Income and Corporation Taxes Act 1988

PART XIX U.K. SUPPLEMENTAL

Miscellaneous U.K.

817 Deductions not to be allowed in computing profits or gains. U.K.

M1 (1) In arriving at the amount of profits or gains for tax purposes—

(a) no other deductions shall be made than such as are expressly enumerated in the Tax Acts; and

(b) no deduction shall be made on account of any annuity or other annual payment (not being interest) to be paid out of such profits or gains in regard that a proportionate part of income tax is allowed to be deducted on making any such payment.

(2) In arriving at the amount of profits or gains from any property described in the Tax Acts, or from any office or employment, no deduction shall be made on account of diminution of capital employed, or of loss sustained, in any trade or in any profession, employment or vocation.

Modifications etc. (not altering text)

C1 See s.125—annual payments for non-taxable consideration.

C2 S. 817(1)(b) restricted (with effect in accordance with Sch. 29 Pt. 14 of the affecting Act) by Finance Act 2002 (c. 23), Sch. 29 para. 8(3) (with Sch. 29 para. 8(4))

Marginal Citations

M1 Source—1970 s.519.

818 Arrangements for payments of interest less tax or of fixed net amount. U.K.

M2 (1) It is hereby declared that any provision made before or after the passing of this Act, whether orally or in writing, for the payment of interest “less tax”, or using words to that effect, is to be construed, in relation to interest payable without deduction of tax, as if the words “less tax”, or the equivalent words, were not included.

(2) In relation to interest on which the recipient is chargeable to tax under Case III of Schedule D, and which is payable without deduction of tax, any provision, made before or after the passing of this Act, whether orally or in writing, and however worded, for the payment of interest at such a rate (“the gross rate”) as shall, after the deduction of income tax, be equal to a stated rate, shall be construed as if it were a provision requiring the payment of interest at the gross rate.

Marginal Citations

M2 Source—1970 s.425; 1971 Sch.6 51

819 Old references to standard rate tax. U.K.

M3 (1) Where any provision, however worded, contained in an instrument (of whatever nature) made on or after 3rd September 1939 or in a will or codicil taking effect on or after that date provides for the payment, whether periodically or otherwise—

(a) of a stated amount free of income tax other than surtax; or

(b) of an amount which, after deduction of income tax at the standard rate, is equal to a stated amount;

it shall have effect as follows.

(2) If it is such a provision as is mentioned in subsection (1)(a) above it shall have effect as if it provided for the payment of the stated amount free of income tax other than such as exceeds the amount to which the person to whom the payment is made would be liable if all income tax [F1 not chargeable [F2 at the starting rate]][F3 were charged at the basic rate, or (so far as applicable in accordance with [F4 section 1A]) the lower rate [F5 or the Schedule F ordinary rate],] to the exclusion of [F6 the higher rate and the Schedule F upper rate].

(3) If it is such a provision as is mentioned in subsection (1)(b) above it shall have effect as if it provided for the payment of an amount which after deduction of income tax at the basic rate is equal to the stated amount.

(4) Any instrument however worded conferring on any person a right to receive a dividend or interest the amount of which depends on the standard rate of income tax shall have effect as if instead of referring to the standard rate it referred to the basic rate.

(5) Any reference in a statutory instrument made under the Tax Acts to the standard rate of income tax shall have effect as if it were a reference to the basic rate.

Textual Amendments

F1 Words in s. 819(2) inserted (16.7.1992 for the year 1992-93 and subsequent years of assessment) by Finance (No. 2) Act 1992 (c. 48), s. 19(3)(7)

F2 Words in s. 819(2) substituted (with effect in accordance with s. 22(12) of the amending Act) by Finance Act 1999 (c. 16), s. 22(9)(c)

F3 Words in s. 819(2) substituted (27.7.1993 with effect for the year 1993-94 and subsequent years of assessment) by 1993 c. 34, s. 79, Sch. 6 paras.1, 25(1)

F4 Words in s. 819(2) substituted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by Finance Act 1996 (c. 8), Sch. 6 para. 13

F5 Words in s. 819(2) inserted (with effect in accordance with Sch. 4 para. 21(2) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 21(1)(a)

F6 Words in s. 819(2) substituted (with effect in accordance with Sch. 4 para. 21(2) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 21(1)(b)

Marginal Citations

M3 Source—1971 Sch.7 2-4; 1978 Sch.2 14

820 Application of Income Tax Acts from year to year. U.K.

• M4 In order to ensure the collection in due time of income tax which may be granted for any year commencing on 6th April, all such provisions contained in the Income Tax Acts as were in force on the preceding day shall have full force and effect with respect to tax which may be so granted, in the same manner as if that tax had been actually granted by Act of Parliament and those provisions had been applied thereto by the Act.

Modifications etc. (not altering text)

C3 S. 820 applied (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1)(2), Sch. 2 para. 160

Marginal Citations

M4 Source—1970 s.520

821 Under-deductions from payments made before passing of annual Act. U.K.

M5 (1) Where, in any year of assessment, any half-yearly or quarterly payments have been made on account of any interest, dividends or other annual profits or gains, previously to the passing of the Act imposing income tax for that year, and tax has not been charged thereon or deducted therefrom or has not been charged thereon or deducted therefrom at the rate ultimately imposed for that year—

(a) the amount not so charged or deducted shall be charged [F7 under Case III of Schedule D in respect of those payments; and]

(b) the agents entrusted with the payment of the interest, dividends or other annual profits or gains shall furnish to the Board a list containing the names and addresses of the persons to whom payments have been made and the amount of those payments, upon a requisition made by the Board in that behalf.

(2) Any person liable to pay any rent, interest or annuity, or to make any other annual payment—

(a) shall be authorised—

(i) to make any deduction on account of income tax for any year of assessment which he has failed to make previously to the passing of the Act imposing the tax for that year, or

(ii) to make up any deficiency in any such deduction which has been so made,

on the occasion of the next payment of the rent, interest or annuity or making of the other annual payment after the passing of the Act so imposing the tax, in addition to any other deduction which he may be by law authorised to make; and

(b) shall also be entitled, if there is no future payment from which the deduction may be made, to recover the sum which might have been deducted as if it were a debt due from the person as against whom the deduction could originally have been made if the Act imposing the tax for the year had been in force.

(3) Subsection (2) above shall apply with respect to—

(a) any payment for or in respect of copyright to which section 536 applies or of public lending right to which that section applies by virtue of section 537; and

[F8 (aa) any payment for or in respect of a right in a design to which section 537B applies; and;]

(b) any royalty or other sum paid in respect of the user of a patent; F9 . . .

F9 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

as it applies with respect to any rent, interest, annuity or other annual payment.

(4) In this section “interest” and “dividends” do not include any interest or dividend which is a distribution.

Textual Amendments

F7 Words in s. 821(1)(a) substituted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by Finance Act 1996 (c. 8), Sch. 6 para. 22

F8 S. 821(3)(aa) inserted (1.8.1989) by Copyright, Designs and Patents Act 1988 (c. 48), Sch. 7 para. 36(7); S.I. 1989/816 art. 2

F9 S. 821(3)(c) and preceding word repealed (with effect in accordance with Sch. 18 Pt. 6(2) Note of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(2)

Marginal Citations

M5 Source—1970 s.521; 1972 Sch.24 29; 1983 s.27.

822 Over-deductions from interest on loan capital etc. made before passing of annual Act. U.K.

M6 (1) If in any year of assessment (“the year”) a resolution having statutory effect under the Provisional Collection of Taxes Act 1968 provides for the charging of income tax at a [F10 lower rate less] than that charged for the previous year, the following provisions of this section shall have effect with respect to deductions in respect of income tax by any body corporate, from payments of interest (not being a distribution) on any of its securities.

(2) Any deduction which was made before the expiration of one month from the passing of the resolution and which would, if the tax had been renewed at the rate imposed for the previous year, have been a legal deduction, shall be deemed to be a deduction rendered legal by section 2 of the Provisional Collection of Taxes Act 1968 and that section shall, subject to this section, apply accordingly.

(3) Any over-deduction to be made good under that section may be made good by a reduction of the amount of tax deducted from the next payment of like nature made on the security in question after the passing of the Act imposing the tax for the year.

(4) Any amount made good under section 2 of the Provisional Collection of Taxes Act 1968 shall—

(a) in the case of an over-deduction which is made good under subsection (3) above, enure to the benefit of the person entitled to the payment on the occasion of which the over-deduction is made good; and

(b) in any other case, enure to the benefit of the person entitled to the security in question at the date when the amount is made good,

irrespective, in either case, of whether or not he is the person who was entitled to the payment, or to the security at the date when the original deduction was made.

(5) Subsection (3) above shall not authorise the retention of any part of the amount over-deducted for more than one year from the passing of the Act imposing the tax for the year.

Textual Amendments

F10 Words in s. 822(1) substituted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by Finance Act 1996 (c. 8), Sch. 6 para. 23

Marginal Citations

M6 Source—1970 s.522; 1971 Sch.6 76; 1972 Sch.24 30

823 Adjustments of reliefs where given at different times. U.K.

• M7 Where under the provisions of the Income Tax Acts an individual—

  (a)

  is entitled to claim relief from income tax (other than relief in respect of life insurance premiums), by repayment or otherwise, in respect of—

  (i)

  any amount which is paid or borne by him out of his income or which is allowable or may be deducted from his income; or

  (ii)

  any reduction of an assessment relating to his income or any part of his income; or

  (iii)

  any adjustment or set-off with regard to a loss; and

  (b)

  claims that relief for any year of assessment,

  any relief granted shall not extend so as to make the total income tax paid or payable by him for that year less than it would have been if the amount in respect of which relief is claimed had been deducted in computing his total income for that year and the amount of any other deductions or reliefs to which he is entitled for that year had been determined accordingly.

Marginal Citations

M7 Source—1970 s.523

824 Repayment supplements: individuals and others. U.K.

[F11 (1) Subject to the following provisions of this section, a repayment made by the Board or an officer of the Board of any of the following, namely—

(a) an amount paid on account of income tax under section 59A of the Management Act;

(b) any income tax paid by or on behalf of an individual for a year of assessment;

(c) a surcharge imposed under section 59C of that Act; and

(d) a penalty incurred by an individual under any of the provisions of that Act,

shall be increased under this section by an amount (a “repayment supplement”) equal to interest on the amount repaid at the rate applicable under section 178 of the Finance Act 1989 for the period (if any) between the relevant time and the date on which the order for the repayment is issued.]

[F12 (1A) In relation to so much (if any) of the last-mentioned period as preceded 6thApril 1974,subsection (1)above shall have effect as if the rate of interest specified in it were 6per cent. per annum (instead of the rate so specified or any other rate in force by virtue of subsection (6)below or section 47(7) of theFinance (No.2)Act 1975). F13 ]

(2) [F12 M8 Subsections (1)andF13 1A] above shall with the necessary modifications apply to a payment of the whole or part of a tax credit as [F12 they apply to a repayment falling within subsection (1)] of income tax paid in the year of assessment to which the tax credit relates.

[F12 (2A) Subsection (1) above shall apply to a repayment made in consequence of a claim under section 228 of the Income Tax Act 1952 (relief in respect of income accumulated under trusts) as if the repayment were of income tax paid by the claimant for the year of assessment in which the contingency mentioned in that section happened.]

[F14 (2B) Subsection (1) above shall apply to a payment made by the Board under section 375(8) (payment of amount which borrower would have been able to deduct from interest payment under section 369(1)) as if the payment were a repayment falling within that subsection.]

[F15 (3) For the purposes of subsection (1) above—

[F16 (aa) if the repayment is a payment made by the Board under section 375(8), the relevant time is—

(i) if the interest payment was made in the year 1996-97 or a subsequent year of assessment, the 31st January next following that year;

(ii) if the interest payment was made in an earlier year of assessment, the 5th April next following that year;]

[F17 (a) if the repayment is—

(i) the repayment of an amount paid in accordance with the requirements of section 59A of the Management Act on account of income tax for a year of assessment, or

(ii) the repayment of income tax for such a year which is not income tax deducted at source,

the relevant time is the date of the payment that is being repaid;

(b) if the repayment is of income tax deducted at source for a year of assessment, the relevant time is the 31st January next following that year; and]

(c) if the repayment is of a penalty or surcharge, [F18 the relevant time is the date on which the penalty or surcharge was paid].]

[F19 (4) For the purposes of subsection (3) above, where a repayment in respect of income tax for a year of assessment is made to any person, that repayment—

(a) shall be attributed first to so much of any payment made by him under section 59B of the Management Act as is a payment in respect of income tax for that year;

(b) in so far as it exceeds the amount (if any) to which it is attributable under paragraph (a) above, shall be attributed in two equal parts to each of the payments made by him under section 59A of the Management Act on account of income tax for that year;

(c) in so far as it exceeds the amounts (if any) to which it is attributable under paragraphs (a) and (b) above, shall be attributed to income tax deducted at source for that year; and

(d) in so far as it is attributable to a payment made in instalments shall be attributed to a later instalment before being attributed to an earlier one.

(4A) In this section any reference to income tax deducted at source for a year of assessment is a reference to—

(a) income tax deducted or treated as deducted from any income, or treated as paid on any income, in respect of that year, and

(b) amounts which, in respect of that year, are tax credits to which section 231 applies,

but does not include a reference to amounts which, in that year, are deducted at source under section 203 in respect of previous years.]

(5) F20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) [F21 Without prejudice to subsection (1A)above]F22 the Treasury may by order from time to time increase or decrease the rate of interestby reference to which—

(a) repayment supplements are calculated under subsection (1) above; and

(b) repayment supplements are calculated under section 47 of the Finance (No. 2) Act 1975.

(7) A repayment supplement shall not be payable under this section in respect of a repayment or payment made in consequence of an order or judgment of a court having power to allow interest on the repayment or payment, or in respect of a repayment of a post-war credit within the meaning of the Income Tax (Repayment of Post-War Credits) Act 1959.

(8) A repayment supplement paid to any person under this section or under section [F23 283 of the 1992 Act] shall not be income of that person for any tax purposes.

(9) M9 Subsections (1) to (8) above shall apply in relation to F24 . . . [F25 the trustees of a settlement][F26 or personal representatives F24 . . . ] as they apply in relation to an individual.

(10) F27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F11 S. 824(1) substituted (with effect in accordance with s. 199(2)(3), Sch. 19 para. 41(4) of the amending Act) by Finance Act 1994 (c. 9), Sch. 19 para. 41(1); S.I. 1998/3173, art. 2

F12 S. 824(1A) inserted (retrospectively) by Finance Act 1988 (c. 39), s. 146, Sch. 13 paras. 1, 7(b)

F13 S. 824(1A) repealed (from 18.8.1989) by Finance Act 1989 (c. 26), ss. 178(7), 187, Sch. 17 Pt. 10, Note; S.I. 1989/1298

F14 S. 824(2B) inserted (retrospectively, with effect in accordance with s. 41(4)-(6) of the amending Act) by Finance Act 1999 (c. 16), s. 41(2)

F15 S. 824(3) substituted (with effect in accordance with s. 199(2)(3), Sch. 19 para. 41(4) of the amending Act) by Finance Act 1994 (c. 9), Sch. 19 para. 41(2); S.I. 1998/3173, art. 2

F16 S. 824(3)(aa) inserted (retrospectively, with effect in accordance with s. 41(4)-(6) of the amending Act) by Finance Act 1999 (c. 16), s. 41(3)

F17 S. 824(3)(a)(b) substituted (with effect in accordance with s. 92(6) of the amending Act) by Finance Act 1997 (c. 16), s. 92(2)

F18 Words in s. 824(3)(c) substituted (with effect in accordance with s. 92(6) of the amending Act) by Finance Act 1997 (c. 16), s. 92(3)

F19 S. 824(4)(4A) substituted for s. 824(4) (with effect in accordance with s. 92(6) of the amending Act) by Finance Act 1997 (c. 16), s. 92(4)

F20 S. 824(5) repealed (with effect in accordance with s. 199(2)(3), Sch. 19 para. 41(4) of the repealing Act) by Finance Act 1994 (c. 9), Sch. 19 para. 41(3)(a), Sch. 26 Pt. 5(23), Note 3; S.I. 1998/3173, art. 2

F21 Words in s. 824(6) inserted (retrospectively) by Finance Act 1988 (c. 39), s. 146, Sch. 13 paras. 1, 7(f)

F22 Words in s. 824(6) repealed (from 18.8.1989) by Finance Act 1989 (c. 26), ss. 178(7), 187, Sch. 17 Pt. 10, Note; S.I. 1989/1298

F23 Words in s. 824(8) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(52) (with ss. 60, 101(1), 171, 201(3))

F24 Words in s. 824(9) repealed (with effect in accordance with s. 199(2)(3), Sch. 19 para. 41(4) of the repealing Act) by Finance Act 1994 (c. 9), Sch. 19 para. 41(3)(b), Sch. 26 Pt. 5(23), Note 3; S.I. 1998/3173, art. 2

F25 Words in s. 824(9) substituted (1989-90 and subsequent years) by Finance Act 1989 (c. 26), s. 110(5)(6)-(9)

F26 Words in s. 824(9) substituted (1989-90 and subsequent years) by Finance Act 1989 (c. 26), s. 111(4)(5)-(8)

F27 S. 824(10) repealed (with effect in accordance with s. 199(2)(3), Sch. 19 para. 41(4) of the repealing Act) by Finance Act 1994 (c. 9), Sch. 19 para. 41(3)(c), Sch. 26 Pt. 5(23), Note 3; S.I. 1998/3173, art. 2

Modifications etc. (not altering text)

C4 See s.281 (repayment to wives), S.I. 1978 No.1117 (in Part III Vol.5) (repayments to wives)and s.289(15) (business expansion scheme).

C5 S. 824 excluded (27.7.1993 with effect for the year 1992-93 and subsequent years of assessment) by Finance Act 1993 (c. 34), ss. 173, 184(3), Sch. 19 Pt. III para. 13(4)

C6 S. 824 excluded (2.1.1996) by The Lloyd's Underwriters (Gilt-edged Securities) (Periodic Accounting for Tax on Interest) Regulations 1995 (S.I. 1995/3225), reg. 12(2) (with reg. 13)

C7 See Table Iin Vol.1.

C8 See 1989 s.178for further regulation making powers and for regulations see Part III Vol.5. (under

“Interest on unpaid tax and repayment supplement”).

Marginal Citations

M8 Source—1975 (No.2) s.47(3)(a)

M9 Source—1975 (No.2) s.47(11), (12).

825 Repayment supplements: companies. U.K.

(1) M10 This section applies to the following payments made to a company in connection with any accounting period for which the company was resident in the United Kingdom (“the relevant accounting period”), that is to say—

(a) a repayment of corporation tax paid by the company for that accounting period (including advance corporation tax paid in respect of distributions made by the company in that accounting periodand any sum paid in respect of that period on an assessment under section 430(7)(a)) F28 ; or

(b) a repayment of income tax in respect of a payment received by the company in that accounting period on which the company bore income tax by deduction; or

(c) a payment of the whole or part of the tax credit comprised in any franked investment income received by the company in that accounting period.

(2) Subject to the following provisions of this section, where a payment F29 . . . to which this section applies is made by the Board or an inspector after the end of the 12 months beginning with the material date, the payment shall be increased under this section by an amount (a “repayment supplement”) equal to interest on the amount paid at the [F30 rate applicable under section 178 of the Finance Act 1989] for each complete tax month contained in the period (if any) beginning with the relevant date and ending at the end of the tax month in which the order for the payment is issued.

[F31 (2A) In relation to any complete tax month beginning before 6thApril 1974which is contained in the last-mentioned period, subsection (2)above shall have effect as if the rate of interest specified in it were 6per cent. per annum (instead of the rate so specified or any other rate in force by virtue of subsection (5)below or section 48(6)of the Finance (No.2) Act 1975). F32 ]

(3) M11 For the purposes of subsection (2) above—

(a) if the payment is a repayment of corporation tax that was paid on or after the first anniversary of the material date, the relevant date is the anniversary of the material date that occurs next after the date on which that tax was paid;

(b) in any other case, the relevant date is the first anniversary of the material date;

and where a payment to which this section applies is a repayment of corporation tax paid by a company on different dates, the payment shall as far as possible be treated for the purposes of this subsection as a repayment of tax paid on a later rather than an earlier date among those dates.

(4) For the purposes of this section—

(a) a repayment of corporation tax made in consequence of a claim by a company under section 239(3) to have the whole or any part of an amount of surplus advance corporation tax arising in the case of any accounting period treated as if it were advance corporation tax paid in respect of distributions made by the company in any earlier accounting period shall be treated as a repayment of corporation tax paid for the accounting period in the case of which that amount of surplus advance corporation tax arose; and

(b) a repayment of income tax or corporation tax made on a claim under subsection (4) of section 419 shall be treated as if it were a repayment of corporation tax paid for the accounting period in which the repayment of, or of the part in question of, the loan or advance mentioned in that subsection was made. [F33 and

(c) a repayment of corporation tax or income tax falling to be made as a result of a claim under section 393A(1) to have the whole or any part of a loss incurred in an accounting period set off against profits of an earlier accounting period (“the earlier period”)—

(i) shall, in a case where the earlier period falls wholly within the period of twelve months immediately preceding the accounting period in which the loss was incurred, be treated as a repayment of tax paid for the earlier period; and

(ii) in any other case, shall be treated as a repayment of tax paid for the accounting period in which the loss is incurred; and

F34 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(5) [F35 Without prejudice to subsection (2A)above] the Treasury may by order from time to time increase or decrease the rate of interest by reference to which repayment supplements are calculated under subsection (2) above.

(6) A repayment supplement shall not be payable under this section in respect of a payment made in consequence of an order or judgment of a court having power to allow interest on the payment.

(7) A repayment supplement paid under this section shall be disregarded for all purposes of income tax and corporation tax.

(8) In this section—

• “tax month” means the period beginning with the 6th day of any calendar month and ending with the 5th day of the following calendar month;

• “the material date” in relation to a payment to which this section applies, means the last date on which corporation tax on any of the profits of the company in question arising in the relevant accounting period could have been paid—

  (a)

  in a case where section 10(1) applies, within the nine months there mentioned;

  (b)

  in a case where section 478 applies, within the time limit imposed by subsection (2)(a) of that section, but subject to subsection (6) of that section.

(9) This section has effect subject to section 826(8).

Textual Amendments

F28 Words in s. 825(1)(a) repealed (for accounting periods beginning after 31.3.1989) by Finance Act 1989 (c. 26), s. 187, Sch. 17 Pt. V, Note 6

F29 Words in s. 825(2) repealed (with effect in relation to payments made on and after 6.4.1993) by Finance Act 1989 (c. 26), ss. 158(2), 187, Sch. 17 Pt. 8, Note 5; S.I. 1993/753

F30 Words in s. 825(2) substituted (from 18.8.1989) by Finance Act 1989 (c. 26), s. 179(1)(a)(vii); S.I. 1989/1298

F31 S. 825(2A) inserted (retrospectively) by Finance Act 1988 (c. 39), s. 146, Sch. 13 paras. 1, 8(a)

F32 Repealed by 1989 s.178(7)and 187and Sch.17 Part Xfrom 18August 1989 (see S.I. 1989 No.1298).

F33 Words in s. 825(4) added by Finance Act 1991 (c. 31, SIF 63:1), s. 73(3)(4)(5), Sch. 15 para.22

F34 S. 825(4)(d) repealed (with effect in accordance with s. 20 of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 8 Pt. 2(4), Note

F35 Words in s. 825(2A) inserted (retrospectively) by Finance Act 1988 (c. 39), s. 146, Sch. 13 paras. 1, 8(b)

Modifications etc. (not altering text)

C9 S. 825(4)(a) modified (27.7.1993) by Finance Act 1993 (c. 34), s. 120, Sch. 14 para. 10(6)

S. 825(4)(a) modified (1.5.1995) by Finance Act 1995 (c. 4), s. 120, Sch. 24 para. 12(5)

C10 See Table Iin Vol.1and see 1989 s.178for further regulation making powers and Part III Vol.5for regulations.

C11 And see Sch.30 para.1(9).

Marginal Citations

M10 Source—1975 (No.2) s.48(1), (2)

M11 Source—1975 (No.2) s.48(4)-(9)

826 Interest on tax overpaid. U.K.

M12 (1) In any case where—

(a) a repayment falls to be made of corporation tax paid by a company for an accounting period which ends after the appointed day; or

[F36 (aa) a repayment falls to be made under sections 246N and 246Q of advance corporation tax paid by a company in respect of distributions made by it in such an accounting period; or]

(b) a repayment of income tax falls to be made in respect of a payment received by a company in such an accounting period; or

(c) a payment falls to be made to a company of the whole or part of the tax credit comprised in any franked investment income received by the company in such an accounting period [F37 ; or

(d) a payment of R&D tax credit falls to be made to a company under Schedule 20 to the Finance Act 2000 in respect of an accounting period,]

then, from the material date until [F38 the order for repayment or payment is issued], the repayment or payment shall carry interest at the rate which, under section 89 of the Management Act, is for the time being the prescribed rate for the purposes of this section.

(2) [F39 Subject to section 826A(2),] in relation to corporation tax paid by a company for an accounting period, the material date for the purposes of this section is the date on which corporation tax was paid or, if it is later, the date on which corporation tax for that accounting period became (or, as the case may be, would have become) due and payable in accordance with [F40 section 59D of the Management Act (payment of corporation tax)].

[F41 (2A) F42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3) In relation to a repayment of income tax falling within subsection (1)(b) above or a payment of the whole or part of a tax credit falling within subsection (1)(c) above, [F43 the material date is the day after the end of the accounting period] in which the payment referred to in subsection (1)(b) above or, as the case may be, the franked investment income referred to in subsection (1)(c) above was received by the company.

[F44 (3A) In relation to a payment of R&D tax credit falling within subsection (1)(d) above the material date is whichever is the later of—

(a) the filing date for the company’s company tax return for the accounting period for which the R&D tax credit is claimed, and

(b) the date on which the company tax return or amended company tax return containing the claim for payment of the R&D tax credit is delivered to the Inland Revenue.

For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the M13 Finance Act 1998.]

(4) For the purposes of this section a repayment of tax made on a claim under section 419(4) shall be treated as if it were a repayment of corporation tax for the accounting period in which [F45 the event giving rise to entitlement to relief under section 419(4) occurred] but, in relation to such a repayment of tax, the material date for the purposes of this section is—

[F46 (a) the date when the entitlement to relief in respect of the repayment accrued, that is to say—

(i) where the repayment [F47 , or the release or writing off,] of the loan or advance (or part thereof) occurred on or after the day mentioned in section 419(4A), the date nine months after the end of that accounting period; and

(ii) in any other case, the date nine months after the end of the accounting period in which the loan or advance was made;

or]

(b) if it is later, the date on which the tax which is to be repaid was in fact paid.

(5) Interest paid under this section—

[F48 (a)] shall be paid without any deduction of income tax and

[F49 (b)] [F50 subject to subsection (5A) below,] shall not be brought into account in computing any profits or income.

[F51 (5A) Paragraph (b) of subsection (5) above does not apply in relation to interest payable to a company within the charge to corporation tax.]

(6) Where a repayment of corporation tax is a repayment of tax paid by a company on different dates, the repayment shall so far as possible be treated for the purposes of this section as a repayment of tax paid on a later rather than an earlier date among those dates.

(7) F52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F53 F54 (7A) In any case where—

(a) a company carrying on a trade incurs a loss in the trade in an accounting period (“the later period”),

(b) as a result of a claim under section 393A(1), the whole or any part of that loss is set off for the purposes of corporation tax against profits (of whatever description) of an earlier accounting period (“the earlier period”) which does not fall wholly within the period of twelve months immediately preceding the later period, and

(c) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that accounting period,

then, in determining the amount of interest (if any) payable under this section on the repayment referred to in paragraph (c) above, no account shall be taken of [F55 so much of the amount of that repayment as falls to be made]] as a result of the claim under section 393A(1), except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable, [F56 as mentioned in subsection (7D) below].

[F53 (7AA) F57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

F58 (7B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F59 (7BB) Subject to subsection (7BC) below, in any case where—

(a) within the meaning of section 806D, any relievable underlying tax or relievable withholding tax arises in an accounting period of a company (“the later period”),

(b) pursuant to a claim under section 806G, the whole or any part of that tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an earlier accounting period (“the earlier period”), and

(c) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period,

then, in determining the amount of interest (if any) payable under this section on the repayment referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of the claim under section 806G, except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (7D) below).

(7BC) Where, in a case falling within subsection (7A)(a) and (b) above—

(a) as a result of the claim under section 393A(1), an amount or increased amount of eligible unrelieved foreign tax arises for the purposes of section 806A(1), and

(b) pursuant to a claim under section 806G, the whole or any part of an amount of relievable underlying tax or relievable withholding tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an accounting period before the earlier period,

then subsection (7BB) above shall have effect in relation to the claim under section 806G as if the reference in the words after paragraph (c) to the later period within the meaning of that subsection were a reference to the period which, in relation to the claim under section 393A(1), would be the later period for the purposes of subsection (7A) above.]

[F60 (7C) In a case where—

(a) there is for an accounting period of a company (“the later period”) [F61 a non-trading deficit on the company’s loan relationships,]

(b) as a result of a claim under [F62 section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act the whole or part of the deficit for the later period is set off against profits] of an earlier accounting period (“the earlier period”), and

(c) a repayment falls to be made of corporation tax for the earlier period [F63 or of income tax in respect of a payment received by the company in that accounting period],

then, in determining the amount of interest (if any) payable under this section on the [F64 repayment referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of] the claim under [F65 section 83(2)(c) of that Act or, as the case may be, paragraph 4(3) of Schedule 11 to that Act] except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable, [F56 as mentioned in subsection (7D) below].]

[F66 F67 (7CA )(. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .)]

[F68 (7D) In subsections (7), (7A), (7B) [F69 , (7BB)] and (7C) above, any reference to the date on which corporation tax for an accounting period became, or would have become, due and payable shall be construed on the basis that corporation tax for an accounting period becomes due and payable on the day following the expiry of nine months from the end of the accounting period.]

[F70 (7E) The power conferred by section 59E of the Management Act (alteration of date on which corporation tax becomes due and payable) does not include power to make provision in relation to subsection (7), (7A), (7B), [F71 (7BB),] (7C) or (7D) above the effect of which would be to change the meaning of references in subsection (7), (7A), (7B) [F71 , (7BB)] or (7C) above to the date on which corporation tax for an accounting period became, or would have become, due and payable (as mentioned in subsection (7D) above).]

(8) In consequence of the preceding provisions of this section, no repayment supplement (within the meaning of section 825) shall be paid in respect of any repayment of tax or payment of tax credit where the relevant accounting period (within the meaning of that section) ends after the appointed day.

[F72 (8A) Where—

(a) interest has been paid to a company under subsection (1)(a) [F73 or (d)] above,

[F74 (b) there is—

(i) a change in the company’s assessed liability to corporation tax, or

(ii) a change in the amount of the R&D tax credit payable to the company (which does not result in a change falling within sub-paragraph (i)),

other than a change which in whole or in part corrects an error made by the Board or an officer of the Board, and]

(c) as a result only of that change (and, in particular, not as a result of any error in the calculation of the interest), it appears to an officer of the Board that the interest ought not to have been paid, either at all or to any extent,

the interest that ought not to have been paid may be recovered from the company as if it were interest charged under Part IX of the Management Act (interest on overdue tax).

(8B) For the purposes of subsection (8A) above, the cases where there is a change in a company’s assessed liability to corporation tax are those cases where—

(a) an assessment, or an amendment of an assessment, of the amount of corporation tax payable by the company for the accounting period in question is made, or

(b) a determination of that amount is made under paragraph 36 or 37 of Schedule 18 to the Finance Act 1998 (which until superseded by a self-assessment under that Schedule has effect as if it were one),

whether or not any previous assessment or determination has been made.

[F75 (8BA) For the purposes of subsection (8A)(b) above, the cases where there is a change in the amount of the R&D tax credit payable to the company are those cases where an assessment, or an amendment to an assessment, is made to recover an amount of R&D tax credit paid to the company for the accounting period in question.]

(8C) In subsection (8A)(b) above “error” includes—

(a) any computational error; and

(b) the allowance of a claim or election which ought not to have been allowed.]

(9) In this section “the appointed day” means such day or days, not being earlier than 31st March 1992, as the Treasury may by order appoint for the purposes of this section.

Subordinate Legislation Made

P1 S. 826(1)(8)(9) power exercised: 30.9.1993 appointed by S.I. 1992/3066, art. 2(2)(b)

Textual Amendments

F36 S. 826(1)(aa) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 16 para. 20(2)

F37 S. 826(1)(d) and preceding word inserted (with effect in accordance with s. 69(1) of the amending Act) by Finance Act 2000 (c. 17), Sch. 21 para. 1(2)

F38 Words in s. 826(1) substituted (retrospectively) by Finance Act 1989 (c. 26), s. 180(6)(7)

F39 Words in s. 826(2) inserted (31.7.1998) by Finance Act 1998 (c. 36), Sch. 4 para. 1(1)

F40 Words in s. 826(2) substituted (with effect in accordance with s. 199(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 19 para. 42; S.I. 1998/3173, art. 2

F41 S. 826(2A) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 16 para. 20(3)

F42 S. 826(2A) repealed (with effect in accordance with Sch. 3 para. 38(5) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 38(2), Sch. 27 Pt. 3(2), Note

F43 Words in s. 826(3) substituted (with effect in accordance with Sch. 4 para. 2(2) of the amending Act) by Finance Act 1998 (c. 36), Sch. 4 para. 2(1)

F44 S. 826(3A) inserted (with effect in accordance with s. 69(1) of the amending Act) by Finance Act 2000 (c. 17), Sch. 21 para. 1(3)

F45 Words in s. 826(4) substituted (with effect in accordance with s. 90(2) of the amending Act) by Finance Act 1999 (c. 16), s. 90(1)(a)

F46 S. 826(4)(a) substituted (with effect in accordance with s. 173(6) of the amending Act) by Finance Act 1996 (c. 8), s. 173(5)

F47 Words in s. 826(4)(a)(i) inserted (with effect in accordance with s. 90(2) of the amending Act) by Finance Act 1999 (c. 16), s. 90(1)(b)

F48 Words in s. 826(5) re-numbered as s. 826(5)(a) (31.7.1998) by virtue of Finance Act 1998 (c. 36), s. 34(2)(a)

F49 Words in s. 826(5) re-numbered as s. 826(5)(b) (31.7.1998) by virtue of Finance Act 1998 (c. 36), s. 34(2)(b)

F50 Words in s. 826(5)(b) inserted (with effect in accordance with s. 34(5) of the amending Act) by Finance Act 1998 (c. 36), s. 34(3)

F51 S. 826(5A) inserted (with effect in accordance with s. 34(5) of the amending Act) by Finance Act 1998 (c. 36), s. 34(4)

F52 S. 826(7) repealed (with effect in accordance with Sch. 3 para. 38(6) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 38(3), Sch. 27 Pt. 3(2), Note

F53 S. 826(7AA) inserted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 10(3)(5)

F54 S. 826(7A)(7B) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 73(3)(4)(5), Sch. 15 para. 23

F55 Words in s. 826(7A) substituted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 10(2)

F56 Words in s. 826(7)(7A)(7B)(7C) substituted (with effect in accordance with Sch. 4 para. 5(5)(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 4 para. 5(2)

F57 S. 826(7AA)(7CA) repealed (with effect in accordance with Sch. 3 para. 38(7) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 38(4), Sch. 27 Pt. 3(2), Note

F58 S. 826(7B) repealed (with effect in accordance with s. 20 of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 8 Pt. 2(4), Note

F59 S. 826(7BB)(7BC) inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 30 para. 29(2)

F60 S. 826(7C) inserted (27.7.1993) by 1993 c. 34, s. 170, Sch. 18 para.5

F61 Words in s. 826(7C)(a) substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 48(1)(a) (with Sch. 15)

F62 Words in s. 826(7C)(b) substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 48(1)(b) (with Sch. 15)

F63 Words in s. 826(7C)(c) inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 24 para. 11(a)

F64 Words in s. 826(7C) substituted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 24 para. 11(b)

F65 Words in s. 826(7C) substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 48(1)(c) (with Sch. 15)

F66 S. 826(7CA) inserted (with effect in accordance with Sch. 24 para. 12(4)(5) of the amending Act) by Finance Act 1995 (c. 4), Sch. 24 para. 12(2)

F67 S. 826(7AA)(7CA) repealed (with effect in accordance with Sch. 3 para. 38(7) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 38(4), Sch. 27 Pt. 3(2), Note

F68 S. 826(7D) inserted (with effect in accordance with Sch. 4 para. 5(5)(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 4 para. 5(3)

F69 Words in s. 826(7D) inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 30 para. 29(3)

F70 S. 826(7E) inserted (with effect in accordance with Sch. 4 para. 5(5)(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 4 para. 5(4)

F71 Words in s. 826(7E) inserted (28.7.2000) by virtue of Finance Act 2000 (c. 17), Sch. 30 para. 29(4)

F72 S. 826(8A)-(8C) inserted (with effect in accordance with Sch. 4 para. 3(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 4 para. 3(1)

F73 Words in s. 826(8A)(a) inserted (with effect in accordance with s. 69(1) of the amending Act) by Finance Act 2000 (c. 17), Sch. 21 para. 1(4)(a)

F74 S. 826(8A)(b) substituted (with effect in accordance with s. 69(1) of the amending Act) by Finance Act 2000 (c. 17), Sch. 21 para. 1(4)(b)

F75 S. 826(8BA) inserted (with effect in accordance with s. 69(1) of the amending Act) by Finance Act 2000 (c. 17), Sch. 21 para. 1(5)

Modifications etc. (not altering text)

C12 S. 826 excluded (2.1.1996) by The Lloyd's Underwriters (Gilt-edged Securities) (Periodic Accounting for Tax on Interest) Regulations 1995 (S.I. 1995/3225), reg. 12(2) (with reg. 13)

C13 S. 826 applied (with modifications) (7.1.1999 in accordance with reg. 1(2) of the affecting S.I.) by The Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175), reg. 8 (as amended by: S.I. 2005/889, regs. 1(1)(3), 7; S.I. 2011/1785, regs. 1, 11; S.I. 2017/1072, regs. 1, 10)

Marginal Citations

M12 Source—1987 (No.2) s.87

M13 1998 c. 36.

[F76 826A Interest on payments in respect of corporation tax and meaning of “the material date". U.K.

(1) The Treasury may by regulations make provision applying section 826, with such modifications as may be prescribed, for the purpose of conferring on companies of such descriptions as may be prescribed a right to interest—

(a) on such payments made by them in respect of corporation tax as may be prescribed,

(b) at the rate applicable under section 178 of the M14 Finance Act 1989, and

(c) for such period as may be prescribed,

and for treating any such interest for the purposes, or prescribed purposes, of the Tax Acts as interest under section 826(1)(a) on a repayment of corporation tax.

(2) The Treasury may by regulations make provision modifying section 826(2) in relation to companies of such description as may be prescribed.

(3) Subsections (1) and (2) above do not apply in relation to companies in relation to which section 826(2) is modified or otherwise affected by regulations under section 59E of the Management Act (alteration of date on which corporation tax becomes due and payable) in relation to the accounting period to which the corporation tax in question relates.

(4) Where the Treasury make regulations under subsection (2) above in relation to companies of any description, they may also make regulations modifying section 59DA(2) of the Management Act in relation to those companies, or any description of such companies, by varying the date before which the claim there mentioned may not be made.

(5) Regulations under this section—

(a) may make different provision in relation to different cases or circumstances or in relation to companies or accounting periods of different descriptions;

(b) may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.

(6) Regulations under this section may not make provision in relation to accounting periods ending before the day appointed under section 199 of the M15 Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

(7) In this section “prescribed” means prescribed by regulations made under this section.]

Textual Amendments

F76 S. 826A inserted (31.7.1998) by Finance Act 1998 (c. 36), Sch. 4 para. 1(2)

Marginal Citations

M14 1989 c. 26.

M15 1994 c. 9.

827 VAT penalties etc. U.K.

M16 (1) Where, under [F77 Part IV of the Value Added Tax Act 1994], a person is liable to make a payment by way of—

(a) penalty under any of sections [F78 60 to 70]; or

(b) interest under section [F79 74]; or

(c) surcharge under section [F79 59];

the payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

[F80 (1A) Where a person is liable to make a payment by way of a penalty under any of sections 8 to 11 of the Finance Act 1994 (penalties relating to excise), that payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.]

[F81 (1B) Where a person is liable to make a payment by way of—

(a) penalty under any of paragraphs 12 to 19 of Schedule 7 to the Finance Act 1994 (insurance premium tax), or

(b) interest under paragraph 21 of that Schedule,

the payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.]

[F82 (1C) Where a person is liable to make a payment by way of—

(a) penalty under Part V of Schedule 5 to the Finance Act 1996 (landfill tax), or

(b) interest under paragraph 26 or 27 of that Schedule,

the payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.]

[F83 (1D) Where a person is liable to make a payment by way of—

(a) any penalty under any provision of Schedule 6 to the Finance Act 2000 (climate change levy),

(b) interest under paragraph 70 of that Schedule (interest on recoverable overpayments etc.),

(c) interest under any of paragraphs 81 to 85 of that Schedule (interest on climate change levy due and on interest), or

(d) interest under paragraph 109 of that Schedule (interest on penalties),

the payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.]

(2) A sum paid to any person by way of supplement under section [F84 79 of that Act] shall be disregarded for all purposes of corporation tax and income tax.

Textual Amendments

F77 Words in s. 827(1) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(a)

F78 Words in s. 827(1)(a) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(b)

F79 Words in s. 827(1)(b)(c) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(c)

F80 S. 827(1A) inserted (1.11.1994 for specified purposes and 1.1.1995 otherwise) by Finance Act 1994 (c. 9), ss. 18(7), 19(1) (with s. 19(3)); S.I. 1994/2679, arts. 2, 3 (with art. 4(3))

F81 S. 827(1B) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 7 para. 31

F82 S. 827(1C) inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 5 para. 40

F83 S. 827(1D) inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 7 para. 4

F84 Words in s. 827(2) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(d)

Marginal Citations

M16 Source—1986 s.53.

Valid from 06/04/2005

[F85 827A Territorial scope of charges under certain provisions to which section 836B applies U.K.

(1) This section applies in relation to any amount chargeable to income tax under or by virtue of any provision to which section 836B applies (other than a provision listed in Part 2 of the table in that section).

(2) An amount arising to a person who is resident in the United Kingdom is chargeable to tax whether or not it is from a source in the United Kingdom.

(3) An amount arising to a person who is not resident in the United Kingdom is chargeable to tax only if it is from a source in the United Kingdom.

(4) References in this section to amounts which are from a source in the United Kingdom include, in the case of any amount which does not have a source, references to amounts which have a comparable connection to the United Kingdom.

(5) This section is subject to any express or implied provision to the contrary in any provision of the Income Tax Acts.

(6) This section does not apply for the purposes of corporation tax.]

Textual Amendments

F85 S. 827A inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 333 (with Sch. 2)

828 Orders and regulations made by the Treasury or the Board. U.K.

(1) M17 Subject to subsection (2) below, any power of the Treasury or the Board to make any order or regulations under this Act or under any other provision of the Tax Acts (including enactments passed after this Act) shall be exercisable by statutory instrument.

(2) Subsection (1) above shall not apply in relation to any power conferred by [F86 section 841(1)(b) or 841A][F87 or section 178(5) of the Finance Act 1989.]

(3) M18 Subject to subsection (4) below and to any other provision to the contrary, any statutory instrument containing any order or regulations made by the Treasury or the Board under this Act or under any other provision of the Tax Acts (including enactments passed after this Act) shall be subject to annulment in pursuance of a resolution of the House of Commons.

(4) Subsection (3) above shall not apply in relation to an order or regulations made under section 1(6), [F88 257C], 324, F89 . . . F90 . . . [F91 582A(1),][F92 590C(6)] 658(3) [F93 791 or 840A(1)(d)] or paragraph 7 of Schedule 14 [F94 or [F95 section 82(4)(d) of the Capital Allowances Act]] or—

(a) if any other Parliamentary procedure is expressly provided;

(b) if the order in question is an order appointing a day for the purposes of any provision of the Tax Acts, being a day as from which the provision will have effect, with or without amendments, or will cease to have effect.

Textual Amendments

F86 Words in s. 828(2) substituted (with effect in accordance with Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), Sch. 7 para. 24

F87 1989 s.178(6).

F88 Words in s. 828(4) substituted (1990-91 and subsequent years of assessment) by Finance Act 1990 (c. 29), s. 17(3)

F89 Words in s. 828(4) repealed (3.5.1994) by Finance Act 1994 (c. 9), Sch. 26 Pt. 5(19)

F90 Words in s. 828(4) repealed (with effect in accordance with Sch. 20 Pt. 3(7) Note 4 of the repealing Act) by Finance Act 1999 (c. 16), Sch. 20 Pt. 3(7)

F91 Words in s. 828(4) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 118(2)

F92 Words in s. 828(4) inserted by Finance Act 1989 (c. 26), Sch. 6 para. 16

F93 Words in s. 828(4) substituted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 37 para. 1(2)

F94 Words in s. 828(4) inserted by Capital Allowances Act 1990 (c. 1), Sch. 1 para. 8(34)

F95 Words in s. 828(4) substituted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 58

Marginal Citations

M17 Source—1970 ss.65(5), 204, 231(3), 343 (1A); 1970(F) s.29(6), Sch.5 2(3), 10; 1972 ss.91(3), 108(4); 1973 Sch.16 17(2); 1975 (No.2) ss.47(10), 48(6), 69(9), 70(8), 70A(3); 1976 ss.64(4), 64A, (4) Sch.4 16(2); 1980 s.24(9); Sch.10 13(3); 1982 ss.28(5), 29(1), (3), Sch.7 14(2); 1984 ss.26(1), 88(8), 126(1), Sch.8 2(1)(f), 3A; 1983 Sch.5 5A(9), 6(8); 1986 s.28, 61, Sch.11 11, Sch.12 3, Sch.17 6(7).

M18 Source—1970 ss.65(5), 204, 343(1B); 1970(F) s.29(8), Sch.5 2(3), 10; 1973 Sch.16 17(2); 1975 (No.2) ss.47(10), 48(6), 69(9), 70(8), 70A(3); 1976 ss.64(4), 64A(4); 1982 s.29(5); 1983 Sch.5 5A(9), 6(9); 1984 ss.26(6), 88(8), Sch.8 2(1), 3A; 1986 ss.26, 27(7), 55, Sch.11 11, Sch.12 3, Sch.17 6(7)

829 Application of Income Tax Acts to public departments and avoidance of exempting provisions. U.K.

M19 (1) Subject to subsections (2) and (3) below, all the provisions of the Income Tax Acts relating to the assessment, charge, deduction and payment of income tax shall apply in relation to public offices and departments of the Crown.

(2) Nothing in those provisions of the Income Tax Acts shall require the payment by any such office or department of any tax which would be ultimately borne by the Crown [F96 unless it is tax which would not have been so borne but for a failure by a public office or department of the Crown to make a deduction required by virtue of subsection (1) above.]

(3) Subsection (1) above shall not apply to public offices and departments of any country, state, province or colony within section 320(3)(b) or (c) and nothing in subsection (1) above shall exempt any government from taxation to which it is liable in connection with any office or department by virtue of section 25 of the Finance Act 1925 (liability in respect of trading operations of Dominion governments and others).

(4) No letters patent granted or to be granted by the Crown to any person, city, borough or town corporate of any liberty, privilege or exemption from subsidies, tolls, taxes, assessments or aids, and no statute which grants any salary, annuity or pension to any person free of any taxes, deductions or assessments, shall be construed or taken to exempt any person, city, borough or town corporate, or any inhabitant of any city, borough or town corporate, from income tax, and all non-obstantes in any such letters patent or statute made or to be made to the contrary effect shall be void.

Textual Amendments

F96 Words in s. 829(2) inserted (27.7.1993 with effect in relation to the year 1993-94 and subsequent years of assessment) by 1993 c. 34, s. 122(1)(3)

Marginal Citations

M19 Source—1970 ss.524, 525(1)

830 Territorial sea and designated areas. U.K.

M20 (1) The territorial sea of the United Kingdom shall for all purposes of income tax and corporation tax (including the following provisions of this section) be deemed to be part of the United Kingdom.

(2) In this section—

(a) “exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of so much of the seabed and subsoil and their natural resources as is situated in the United Kingdom or a designated area;

(b) “exploration or exploitation rights” means rights to assets to be produced by exploration or exploitation activities or to interests in or to the benefit of such assets; and

(c) “designated area” means an area designated by Order in Council under section 1(7) of the M21 Continental Shelf Act 1964.

(3) Any profits or gains from exploration or exploitation activities carried on in a designated area or from exploration or exploitation rights shall be treated for the purposes of income tax or corporation tax as profits or gains from activities or property in the United Kingdom.

(4) Any profits or gains arising to any person not resident in the United Kingdom from exploration or exploitation activities or rights shall for the purposes of corporation tax be treated as [F97 profits] of a trade carried on by that person in the United Kingdom through a branch or agency.

(5) Any emoluments from an office or employment in respect of duties performed in a designated area in connection with exploration or exploitation activities shall be treated for the purposes of income tax as emoluments in respect of duties performed in the United Kingdom.

Textual Amendments

F97 Word in s. 830(4) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a), Sch. 7 para. 1

Marginal Citations

M20 Source—1973 s.38(1), (2)-(4), (6)

M21 1964 c. 29.

Interpretation U.K.

831 Interpretation of this Act. U.K.

(1) M22 In this Act, except so far as the context otherwise requires—

(a) “the Corporation Tax Acts” means the enactments relating to the taxation of the income and chargeable gains of companies and of company distributions (including provisions relating also to income tax); and

(b) “the Income Tax Acts” means the enactments relating to income tax, including any provisions of the Corporation Tax Acts which relate to income tax.

(2) In this Act “the Tax Acts”, except so far as the context otherwise requires, means this Act and all other provisions of the Income Tax Acts and the Corporation Tax Acts.

(3) In this Act—

• “the Management Act” means the Taxes Management Act 1970;

• “the 1968 Act” means the Capital Allowances Act 1968;

• “the 1970 Act” means the Income and Corporation Taxes Act 1970; and

• “the 1979 Act” means the Capital Gains Tax Act 1979.

• [F98 “the 1990 Act” means the Capital Allowances Act 1990.]

• [F99 “the 1992 Act” means the Taxation of Chargeable Gains Act 1992.]

(4) Section 1 of the M23 Family Law Reform Act 1987, the paragraph inserted in Schedule 1 to the M24 Interpretation Act 1978 by paragraph 73 of Schedule 2 to that Act and section 1(3) of the M25 Law Reform (Parent and Child) (Scotland) Act 1986 (legal equality of illegitimate children) shall be disregarded in construing references in this Act to a child or to children (however expressed).

(5) M26 This Act, so far as it relates to capital gains tax, shall be construed as one with the [F100 1992] Act.

(6) Any reference in this Act to a section, Part or Schedule is a reference to that section, Part or Schedule of or to this Act, unless the context otherwise requires.

Textual Amendments

F98 S. 831(3): definition of "the 1990 Act" inserted by Capital Allowances Act 1990 (c. 1), Sch. 1 para. 8(35); and that amendment continued by Capital Allowances Act 2001 (c. 2), s. 579, Sch. 2 para. 59

F99 S. 831(3): definition of "the 1992 Act" inserted (with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(53)(a) (with ss. 60, 101(1), 171, 201(3))

F100 Words in s. 831(5) substituted (with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(53)(b) (with ss. 60, 101(1), 171, 201(3))

Modifications etc. (not altering text)

C14 S. 831(4) applied (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 144(2)

Marginal Citations

M22 Source—1970 s.526(1), (2); 1987 Sch.15 12

M23 1987 c. 42.

M24 1978 c. 30.

M25 1986 c. 9.

M26 Source—1970 s.540(2)

832 Interpretation of the Tax Acts. U.K.

(1) M27 In the Tax Acts, except in so far as the context otherwise requires—

• “Act” includes an Act of the Parliament of Northern Ireland and a Measure of the Northern Ireland Assembly;

• F101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “authorised unit trust” has the meaning given by section 468(6);

• “basic rate”, in relation to the charging of income tax for any year of assessment, means the rate of income tax determined in pursuance of section 1(2)(a), and any reference to the basic rate limit shall be construed in accordance with section 1(3);

• “the Board” means the Commissioners of Inland Revenue;

• “body of persons” means any body politic, corporate or collegiate, and any company, fraternity, fellowship and society of persons whether corporate or not corporate;

• “building society” means a building society within the meaning of the M28 Building Societies Act 1986;

• “capital allowance” means any allowance under [F102 the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act)];

• [F103 “the Capital Allowances Act” means the Capital Allowances Act 2001;

• “chargeable gain” has the same meaning as in the [F104 1992] Act;

• “chargeable period” means an accounting period of a company or a year of assessment;

• “close company” has the meaning given by sections 414 and 415;

• “collector” means any collector of taxes;

• “company” means, subject to subsection (2) below, any body corporate or unincorporated association but does not include a partnership, a local authority or a local authority association;

• “distribution” has the meaning given by Part VI with section 418;

• “farm land” means land in the United Kingdom wholly or mainly occupied for the purposes of husbandry, but excluding any dwelling or domestic offices, and excluding market garden land, and “farming” shall be construed accordingly;

• [F105 “franked investment income” means income of a company resident in the United Kingdom which consists of a distribution in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution and the amount of that credit);

• F106 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F107 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “higher rate”, in relation to the charging of income tax for any year of assessment, means any rate of income tax determined in pursuance of section 1(2)(b),and any reference to any higher rate band shall be construed in accordance with section 1(3) F108 ;

• “industrial assurance business” has the meaning given by section 1(2) of the M29 Industrial Assurance Act 1923 or Article 3(1) of the M30 Industrial Assurance (Northern Ireland) Order 1979;

• “inspector” means any inspector of taxes;

• “interest” means both annual or yearly interest and interest other than annual or yearly interest;

• [F109 “local authority association” has the meaning given by section 519;]

• [F110 [F111 “lower rate”, in relation to the charging of income tax for any year of assessment, means the rate of income tax specified in or determined in pursuance of section 1A(1B);

• “market garden land” means land in the United Kingdom occupied as a nursery or garden for the sale of the produce (other than land used for the growth of hops) and “market gardening” shall be construed accordingly;

• “notice” means notice in writing [F112 or in a form authorised (in relation to the case in question) by directions under section 118 of the Finance Act 1998];

• [F113 “open-ended investment company", and “authorised corporate director", “owner of shares" and “scheme property" in relation to an open-ended investment company, have the meanings given by subsection (10) of section 468, read with subsections (11) to (18) of that section, as those subsections are added by regulation 10(4) of the Open-ended Investment Companies (Tax) Regulations 1997;

• “ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company;

• [F114 “overseas property business” has the meaning given by section 65A(4) or 70A(4);]

• “preference dividend” means a dividend payable on a preferred share or preferred stock at a fixed rate per cent. or, where a dividend is payable on a preferred share or preferred stock partly at a fixed rate per cent. and partly at a variable rate, such part of that dividend as is payable at a fixed rate per cent.;

• “qualifying distribution” has the meaning given by section 14(2);

• “qualifying policy” means a policy of insurance which is a qualifying policy for the purposes of Chapter I of Part VII;

• [F115 “the rate applicable to trusts” shall be construed in accordance with section 686(1A);]

• F116 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F117 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• [F118 “Schedule A business” means any business the profits or gains of which are chargeable to income tax under Schedule A, including the business in the course of which any transaction is by virtue of paragraph 1(2) of that Schedule to be treated as entered into;

• [F119 “starting rate”, in relation to the charging of income tax for any year of assessment, means the rate of income tax determined in pursuance of section 1(2)(aa), and any reference to the starting rate limit shall be construed in accordance with section 1(2A);]

• [F120 “the Schedule F ordinary rate” shall be construed in accordance with section 1B(2);]

• [F120 “the Schedule F trust rate” shall be construed in accordance with section 686(1A);]

• [F120 “the Schedule F upper rate” shall be construed in accordance with section 1B(2);]

• F121 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “tax credit” means a tax credit under section 231;

• “trade” includes every trade, manufacture, adventure or concern in the nature of trade;

• “Ulster Savings Certificates” means savings certificates issued or treated as issued under section 15 of the M31 Exchequer and Financial Provisions Act (Northern Ireland) 1950;

• “unit holder” has the meaning given by section 468(6);

• “unit trust scheme” has the meaning given by section 469;

• “year of assessment” means, with reference to any income tax, the year for which such tax was granted by any Act granting income tax;

• “the year 1988-89” means the year of assessment beginning on 6th April 1988, and any corresponding expression in which two years are similarly mentioned means the year of assessment beginning on 6th April in the first-mentioned of those two years;

and a source of income is within the charge to corporation tax or income tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income, and references to a person, or to income, being within the charge to tax, shall be similarly construed.

(2) M32 The definition of “company” is subject to section 468, and does not apply in the following provisions of this Act, that is to say—

• Chapter I of Part XVII;

• sections 774 to 777;

• section 839;

• paragraph 15 of Schedule 3;

(and also does not apply where the context otherwise requires because some other definition of “company” applies).

(3) M33 Except so far as the context otherwise requires, in the Tax Acts, and in any enactment passed after 12th March 1970 which by any express provision is to be construed as one with the Tax Acts, the Corporation Tax Acts or the Income Tax Acts, “tax”, where neither income tax nor corporation tax is specified, means either of those taxes.

(4) Subsection (3) above is without prejudice to the provisions of section 9 which apply income tax law for certain purposes of corporation tax, and accordingly the employment of “income tax” rather than “tax” in any provision of the Tax Acts is not a conclusive indication that that provision is not applied to corporation tax by that section.

[F122 (4A) Any reference in the Tax Acts to franked investment income received by a company apply to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person.]

(5) M34 In the Tax Acts any reference to a child, however expressed, shall be construed as including a reference to an adopted child.

This subsection does not apply for the purposes of paragraph 10 of Schedule 30.]]]]]]

Textual Amendments

F101 S. 832(1): definition of "additional rate" repealed (with effect in accordance with Sch. 18 Pt. 6(1) Note of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(1)

F102 S. 832(1): words in definition of "capital allowance" substituted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 60(a)

F103 S. 832(1): definition of "the Capital Allowances Act" substituted for definition of "the Capital Allowances Acts" (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 60(b)

F104 Word in s. 832(1) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(54) (with ss. 60, 101(1), 171, 201(3)).

F105 S. 832(1): definition of "franked investment income" substituted (with effect in accordance with Sch. 3 para. 39(8) of the amending Act) by Finance Act 1998 (c. 36), Sch. 3 para. 39(2)

F106 S. 832(1): definition of "franked payment" repealed (with effect in accordance with Sch. 3 para. 39(8) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 39(3), Sch. 27 Pt. 3(2), Note

F107 S. 832(1): definition of "group income" repealed (with effect in accordance with Sch. 3 para. 39(9) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 39(4), Sch. 27 Pt. 3(2), Note

F108 Repealed by 1988(F) s.148and Sch.14 Part IVfor 1988-89and subsequent years.

F109 1990 s.127and Sch.18 para.5(3)on and after 1April 1990.Previously

“ “local authority” and “local authority association” have the meanings given by section 519;”.

F110 S. 832(1): definition of "lower rate" inserted (16.3.1992 with application for the year 1992-93 and subsequent years of assessment) by Finance Act 1992 (c. 20), s. 9(9)(10)(11)

F111 S. 832(1): definition of "lower rate" substituted (with effect in accordance with s. 22(12) of the amending Act) by Finance Act 1999 (c. 16), s. 22(10)(a)

F112 S. 832(1): words in definition of "notice" inserted (31.7.1998) by Finance Act 1998 (c. 36), s. 118(10)

F113 S. 832(1): definitions of "open-ended investment company", "authorised corporate director", "owner of shares" and "scheme property" inserted (28.4.1997) by The Open-ended Investment Companies (Tax) Regulations 1997 (S.I. 1997/1154), reg. 14

F114 S. 832(1): definition of "overseas property business" inserted (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 5 para. 45

F115 S. 832(1): definition of “the rate applicable to trusts” inserted (27.7.1993 with effect for the year 1993-94 and subsequent years of assessment) by 1993 c. 34, s. 79, Sch. 6 paras.15, 25(1)

F116 S. 832(1): definition of "the rate of advance corporation tax" repealed (with effect in accordance with Sch. 3 para. 39(9) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 39(5), Sch. 27 Pt. 3(2), Note

F117 S. 832(1): definition of "recognised clearing system" repealed (with effect in accordance with Sch. 7 para. 32 of the repealing Act) by Finance Act 1996 (c. 8), Sch. 7 para. 25, Sch. 41 Pt. 5(2), Note (with Sch. 7 paras. 33-35)

F118 S. 832(1): definition of "Schedule A business" inserted (with effect in accordance with s. 39(4)(5) of the amending Act) by Finance Act 1995 (c. 4), Sch. 6 para. 28

F119 S. 832(1): definition of "starting rate" and "starting rate limit" inserted after the definition of "Schedule A business" (with effect in accordance with s. 22(12) of the amending Act) by Finance Act 1999 (c. 16), s. 22(10)(b)

F120 S. 832(1): definitions of "the Schedule F ordinary rate", "the Schedule F trust rate", and "the Schedule F upper rate" inserted (with effect in accordance with Sch. 4 para. 22(2) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 22(1)

F121 S. 832(1): definition of "surplus of franked investment income" repealed (with effect in accordance with Sch. 3 para. 39(8) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 39(6), Sch. 27 Pt. 3(2), Note

F122 S. 832(4A) inserted (with effect in accordance with Sch. 3 para. 39(8) of the amending Act) by Finance Act 1998 (c. 36), Sch. 3 para. 39(7)

Marginal Citations

M27 1970 s.526(5), 527(1); 1971 s.32(1), (1D), Sch.8 16(3); 1976 Sch.4 11; 1972 s.93(6); 1979(C), Sch.7; 1981 s.34(5); 1987 Sch.15 2(20)

M28 1986 c. 53.

M29 1923 c. 8.

M30 S.I. 1979/1574 (N.I. 13).

M31 1950 c. 3 (N.I.).

M32 Source—1970 s.526(6)

M33 Source—1970 s.526(3), (4)

M34 Source—1970 s.526(5A); 1987 Sch.15 2(21)

833 Interpretation of Income Tax Acts. U.K.

(1) M35 In the Income Tax Acts references to profits or gains shall not include references to chargeable gains.

(2) M36 References in the Income Tax Acts to the retail prices index are references to the general index of retail prices (for all items) published by the [F123 Office for National Statistics]; and if that index is not published for a month which is relevant for the purposes of any provision of those Acts that provision shall be construed as referring to any substituted index or index figures published by [F124 that Office].

(3) M37 For the purposes of any provision of the Income Tax Acts (other than section 550or Schedule 2 F125 ) requiring income of any description to be treated as the highest part of a person’s income, his income shall be calculated without regard to—

(a) any payment [F126 or other benefit] chargeable to tax by virtue of section 148; or

(b) any amount included in his total income by virtue of section 547(1)(a);or

(c) any chargeable sum as defined in paragraph 2of Schedule 2 F125 .

(4) M38 Subject to subsections (5) and (6) below, in the Income Tax Acts “earned income” means, in relation to any individual—

(a) any income arising in respect of —

(i) any remuneration from any office or employment held by the individual, or

(ii) any pension, superannuation or other allowance, deferred pay or compensation for loss of office, given in respect of the past services of the individual or of the [F127 spouse] or parent of the individual in any office or employment, or given to the individual in respect of past services of any deceased person, whether the individual or [F127 spouse] or parent of the individual shall have contributed to such pension, superannuation allowance or deferred pay or not; and

(b) any income from any property which is attached to or forms part of the emoluments of any office or employment held by the individual; and

(c) any income which is charged under ScheduleAF128 ,BF129 or D and is immediately derived by the individual from the carrying on or exercise by him of his trade, profession or vocation, either as an individual or, in the case of a partnership, as a partner personally acting in the partnership.

In cases where the income of a wife is deemed to be income of the husband, any reference in this subsection to the individual includes either the husband or the wife F130 .

(5) M39 Without prejudice to the generality of the provisions of subsection (4) above, in the Income Tax Acts, except so far as is otherwise expressly provided, “earned income” also includes, in relation to any individual—

(a) any income arising in respect of Civil List pensions granted under the M40 Civil List Act 1837 as amended by any subsequent enactment; and

(b) any annuity, pension or annual payment to which section 58(2) or 133 applies; and

(c) any payments chargeable to income tax under Schedule E by virtue of section 150, 151 or 617;

(d) any sum payable by way of annuity to an individual by virtue of a scheme under section 27 of the M41 Agriculture Act 1967 (grants for relinquishing occupation of uncommercial agricultural units), unless the annuity was granted to the individual by reason of his having relinquished occupation before attaining the age of 55; and

(e) income which is earned income by virtue of section 529.

(6) M42 The provisions of this section are without prejudice to any other provision of the Income Tax Acts directing income to be treated as earned income.

Textual Amendments

F123 Words in s. 833(2) substituted (1.4.1996) by The Transfer of Functions (Registration and Statistics) Order 1996 (S.I. 1996/273), Sch. 2 para. 22(a)

F124 Words in s. 833(2) substituted (1.4.1996) by The Transfer of Functions (Registration and Statistics) Order 1996 (S.I. 1996/273), Sch. 2 para. 22(b)

F125 Repealed by 1988(F) s.148and Sch.14 Part IVfor 1988-89and subsequent years.

F126 Words in s. 833(3)(a) inserted (with effect in accordance with s. 58(4) of the amending Act) by Finance Act 1998 (c. 36), Sch. 9 Pt. 2 para. 4

F127 1988(F) s.35and Sch.3 para.21for 1990-91and subsequent years. Previously

“husband”.

F128 Repealed by 1988(F) s.148and Sch.14 Part IVfor 1988-89and subsequent years.

F129 Repealed by 1988(F) s.148and Sch.14 Part Vfrom 6April 1988.

F130 Repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

Marginal Citations

M35 Source—1979(C) s.155(5).

M36 Source—1980 s.24(8)

M37 Source—1970 s.529

M38 Source—1970 s.530(1)

M39 Source—1970 s.530(2), 383; 1981 s.27(10); 1982 s.31(2); 1987 Sch.3 5

M40 1837 c. 2 (1 & 2 Vict.).

M41 1967 c. 22.

M42 Source—1970 s.530(3).

834 Interpretation of the Corporation Tax Acts. U.K.

M43 (1) For the purposes of the Corporation Tax Acts, except in so far as the context otherwise requires—

• “accounting date” means the date to which a company makes up its accounts and “period of account” means the period for which it does so;

• “accounting period” shall be construed in accordance with section 12;

• “allowable loss” does not include, for the purposes of corporation tax in respect of chargeable gains, a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it;

• “branch or agency” means any factorship, agency, receivership, branch or management;

• “charges on income” has the meaning given by section 338;

• “the financial year 1988” means the financial year beginning with April 1988, and similarly with references embodying other dates;

• “group relief” has the meaning given by section 402;

• [F131 “loan relationship” has the same meaning as it has for the purposes of Chapter II of Part IV of the Finance Act 1996;

  “non-trading deficit”, in relation to a company’s loan relationships, shall be construed in accordance with section 82 of the Finance Act 1996.]

(2) Section 6(4) shall also apply for the purposes of the following provisions of this Act, that is to say—

• Chapter II of Part X, except section 395;

• sections 75 and 76;

• section 490;

• sections 768 and 769;

F132 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

(3) For all the purposes of the Corporation Tax Acts dividends shall be treated as paid on the date when they become due and payable, [F133 except in so far as Chapter III of Part XII makes other provision for dividends treated as paid by virtue of that Chapter].

(4) Except as otherwise provided by the Corporation Tax Acts, any apportionment to different periods which falls to be made under those Acts shall be made on a time basis according to the respective lengths of those periods.

Textual Amendments

F131 S. 834(1): definitions of "loan relationship" and "non-trading deficit" inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 49 (with Sch. 15)

F132 Words in s. 834(2) repealed (with effect in accordance with s. 579 of the repealing Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 61, Sch. 4

F133 Words in s. 834(3) substituted (with effect in accordance with Sch. 14 para. 7 of the amending Act) by Finance Act 1994 (c. 9), Sch. 14 para. 6

Modifications etc. (not altering text)

C15 S. 834(1): definition of "allowable loss" excluded (with effect in accordance with s. 63(4) of the excluding Act) by Finance Act 2000 (c. 17), Sch. 15 para. 94(4)

C16 See S.I. 1973 No.317 (double taxation relief) (in Part III Vol.5) regn.1(4)—application of subs. (3).

Marginal Citations

M43 Source—1970 s.527.

Valid from 01/04/2009

[F134 834A Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D) U.K.

(1) In the Corporation Tax Acts references to any provision to which this section applies are references to any provision listed in the following table, so far as the provision relates to corporation tax (but subject to any applicable limitation in subsection (3)).

(2) This is the table—

PART 1

Provisions of this Act	Description
Section 56(2)	Transactions in deposits
Section 214(1)(ab)	Chargeable payments connected with exempt distributions
Section 436A(1)	Gross roll-up business: separate charge on profits
Section 442A(1)	Taxation of investment return where risk reinsured
Section 571(1)	Cancellation of tax certificates
Section 730(6)	Transfers of income arising from securities
Section 761(1)(b)(ii)	Offshore income gains
Section 774(1)	Transactions between dealing company and associated company
Section 776(3A)	Transactions in land
Section 780(3A)(b)	Sale and leaseback: taxation of consideration received
Section 781(1)	Assets leased to traders and others
Section 786(5)(b)	Transactions associated with loans or credit

PART 2

Provisions of CTA 2009	Description
Chapter 15 of Part 3	Post-cessation receipts: trades
Chapter 7 of Part 4	Rent receivable in connection with a UK section 39(4) concern
Chapter 8 of Part 4	Rent receivable for UK electric-line wayleaves
Chapter 9 of Part 4	Post-cessation receipts: UK property businesses
Section 752	Non-trading gains on intangible fixed assets
Section 908	Profits from disposals of know-how
Section 912	Profits from sales of patent rights
Section 965(4)	Adjustments after the administration period
Chapter 8 of Part 10	Income not otherwise charged
Section 986(4), so far as it relates to an amount treated as received under section 998(3)	Withdrawal of deductions if approval for share incentive plan withdrawn: non-trading cases
Section 1083(5)	Refunds of expenditure on research and development
Section 1229	Management expenses: claw back of relief
Section 1252	Industrial development grants: companies with investment business
Section 1253	Contributions to local enterprise organisations or urban regeneration companies: disqualifying benefits
Section 1254	Repayments under the Financial Services and Markets Act 2000
Section 1277(4)	Withdrawal of relief for unremittable foreign income after source ceases

PART 3

Other provisions	Description
Section 85(1) of the Finance Act 1989	Certain receipts of basic life assurance and general annuity business
Section 85A(1) of the Finance Act 1989	Excess adjusted life assurance trade profits
Paragraph 3(1) of Schedule 12 to the Finance (No 2) Act 1992	Banks etc in compulsory liquidation
Section 256(2) of the Capital Allowances Act	Life assurance business: capital allowances
Section 131(4) of the Finance Act 2004	Companies in partnership
Section 27(2) of the Finance (No 2) Act 2005	Avoidance involving tax arbitrage: qualifying payments
Section 112(1) of the Finance Act 2006	Real estate investment trusts: entry charge

(3) The reference in Part 2 of the above table to Chapter 8 of Part 10 of CTA 2009 does not include that Chapter so far as relating to income which arises from a source outside the United Kingdom.]

Textual Amendments

F134 S. 834A inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 274 (with Sch. 2 Pts. 1, 2)

Valid from 01/04/2009

[F135 834B Meaning of “UK property business” and “overseas property business” U.K.

In the enactments relating to corporation tax “UK property business” and “overseas property business” have the meaning given by Chapter 2 of Part 4 of CTA 2009.]

Textual Amendments

F135 S. 834B inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 275 (with Sch. 2 Pts. 1, 2)

Valid from 01/04/2009

[F136 834C Total profits U.K.

(1) In the Corporation Tax Acts references to total profits, in relation to an accounting period of a company, are to the amount arrived at by adding together—

(a) the amounts chargeable for the period under the charge to corporation tax on income, and

(b) any amount to be included for the period in respect of chargeable gains (see section 8 of the 1992 Act).

(2) Subsection (1) is subject to the provisions of the Corporation Tax Acts.]

Textual Amendments

F136 S. 834C inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 276 (with Sch. 2 Pts. 1, 2)

835 “Total income” in the Income Tax Acts. U.K.

M44 (1) In the Income Tax Acts “total income”, in relation to any person, means the total income of that person from all sources estimated in accordance with the provisions of the Income Tax Acts.

(2) Any person who, on his own behalf or on behalf of another person, delivers a statement of the amount of his or that other person’s total income shall observe the rules and directions contained in section 836.

(3) M45 Where deductions reduce a person’s total income and the order in which they are made or in which income of different descriptions is reduced thereby may affect his liability to income tax the deductions shall be made and treated as reducing income in accordance with subsections (4) and (5) below.

(4) Subject to any express provisions of the Income Tax Acts, any deductions allowable in computing a person’s total income or to be made from a person’s total income shall be treated as reducing income of different descriptions in the order which will result in the greatest reduction of his liability to income tax.

(5) Deductions from total income under Chapter I of Part VII shall be made after any other deductions and shall not affect the amount to be taken as a person’s total income for the purposes of section 257(5) [F137 , 257A(5)] or 274nor the amount determining whether a person is entitled to relief under section 263or by how much relief under that section is reducedF138 .

(6) M46 In estimating the total income of any person—

(a) any income which is chargeable with income tax by way of deduction at the basic rate [F139 or the lower rate] in force for any year or which for the purposes of Schedule F comprises an [F140 amount which is equal to a tax credit calculated by reference to the tax credit fraction] shall be deemed to be income of that year; and

(b) any deductions which are allowable on account of sums payable under deduction of income tax at the basic rate in force for any year out of the property or profits of that person shall be allowed as deductions in respect of that year;

notwithstanding that the income or sums, as the case may be, accrued or will accrue in whole or in part before or after that year.

(7) Where an assessment has become final and conclusive for the purposes of income tax for any year of assessment—

(a) that assessment shall also be final and conclusive in estimating total income; and

(b) no allowance or adjustment of liability, on the ground of diminution of income or loss, shall be taken into account in estimating total income unless that allowance or adjustment has previously been made on an application under the special provisions of the Income Tax Acts relating thereto.

(8) Subsection (7) above shall apply in relation to—

(a) any relief under section 353;

(b) any relief by reason of the operation of an election for the herd basis under Schedule 5; and

[F141 (c) any allowance given effect under section 258 or 479 of the Capital Allowances Act;]

as it applies in relation to allowances or adjustments on the ground of diminution of income or loss.

Textual Amendments

F137 1988(F) s.35 Sch.3 para.22for 1990-91and subsequent years.

F138 Repealed by 1988(F) s.148and Sch.14 Part IVfor 1988-89and subsequent years.

F139 Words in s. 835(6)(a) inserted (with effect in accordance with s. Sch. 6 para. 28 of the amending Act) by Finance Act 1996 (c. 8), Sch. 6 para. 24

F140 Words in s. 835(6)(a) substituted (with effect in accordance with Sch. 3 para. 40(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 3 para. 40(2)

F141 S. 835(8)(c) substituted (with effect in accordance with s. 579 of the amending Act) by Capital Allowances Act 2001 (c. 2), Sch. 2 para. 62

Marginal Citations

M44 Source—1970 s.528(1), (2); 1971 Sch.6 78; 1972 Sch.24 32.

M45 Source—1971 s.34; 1975 (No.2) s.31(4)

M46 Source—1970 s.528(3)(5); 1972 Sch.11 8, Sch.24 32; 1971 Sch.6 78

836 Returns of total income. U.K.

M47 The following rules and directions shall be observed in delivering returns of total income under section 835(2)—

• First - Declaration of the amount of profits or gains returned, or for which the person in question has been or is liable to be assessed.

• Second - Declaration of the amount of rents, interest, annuities or other annual payments, in respect of which the person in question is liable to allow the tax, with the names of the respective persons by whom such payments are to be made, distinguishing the amount of each payment.

• Third - Declaration of the amount of annuities or other annual payments (not being interest) to be made out of the property or profits or gains assessed on the person in question, distinguishing each source.

• Fourth - Statement of the amount of income derived according to the three preceding declarations.

• Fifth - Statement of any tax which the person in question may be entitled to deduct, retain or charge against any other person.

Marginal Citations

M47 Source—1970 Sch.13

Valid from 24/07/2002

[F142 836A Generally accepted accounting practice U.K.

(1) In the Tax Acts, unless the context otherwise requires, “generally accepted accounting practice”—

(a) means generally accepted accounting practice with respect to accounts of UK companies that are intended to give a true and fair view, and

(b) has the same meaning in relation to—

(i) individuals,

(ii) entities other than companies, and

(iii) companies that are not UK companies,

as it has in relation to UK companies.

(2) In subsection (1) “UK companies” means companies incorporated or formed under the law of a part of the United Kingdom.]

Textual Amendments

F142 S. 836A inserted (with effect in accordance with s. 103(6) of the amending Act) by Finance Act 2002 (c. 23), s. 103(2)

Valid from 06/04/2005

[F143 836B Table of provisions to which this section applies U.K.

(1) In the Tax Acts references to any provision to which this section applies are references to any provision listed in the following table so far as it relates to income tax (but subject to any applicable limitation in subsections (3) to (5)).

(2) This is the table—

PART 1

Provisions of this Act	Description
Section 214(1)(ab)	Chargeable payments connected with exempt distributions
Section 571(1)	Cancellation of certificates: schemes for rationalising industry
Section 591C(1)	Cessation of approval (retirement benefits scheme)
Section 598(1)	Repayment of employee's contribution
Section 599(1) or (1B)	Commutation of entire pension in special circumstances
Section 599A(2)	Payment out of surplus funds
Section 601(2) (as read with section 602(1)(a)) or 601(5)	Payments to employers (retirement benefits scheme)
Section 648B(1)	Return of contributions after pension date (approved personal pension scheme)
Section 650A(1)	Withdrawal of approval from arrangements (approved personal pension scheme)
Section 714(2)	Transfer of securities within accrued income scheme with or without accrued interest
Section 716(3)	Transfer of securities with unrealised interest where settlement day follows last interest period
Section 723(4)	Proceeds of transfer of foreign securities within the accrued income scheme ceasing to be unremittable
Section 730(4)	Transfers of income arising from securities
Section 740(2)(a) or (b)	Transfer of assets abroad (liability of non-transferors)
Section 743(1)	Transfer of assets abroad (liability of transferors)
Section 761(1)(b)(i)	Offshore income gains
Section 774(1)	Transactions between dealing company and associated company
Section 775(2A)	Sale by individual of income derived from his personal activities
Section 776(3A)(a)	Transactions in land
Section 780(3A)(a)	Sale and lease-back (taxation of consideration received)
Section 781(1)	Assets leased to traders and others
Section 786(5)(a)	Transactions associated with loans or credit
Section 804(5B)(a)	Double taxation relief

PART 2

Provisions of ITTOIA 2005	Description
Chapter 18 of Part 2	Post-cessation receipts: trades, professions and vocations
Chapter 8 of Part 3	Rent receivable in connection with a UK section 12(4) concern
Chapter 9 of Part 3	Rent receivable for UK electric-line wayleaves
Chapter 10 of Part 3	Post-cessation receipts: UK property businesses
Chapter 2 of Part 4	Interest
Chapter 9 of Part 4	Gains from contracts for life insurance etc.
Chapter 11 of Part 4	Transactions in deposits
Chapter 12 of Part 4	Disposals of futures and options involving guaranteed returns
Section 579	Royalties and other income from intellectual property
Section 583	Income from disposals of know-how
Section 587	Income from sales of patent rights
Chapter 3 of Part 5	Films and sound recordings: non-trade businesses
Chapter 4 of Part 5	Certain telecommunication rights: non-trading income
Chapter 5 of Part 5	Settlements: amounts treated as income of settlor
Section 682(3)	Adjustments after the administration period
Chapter 8 of Part 5	Income not otherwise charged
Section 844(4)	Withdrawal of relief for unremittable foreign income after source ceases

PART 3

Other provisions	Description
Paragraph 8(2)(b)(i) of Schedule 3 to the Finance Act 1971	Occupational pension schemes (refunds of contributions and commutation payments)
Section 68(2) of the Finance Act 1989	Employee share ownership trust (chargeable event)
Section 71(4) of the Finance Act 1989	Employee share ownership trust (borrowing)
Paragraph 11(3) of Schedule 20 to the Finance Act 1994	Self-assessment transitional
Section 258(4) of the Capital Allowances Act	Special leasing
Section 479(4) of the Capital Allowances Act	Persons having qualifying non-trade expenditure
Section 394(2) of ITEPA 2003	Charge on administrator of non-approved pension scheme
Section 476(5) of ITEPA 2003	Charge on occurrence of chargeable event
Section 583 of ITEPA 2003	certain pension income (approved retirement benefits schemes: unauthorised payments)
Section 623 of ITEPA 2003	certain pension income (return of surplus employee AVCs)
Section 119(4) of the Finance Act 2004	Individuals benefited by film relief
Section 127(2) of the Finance Act 2004	Losses derived from exploiting licence: individuals in partnership

(3) For the purposes of this section the reference to section 743 of this Act does not include that section so far as relating to income falling within subsection (1A) of that section.

(4) For the purposes of this section—

(a) any reference to any provision of ITTOIA 2005 does not include that provision so far as relating to relevant foreign income,

(b) the reference to Chapter 2 of Part 4 of ITTOIA 2005 is a reference to that Chapter only so far as relating to interest falling within section 582(2)(b)(ii) of this Act (funding bonds issued in respect of interest on certain debts),

(c) the reference to Chapter 9 of Part 4 of ITTOIA 2005 is a reference to that Chapter only so far as relating to gains—

(i) which are from a policy or contract specified in section 531(3) of that Act, and

(ii) which do not fall within section 532 or 534 of that Act,

(d) the reference to section 579 of ITTOIA 2005 does not include that section so far as relating to any annual payment,

(e) the reference to Chapter 4 of Part 5 of ITTOIA 2005 does not include that Chapter so far as relating to any annual payment, and

(f) the reference to Chapter 5 of Part 5 of ITTOIA 2005 does not include that Chapter so far as relating to income which falls within section 619(3) of that Act.

(5) For the purposes of this section the reference to section 583 of ITEPA 2003 is a reference to that section only where the paying scheme (see subsection (3) of that section) is a pilots' benefit fund (see section 587 of that Act).]

Textual Amendments

F143 S. 836B inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 340 (with Sch. 2)

837 “Annual value” of land. U.K.

M48 (1) For the purposes of, and subject to, the provisions of the Tax Acts which apply this section, the annual value of land shall be taken to be the rent which might reasonably be expected to be obtained on a letting from year to year if the tenant undertook to pay all usual tenant’s rates and taxes, and if the landlord undertook to bear the costs of the repairs and insurance, and the other expenses, if any, necessary for maintaining the subject of the valuation in a state to command that rent.

(2) Section 23 of the M49 General Rate Act 1967 (adjustment of gross value by reference to provision of or payment for services etc.) shall apply for the purposes of subsection (1) above, and in relation to land in Scotland or Northern Ireland shall apply as if it extended to the whole of the United Kingdom.

(3) Where any question arises as to the annual value of land it shall be determined by the General Commissioners and those Commissioners shall hear and determine the question in like manner as an appeal.

Modifications etc. (not altering text)

C17 See—s.26—and managed as one estate.s.145—living accommodation provided for employee.s.156—valuation of benefits in kind.

C18 Reproduced in Part II Vol.5.

Marginal Citations

M48 Source—1970 s.531

M49 1967 c. 9.

[F144 837A Meaning of “research and development”. U.K.

(1) The following provisions have effect for the purposes of, and subject to, the provisions of the Tax Acts which apply this section.

(2) “Research and development” means activities that fall to be treated as research and development in accordance with normal accounting practice.

This is subject to regulations under subsection (3) below.

(3) The Treasury may by regulations provide—

(a) that such activities as may be prescribed are not “research and development” for the purposes of this section, and

(b) that such other activities as may be prescribed are “research and development” for those purposes.

(4) Regulations under subsection (3) above may—

(a) make provision by reference to guidelines issued (whether before or after the coming into force of this section) by the Secretary of State, and

(b) make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.

(5) In subsection (2) above “normal accounting practice” means normal accounting practice in relation to the accounts of companies incorporated in a part of the United Kingdom.

(6) Unless otherwise expressly provided, “research and development" does not include oil and gas exploration and appraisal.]

Textual Amendments

F144 S. 837A inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 19 para. 1

[F145 837B Meaning of “oil and gas exploration and appraisal”. U.K.

(1) References in the Tax Acts to “oil and gas exploration and appraisal” are to activities carried out for the purpose of—

(a) searching for petroleum anywhere in an area, or

(b) ascertaining—

(i) the extent or characteristics of any petroleum-bearing area, or

(ii) what the reserves of petroleum of any such area are,

so that it may be determined whether the petroleum is suitable for commercial exploitation.

(2) For this purpose “petroleum” has the meaning given in section 1 of the M50 Petroleum Act 1998.]

Textual Amendments

F145 S. 837B inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 19 para. 2

Marginal Citations

M50 1998 c. 17.

Valid from 22/07/2004

[F146 837C Meaning of “offshore installation” U.K.

(1) For the purposes of the Tax Acts, unless the context otherwise requires, “offshore installation” means a structure which is, is to be, or has been, put to a use specified in subsection (2) while—

(a) standing in any waters,

(b) stationed (by whatever means) in any waters, or

(c) standing on the foreshore or other land intermittently covered with water.

(2) The uses are—

(a) use for the purposes of exploiting mineral resources by means of a well;

(b) use for the purposes of exploration with a view to exploiting mineral resources by means of a well;

(c) use for the storage of gas in or under the shore or the bed of any waters;

(d) use for the recovery of gas so stored;

(e) use for the conveyance of things by means of a pipe;

(f) use mainly for the provision of accommodation for persons who work on or from a structure which is, is to be, or has been, put to a use specified in any of paragraphs (a) to (e) while—

(i) standing in any waters,

(ii) stationed (by whatever means) in any waters, or

(iii) standing on the foreshore or other land intermittently covered with water.

(3) But a structure is not an offshore installation if—

(a) it has ceased permanently to be put to a use specified in subsection (2),

(b) it is not, and is not to be, put to any other use specified in subsection (2), and

(c) since ceasing permanently to be put to a use specified in subsection (2) it has been put to a use which is not so specified.

(4) In this section “structure” includes a ship or other vessel.

(5) The Treasury may make provision by regulations as to the meaning of “offshore installation” for the purposes of the Tax Acts.

(6) The regulations may—

(a) add to, amend or repeal subsections (1) to (4) or any provision of those subsections;

(b) make different provision for different purposes;

(c) include incidental, consequential, supplemental, saving or transitional provisions.]

Textual Amendments

F146 S. 837C inserted (with effect in accordance with Sch. 27 para. 3 of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 1

838 Subsidiaries. U.K.

M51 (1) For the purposes of the Tax Acts a body corporate shall be deemed to be—

(a) a “51 per cent. subsidiary” of another body corporate if and so long as more than 50 per cent. of its ordinary share capital is owned directly or indirectly by that other body corporate;

(b) a “75 per cent. subsidiary” of another body corporate if and so long as not less than 75 per cent. of its ordinary share capital is owned directly or indirectly by that other body corporate;

(c) a “90 per cent. subsidiary” of another body corporate if and so long as not less than 90 per cent. of its ordinary share capital is owned directly by that other body corporate.

(2) In subsection (1)(a) and (b) above “owned directly or indirectly” by a body corporate means owned, whether directly or through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate.

(3) In this section references to ownership shall be construed as references to beneficial ownership.

(4) For the purposes of this section the amount of ordinary share capital of one body corporate owned by a second body corporate through another body corporate or other bodies corporate, or partly directly and partly through another body corporate or other bodies corporate, shall be determined in accordance with the following provisions of this section.

(5) Where, in the case of a number of bodies corporate, the first directly owns ordinary share capital of the second and the second directly owns ordinary share capital of the third, then for the purposes of this section, the first shall be deemed to own ordinary share capital of the third through the second, and, if the third directly owns ordinary share capital of a fourth, the first shall be deemed to own ordinary share capital of the fourth through the second and third, and the second shall be deemed to own ordinary share capital of the fourth through the third and so on.

(6) In this section—

(a) any number of bodies corporate of which the first directly owns ordinary share capital of the next and the next directly owns ordinary share capital of the next but one, and so on, and, if they are more than three, any three or more of them, are referred to as “a series”;

(b) in any series—

(i) that body corporate which owns ordinary share capital of another through the remainder is referred to as the “first owner”;

(ii) that other body corporate the ordinary share capital of which is so owned is referred to as “the last owned body corporate”;

(iii) the remainder, if one only, is referred to as “an intermediary” and, if more than one, are referred to as “a chain of intermediaries”;

(c) a body corporate in a series which directly owns ordinary share capital of another body corporate in the series is referred to as “an owner”; and

(d) any two bodies corporate in a series of which one owns ordinary share capital of the other directly, and not through one or more of the other bodies corporate in the series, are referred to as being directly related to one another.

(7) Where every owner in a series owns the whole of the ordinary share capital of the body corporate to which it is directly related, the first owner shall be deemed to own through the intermediary or chain of intermediaries the whole of the ordinary share capital of the last owned body corporate.

(8) Where one of the owners in a series owns a fraction of the ordinary share capital of the body corporate to which it is directly related, and every other owner in the series owns the whole of the ordinary share capital of the body corporate to which it is directly related, the first owner shall be deemed to own that fraction of the ordinary share capital of the last owned body corporate through the intermediary or chain of intermediaries.

(9) Where—

(a) each of two or more of the owners in a series owns a fraction, and every other owner in the series owns the whole, of the ordinary share capital of the body corporate to which it is directly related; or

(b) every owner in a series owns a fraction of the ordinary share capital of the body corporate to which it is directly related;

the first owner shall be deemed to own through the intermediary or chain of intermediaries such fraction of the ordinary share capital of the last owned body corporate as results from the multiplication of those fractions.

(10) Where the first owner in any series owns a fraction of the ordinary share capital of the last owned body corporate in that series through the intermediary or chain of intermediaries in that series, and also owns another fraction or other fractions of the ordinary share capital of the last owned body corporate, either—

(a) directly, or

(b) through an intermediary or intermediaries which is not a member or are not members of that series, or

(c) through a chain or chains of intermediaries of which one or some or all are not members of that series, or

(d) in a case where the series consists of more than three bodies corporate, through an intermediary or intermediaries which is a member or are members of the series, or through a chain or chains of intermediaries consisting of some but not all of the bodies corporate of which the chain of intermediaries in the series consists;

then, for the purpose of ascertaining the amount of the ordinary share capital of the last owned body corporate owned by the first owner, all those fractions shall be aggregated and the first owner shall be deemed to own the sum of those fractions.

Modifications etc. (not altering text)

C19 S. 838 applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 184(1)(a), 289 (with ss. 60(1), 101(1), 171, 201(3))

S. 838 applied (27.7.1993) by 1993 c. 34, s. 189(6)

C20 S. 838 modified (24.7.2002) by Finance Act 2002 (c. 23), Sch. 29 para. 50(7)

C21 Definition in s. 838 modified (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 170(2)(c), 289 (with ss. 60(1), 101(1), 171, 201(3))

C22 S. 838(2)-(10) applied (30.3.1995) by The Electricity (Class Exemptions from the Requirement for a Licence) (No. 2) Order 1995 (S.I. 1995/909), art. 2(2)(c)

S. 838(2)-(10) applied (1.10.2001) by The Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 (S.I. 2001/3270), art. 2(2)(c)

S. 838(2)-(10) applied (with effect in accordance with Sch. 29 Pt. 14 of the affecting Act) by Finance Act 2002 (c. 23), Sch. 29 para. 50(7)

C23 S. 838(4)-(10) applied (27.7.1993) by 1993 c. 37, s. 12, Sch. 2, Pt. I para. 31(11)

Marginal Citations

M51 Source—1970 s.532.

839 Connected persons. U.K.

M52 (1) For the purposes of, and subject to, the provisions of the Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).

(2) A person is connected with an individual if that person is the individual’s wife or husband, or is a relative, or the wife or husband of a relative, of the individual or of the individual’s wife or husband.

[F147 (3) A person, in his capacity as trustee of a settlement, is connected with—

(a) any individual who in relation to the settlement is a settlor,

(b) any person who is connected with such an individual, and

(c) any body corporate which is connected with that settlement.

• In this subsection “settlement” and “settlor” have the same meaning as in Chapter IA of Part XV (see section 660G(1) and (2)).

(3A) For the purpose of subsection (3) above a body corporate is connected with a settlement if—

(a) it is a close company (or only not a close company because it is not resident in the United Kingdom) and the participators include the trustees of the settlement; or

(b) it is controlled (within the meaning of section 840) by a company falling within paragraph (a) above.]

(4) Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the wife or husband or relative of any individual with whom he is in partnership.

(5) A company is connected with another company—

(a) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other; or

(b) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

(6) A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.

(7) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

(8) In this section—

• “company” includes any body corporate [F148 (including an open-ended investment company)] or unincorporated association, but does not include a partnership, and this section shall apply in relation to any unit trust scheme as if the scheme were a company and as if the rights of the unit holders were shares in the company;

• “control” shall be construed in accordance with section 416; and

• “relative” means brother, sister, ancestor or lineal descendant.

In relation to any period during which section 470(2) has effect the reference above to a unit trust scheme shall be construed as a reference to a unit trust scheme within the meaning of the M53 Prevention of Fraud (Investments) Act 1958 or the M54 Prevention of Fraud (Investments) Act (Northern Ireland) 1940.

Textual Amendments

F147 S. 839(3)(3A) substituted for s. 839(3) (with effect in accordance with s. 74(2) of the amending Act) by Finance Act 1995 (c. 4), Sch. 17 para. 20

F148 Words in s. 839(8) inserted (28.4.1997) by The Open-ended Investment Companies (Tax) Regulations 1997 (S.I. 1997/1154), reg. 15

Modifications etc. (not altering text)

C24 S. 839 applied by Finance Act 1991 (c. 31, SIF 63:1), ss. 104(3), 112(7)(b)

S. 839 applied by 1983 c. 55, Sch. 4A para. 1(5) (as inserted (1.12.1992 for specified purposes and 1.1.1993 otherwise) by Finance No. 2 Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. I para. 62; S.I. 1992/2979, art. 4, Sch. Pt. II; S.I. 1992/3261, art. 3,Sch.)

S. 839 applied (27.7.1993) by 1993 c. 34, s. 193(6)

C25 S. 839 applied (with effect in accordance with s. 127(19) of the affecting Act) by Finance Act 1995 (c. 4), s. 127(17)

C26 S. 839 applied (29.4.1996) by Finance Act 1996 (c. 8), Sch. 9 para. 15(7)

S. 839 applied (with effect in accordance with s. 105(1), Sch. 13 para. 8(1) of the affecting Act) by Finance Act 1996 (c. 8), Sch. 13 para. 8(3) (with Sch. 13 para. 6)

C27 S. 839 applied by Finance Act 1986 (c. 8), s. 80B(1) (as inserted by Finance Act 1997 (c. 16), s. 97(1)(4)(6); S.I. 1997/ 2428, art. 2)

S. 839 applied by Finance Act 1986 (c. 8), s. 88B(1) (as inserted by Finance Act 1997 (c. 16), s. 102(1)(4)(6); S.I. 1997/ 2428, art. 2)

C28 S. 839 applied by Finance Act 1994 (c. 9), Sch. 6A para. 1(2) (as inserted by Finance Act 1997 (c. 16), ss. 22(3), 24, Sch. 4)

C29 S. 839 applied by Value Added Tax Act 1994 (c. 23), Sch. 9 Group 2 Note (6) (as substituted by Finance Act 1997 (c. 16), s. 38)

S. 839 applied by Value Added Tax Act 1994 (c. 23), Sch. 10 para. 3A(14) (as inserted by Finance Act 1997 (c. 16), s. 37(3)-(6))

C30 S. 839 applied (19.3.1997) by Finance Act 1997 (c. 16), Sch. 12 para. 25(2)

C31 S. 839 applied (with effect in accordance with s. 48(11) of the affecting Act) by Finance (No. 2) Act 1997 (c. 58), s. 48(10)

C32 S. 839 applied (31.7.1998) by Finance Act 1998 (c. 36), s. 47(10)

S. 839 applied (31.7.1998) by Finance Act 1998 (c. 36), Sch. 11 para. 3(4)

C33 S. 839 applied (27.7.1999) by Finance Act 1999 (c. 16), s. 97(2)(a)

C34 S. 839 applied (28.3.2000) by Finance Act 2000 (c. 17), s. 119(9)(13)

S. 839 applied (with effect in accordance with s. 62 of the affecting Act) by Finance Act 2000 (c. 17), Sch. 14 para. 71(2)

S. 839 applied (with effect in accordance with s. 63(4) of the affecting Act) by Finance Act 2000 (c. 17), Sch. 15 para. 102(3)

S. 839 applied (with effect in accordance with s. 69(1) of the affecting Act) by Finance Act 2000 (c. 17), Sch. 20 para. 25(2) (with Sch. 20 para. 26)

C35 S. 839 applied (with effect in accordance with s. 579 of the affecting Act) by Capital Allowances Act 2001 (c. 2), s. 575(1) (with s. 575(2))

C36 S. 839 applied (with effect in accordance with s. 70(1) of the affecting Act) by Finance Act 2001 (c. 9), Sch. 22 para. 31(4) (with Sch. 22 para. 32)

C37 S. 839 applied (1.4.2002) by The Aggregates Levy (General) Regulations 2002 (S.I. 2002/761), reg. 12(2)

C38 S. 839 applied (1.6.2002) by The Beer Regulations 1993 (S.I. 1993/1228), Sch. 1 (as amended by The Beer and Excise Warehousing (Amendment) Regulations 2002 (S.I. 2002/1265), reg. 2(5)(b))

C39 S. 839 applied (with effect in accordance with s. 55(7) of the affecting Act) by Finance Act 2002 (c. 23), s. 55(5)

S. 839 applied by Finance Act 1996 (c. 8), Sch. 13 para. 9A(5) (as inserted (with effect in accordance with s. 104(5) of the amending Act) by Finance Act 2002 (c. 23), s. 104(3))

S. 839 applied by Alcoholic Liquor Duties Act 1979 (c. 4), s. 36B(8) (as inserted (1.6.2002) Finance Act 2002 (c. 23), s. 4(1)(2), Sch. 1 para. 2)

S. 839 applied (with effect in accordance with s. 53(1) of the affecting Act) by Finance Act 2002 (c. 23), Sch. 12 para. 19(2) (with Sch. 12 para. 20)

S. 839 applied (with effect in accordance with Sch. 13 para. 28 of the affecting Act) by Finance Act 2002 (c. 23), Sch. 13 para. 27(2)

S. 839 applied (with effect in accordance with Sch. 37 para. 2(5) of the affecting Act) by Finance Act 2002 (c. 23), Sch. 37 para. 2(4)(b)

C40 S. 839 applied by The Social Security (Contributions) Regulations 2001 (S.I. 2001/1004), Sch. 4 para. 4A(3) (as inserted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), reg. 5)

C41 S. 839 applied (23.1.2003 with effect in accordance with s. 57(4)(a) of the affecting Act) by Finance Act 2002 (c. 23), s. 57(3), Sch. 16 para. 51(3); S.I. 2003/88, art. 2

C42 S. 839 applied (6.4.2003 with effect in accordance with s. 723(1) of the affecting Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 718 (with Sch. 7)

C43 S. 839 applied (10.7.2003 with effect in accordance with Sch. 19 of the affecting Act) by Finance Act 2003 (c. 14), ss. 45(6), 53(2), 58(5), 108(1), Sch. 4 paras. 1(2), 10(4), 12(2); S.I. 2003/2899, art. 2

C44 S. 839 applied (10.7.2003) by Finance Act 2003 (c. 14), Sch. 26 para. 7(3)

C45 S. 839 applied by Finance Act 2003 (c. 14), Sch. 6A para. 10 (as inserted (1.12.2003) by The Stamp Duty and Stamp Duty Land Tax (Variation of the Finance Act 2003) (No. 2) Regulations 2003 (S.I. 2003/2816), reg. 1, Sch. para. 3(2) (replacing S.I. 2003/2760, reg. 1, Sch. para. 3(2)); and S.I. 2003/2816 is revoked and replaced by Finance Act 2004 (c. 12), Sch. 39 paras. 14, 17(2), 26

C46 S. 839 applied by The Value Added Tax Regulations 1995 (S.I. 1995/2518), reg. 171(7)(8) (as inserted (11.12.2003) by The Value Added Tax (Amendment) (No. 6) Regulations 2003 (S.I. 2003/3220), regs. 1(1)(b), 23)

C47 S. 839 applied (22.7.2004) by Finance Act 2004 (c. 12), s. 278(4) (with Sch. 36)

C48 S. 839 applied (with modifications) (with effect in accordance with s. 84(2) of the affecting Act) by Finance Act 2004 (c. 12), Sch. 15 para. 2

C49 S. 839 applied by Finance Act 2003 (c. 14), s. 45A(10) (as inserted (with effect in accordance with Sch. 39 para. 13(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 5(5))

C50 S. 839 applied by Finance Act 2003 (c. 14), s. 44(11) (as inserted (with effect in accordance with Sch. 39 para. 26 of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 15(4))

C51 S. 839 applied by Finance Act 2003 (c. 14), Sch. 6A para. 10 (as inserted (with effect in accordance with Sch. 39 para. 26 of the amending Act) by Finance Act 2004 (c. 12), Sch. 39 para. 17(2))

C52 S. 839 applied (with modifications) by Finance Act 2003 (c. 14), Sch. 15 para. 39 (as substituted (with effect in accordance with Sch. 41 para. 3 of the amending Act) by Finance Act 2004 (c. 12), Sch. 41 para. 1)

C53 S. 839 applied (1.8.2004) by The Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004 (S.I. 2004/1863), reg. 1(1)(3)

C54 S. 839 applied (1.8.2004) by The Tax Avoidance Schemes (Promoters and Prescribed Circumstances) Regulations 2004 (S.I. 2004/1865), reg. 1(1)(3)

C55 S. 839 applied (24.3.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), ss. 878(5), 883(3)(b)

C56 S. 839(2)-(8) applied (E.W.S.) (16.1.1992) by S.I. 1992/58, art. 8(9)(b), Sch. 1 para. 3

Marginal Citations

M52 Source—1970 s.533.

M53 1958 c. 45.

M54 1940 c. 9 (N.I.)

840 Meaning of “control” in certain contexts. U.K.

M55 For the purposes of, and subject to, the provisions of the Tax Acts which apply this section, “control”, in relation to a body corporate, means the power of a person to secure—

(a) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate; or

(b) by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person, and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

Modifications etc. (not altering text)

C57 S. 840 applied by Finance Act 1988 (c. 39), s. 87(3)

S. 840 applied by Finance Act 1989 (c. 26), s. 67(3)

S. 840 applied by Capital Allowances Act 1990 (c. 1), s.77(6)

S. 840 applied (1.5.1995) by Finance Act 1995 (c. 4), Sch. 22 para. 17(6)(a)(ii)

S. 840 applied (29.4.1996) by Finance Act 1996 (c. 8), Sch. 9 para. 8(9)

S. 840 applied (1.2.2001) by Trustee Act 2000 (c. 29), ss. 19(3), 42(2); S.I. 2001/49, art. 2

S. 840 applied (29.7.2002) by Trustee Act (Northern Ireland) 2001 (c. 14), ss. 19(3), 45(1); S.R. 2002/253, art. 2

S. 840 applied by Taxation of Chargeable Gains Act 1992 (c. 12), Sch. 5AA para. 4(3) (as inserted (with effect in accordance with Sch. 9 para. 7 of the amending Act) by Finance Act 2002 (c. 23), Sch. 9 para. 3)

C58 S. 840 applied (23.1.2003 with effect in accordance with s. 57(4)(a) of the affecting Act) by Finance Act 2002 (c. 23), s. 57(3), Sch. 16 para. 14(3); S.I. 2003/88, art. 2

C59 S. 840 applied and extended (6.4.2003 with effect in accordance with s. 723(1) of the affecting Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), ss. 69, 719 (with Sch. 7)

C60 S. 840 applied (with effect in accordance with s. 77 of the affecting Act) by Finance Act 2004 (c. 12), s. 65(3)

C61 S. 840 applied (24.3.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), ss. 878(6), 883(3)(b)

Marginal Citations

M55 Source—1970 s.534

Valid from 06/04/2007

[F149 840ZA Meaning of “tax advantage” U.K.

(1) In any provision of the Corporation Tax Acts in relation to which it is provided that “tax advantage” has the meaning given by this section, “tax advantage” means—

(a) a relief from tax or increased relief from tax,

(b) a repayment of tax or increased repayment of tax,

(c) the avoidance or reduction of a charge to tax or an assessment to tax, or

(d) the avoidance of a possible assessment to tax.

(2) For the purposes of subsection (1)(c) and (d) it does not matter whether the avoidance or reduction is effected—

(a) by receipts accruing in such a way that the recipient does not pay or bear tax on them, or

(b) by a deduction in calculating profits or gains.

(3) In this section “relief from tax” includes—

(a) a tax credit under section 231 for the purposes of corporation tax, and

(b) a tax credit under section 397(1) of ITTOIA 2005 for the purposes of income tax.]

Textual Amendments

F149 S. 840ZA 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. 225 (with Sch. 2)

[F150 840A Banks. U.K.

(1) In any provision in relation to which it is provided that “bank” has the meaning given by this section “bank” means—

(a) the Bank of England;

(b) an institution authorised under the M56 Banking Act 1987;

(c) a relevant European institution; or

(d) a relevant international organisation which is designated as a bank for the purposes of that provision by an order made by the Treasury.

(2) For the purposes of subsection (1) above, an institution is a relevant European institution if—

(a) it is a European authorised institution within the meaning of the M57 Banking Co-ordination (Second Council Directive) Regulations 1992; and

(b) the requirements of paragraph 1 of Schedule 2 to those regulations have been complied with in relation to its establishment of a branch.

(3) For the purposes of subsection (1) above, a relevant international organisation is an international organisation of which the United Kingdom is a member.]

Textual Amendments

F150 S. 840A inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 37 para. 1(1)

Marginal Citations

M56 1987 c. 22.

M57 S.I. 1992/3218.

841 Recognised stock exchange and recognised investment exchanges. U.K.

M58 (1) In the Tax Acts “recognised stock exchange” means—

(a) the Stock Exchange; and

(b) any such stock exchange outside the United Kingdom as is for the time being designated for the purposes of this section as a recognised stock exchange by order made by the Board.

(2) An order made by the Board under this section—

(a) may designate a stock exchange by name, or by reference to any class or description of stock exchanges including a class or description framed by reference to any authority or approval given in a country outside the United Kingdom;

(b) may contain such transitional and other supplemental provisions as appear to the Board to be necessary or expedient;

(c) may be varied or revoked by a subsequent order so made.

(3) The Board may by regulations make provision securing that enactments in the Tax Acts containing references to the Stock Exchange have effect, for such purposes and subject to such modifications as may be prescribed by the regulations, in relation to all other recognised investment exchanges (within the meaning of the M59 Financial Services Act 1986), or in relation to such of those exchanges as may be prescribed.

Modifications etc. (not altering text)

C62 Definition applied for purposes of:—1979(C) s.155(1)—capital gains tax.The Occupational Pensions Schemes (Transitional Provisions) Regulations 1988 (S.I.1988 No.1436—in Part III Vol.5).The Personal Equity Plan Regulations 1989 (S.I. 1989 No.469—in Part III Vol.5).The Retirement Benefits Schemes (Tax Relief on Contributions) (Disapplication of Earnings Cap) Regns. 1990 (S.I.1990 No.586—in Part III Vol.5).

Marginal Citations

M58 Source—1970 s.535; 1973 Sch.21 9; 1987 (No.2) s.73

M59 1986 c. 60.

[F151 841A Recognised clearing systems. U.K.

F152 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F151 S. 841A inserted (with effect in accordance with Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), Sch. 7 para. 26 (with Sch. 7 paras. 33-35)

F152 S. 841A repealed (28.7.2000) by Finance Act 2000 (c. 17), Sch. 40 Pt. 2(17)

842 Investment trusts. U.K.

M60 (1) In the Tax Acts “investment trust” means, as respects any accounting period, a company which is not a close company and which is approved for the purposes of this section for that accounting period by the Board, and the Board shall not approve any company unless it is shown to their satisfaction—

[F153 (aa) that the company is resident in the United Kingdom; and]

(a) that the company’s income [F154 consists wholly or mainly of eligible investment income]; and

(b) subject to subsection (2) below, that no holding in a company, other than an investment trust or a company which would qualify as an investment trust but for paragraph (c) below, represents more than 15 per cent. by value of the investing company’s investments; and

[F155 (c) that the shares making up the company’s ordinary share capital (or, if there are such shares of more than one class, those of each class) are [F156 listed in the Official List of] the Stock Exchange; and]

(d) that the distribution as dividend of surpluses arising from the realisation of investments is prohibited by the company’s memorandum or articles of association; and

(e) that the company does not retain in respect of any accounting period more than 15 per cent. of [F157 its eligible investment income].

[F158 (1AA) Income is eligible investment income for the purposes of this section in so far as it is either—

(a) income deriving from shares or securities, or

(b) eligible rental income, within the meaning of section 508A.]

[F159 (1A) For the purposes of paragraph (b) of subsection (1) above and the other provisions of this section having effect in relation to that paragraph—

(a) holdings in companies which are members of a group (whether or not including the investing company) and are not excluded from that paragraph shall be treated as holdings in a single company; and

(b) where the investing company is a member of a group, money owed to it by another member of the group shall be treated as a security of the latter held by the investing company and accordingly as, or as part of, the holding of the investing company in the company owing the money;

and for the purposes of this subsection “group” means a company and all companies which are its 51 per cent. subsidiaries]

(2) Subsection (1)(b) above shall not apply—

(a) to a holding in a company acquired before 6th April 1965 which on that date represented not more than 25 per cent. by value of the investing company’s investments; or

(b) to a holding in a company which, when it was acquired, represented not more than 15 per cent. by value of the investing company’s investments;

so long as no addition is made to the holding.

[F160 (2A) Subsection (1)(e) above shall not apply as regards an accounting period if—

(a) the company is required to retain income in respect of the period by virtue of a restriction imposed by law, and

(b) the amount of income the company is so required to retain in respect of the period exceeds an amount equal to 15 per cent. of the income the company derives from shares and securities.

(2B) Subsection (2A) above shall not apply where—

(a) the amount of income the company retains in respect of the accounting period exceeds the amount of income it is required by virtue of a restriction imposed by law to retain in respect of the period, and

(b) the amount of the excess or, where the company distributes income in respect of the period, that amount together with the amount of income which the company so distributes is at least £10,000 or, where the period is less than 12 months, a proportionately reduced amount.

(2C) Paragraph (e) of subsection (1) above shall not apply as regards an accounting period if the amount which the company would be required to distribute in order to fall within that paragraph is less than £10,000 or, where the period is less than 12 months, a proportionately reduced amount.]

(3) For the purposes of subsection (2) above—

(a) “holding” means the shares or securities (whether of one class or more than one class) held in any one company; and

(b) an addition is made to a holding whenever the investing company acquires shares or securities of that one company, otherwise than by being allotted shares or securities without becoming liable to give any consideration, and if an addition is made to a holding that holding is acquired when the addition or latest addition is made to the holding; and

(c) where in connection with a scheme of reconstruction or amalgamation, a company issues shares or securities to persons holding shares or securities in a second company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings in the second company, without those persons becoming liable to give any consideration, a holding of the shares or securities in the second company and a corresponding holding of the shares or securities so issued shall be regarded as the same holding.

(4) In this section “company” and “shares” shall be construed in accordance with sections [F161 99 and 288 of [F162 the 1992 Act]].

Textual Amendments

F153 1988(F) s.117(1)(a)for accounting periods ending after 5th April 1988.

F154 Words in s. 842(1)(a) substituted (with effect in accordance with Sch. 30 para. 3 of the amending Act) by virtue of Finance Act 1996 (c. 8), Sch. 30 para. 2(2)(a)

F155 1988(F) s.117(1)(b)for accounting periods ending after 5th April 1988.Previously

“that the shares or securities of the company are quoted on the Stock Exchange and”.

F156 Words in s. 842(1)(c) substituted (with effect in accordance with Sch. 38 para. 7(3)(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 7(1)(2)(b)

F157 Words in s. 842(1)(e) substituted (with effect in accordance with Sch. 30 para. 3 of the amending Act) by Finance Act 1996 (c. 8), Sch. 30 para. 2(2)(b)

F158 S. 842(1AA) inserted (with effect in accordance with Sch. 30 para. 3 of the amending Act) by Finance Act 1996 (c. 8), Sch. 30 para. 2(3)

F159 1988(F) s.117(1)(c)for accounting periods ending after 5th April 1988.

F160 1990 s.55in relation to accounting periods ending on or after 26July 1990.

F161 Words in s. 842(4) substituted (with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(55) (with ss. 60, 101(1), 171, 201(3))

F162 Words in s. 842(4) substituted (retrospectively) by Finance Act 1994 (c. 9), Sch. 17 para. 8

Modifications etc. (not altering text)

C63 S. 842(1A)(a) excluded (27.7.1999) by Commonwealth Development Corporation Act 1999 (c. 20), Sch. 2 para. 12(2)

Marginal Citations

M60 Source—1970 s.359; 1973 s.54; 1979(C) Sch.7.

[F163 842AA Venture capital trusts. U.K.

(1) In the Tax Acts “venture capital trust” means a company which is not a close company and which is for the time being approved for the purposes of this section by the Board; and an approval for the purposes of this section shall have effect as from such time as may be specified in the approval, being a time which, if it falls before the time when the approval is given, is no earlier than—

(a) in the case of an approval given in the year 1995-96, 6th April 1995; or

(b) in any other case, the time when the application for approval was made.

(2) Subject to the following provisions of this section, the Board shall not approve a company for the purposes of this section unless it is shown to their satisfaction in relation to the most recent complete accounting period of the company—

(a) that the company’s income in that period has been derived wholly or mainly from shares or securities;

(b) that at least 70 per cent. by value of the company’s investments has been represented throughout that period by shares or securities comprised in qualifying holdings of the company;

(c) that at least 30 per cent. by value of the company’s qualifying holdings has been represented throughout that period by holdings of eligible shares;

(d) that no holding in any company, other than a venture capital trust or a company which would qualify as a venture capital trust but for paragraph (e) below, has at any time during that period represented more than 15 per cent. by value of the company’s investments;

(e) that the shares making up the company’s ordinary share capital (or, if there are such shares of more than one class, those of each class) have throughout that period been [F164 listed in the Official List of] the Stock Exchange; and

(f) that the company has not retained more than 15 per cent. of the income it derived in that period from shares and securities.

(3) Where, in the case of any company, the Board are satisfied that the conditions specified in subsection (2) above are fulfilled in relation to the company’s most recent complete accounting period, they shall not approve the company for the purposes of this section unless they are satisfied that the conditions will also be fulfilled in relation to the accounting period of the company which is current when the application for approval is made.

(4) The Board may approve a company for the purposes of this section notwithstanding that conditions specified in subsection (2) above are not fulfilled with respect to that company in relation to its most recent complete accounting period if they are satisfied—

(a) in the case of any of the conditions specified in paragraphs (a), (d), (e) and (f) of that subsection which are not fulfilled, that the conditions will be fulfilled in relation to the accounting period of the company which is current when the application for approval is made or in relation to its next accounting period;

(b) in the case of any of the conditions specified in paragraphs (b) and (c) of that subsection which are not fulfilled, that the conditions will be fulfilled in relation to an accounting period of the company beginning no more than three years after the time when they give their approval or, if earlier, when the approval takes effect; and

(c) in the case of every condition which is not fulfilled but with respect to which the Board are satisfied as mentioned in paragraph (a) or (b) above, that the condition will continue to be fulfilled in relation to accounting periods following the period in relation to which they are satisfied as so mentioned.

(5) For the purposes of subsection (2)(b) to (d) above the value of any holding of investments of any description shall be taken—

(a) unless—

(i) it is added to by a further holding of investments of the same description, or

(ii) any such payment is made in discharge, in whole or in part, of any obligation attached to the holding as (by discharging the whole or any part of that obligation) increases the value of the holding,

to be its value when acquired, and

(b) where it is so added to or such a payment is made, to be its value immediately after the most recent addition or payment.

[F165 (5AA) For the purposes of subsection (2)(b) to (d) above where—

(a) any shares (“new shares”) are exchanged for other shares (“old shares”) under arrangements in relation to which paragraph 10C of Schedule 28B applies, and

(b) those arrangements have not ceased by virtue of sub-paragraph (13) of that paragraph to be arrangements by reference to which requirements of that Schedule are deemed to be satisfied,

the value of the new shares, both at the time of their acquisition and immediately after any subsequent addition to a holding of the new shares that is made under those arrangements, shall be taken to be the same as the value, when last valued in accordance with subsection (5) above, of the old shares for which they are exchanged.

(5AB) References in subsection (5AA) above to shares in a company include references to any securities of that company.

(5AC) For the purposes of subsection (2)(b) to (d) above, where—

(a) shares (“new shares”) are issued to a company by virtue of the exercise by that company of any right of conversion attached to other shares, or securities, held by that company (“convertibles”), and

(b) paragraph 10D of Schedule 28B applies in relation to the issue of the new shares,

the value of the new shares at the time of their acquisition shall be taken to be the same as the value, when last valued in accordance with subsection (5) above, of the convertibles for which they are exchanged.]

[F166 (5AD) Regulations under paragraph 11B of Schedule 28B may make provision for the purposes of subsection (2)(b) to (d) above for securing that where—

(a) there is an exchange of shares to which regulations under that paragraph apply, and

(b) the new shares are treated by virtue of the regulations as meeting the requirements of that Schedule,

the value of the holding of new shares, and of any original shares that are retained under the exchange, shall be taken to be an amount such that the requirements of subsection (2)(b) to (d) above do not cease to be met by reason of the exchange.

(5AE) In subsection (5AD) above—

(a) “shares” includes securities; and

(b) “exchange of shares”, “new shares” and “original shares” have the same meaning as in paragraph 11B of Schedule 28B.]

[F167 (5A) Subsection (5B) below applies where—

(a) there has been an issue of ordinary share capital of a company (“the first issue”),

(b) an approval of that company for the purposes of this section has taken effect on or before the day of the making of the first issue, and

(c) a further issue of ordinary share capital of that company has been made since the making of the first issue.

(5B) Where this subsection applies, the use to which the money raised by the further issue is put, and the use of any money deriving from that use, shall be disregarded in determining whether any of the conditions specified in subsection (2)(b) and (c) above are, have been or will be fulfilled in relation to—

(a) the accounting period in which the further issue is made; or

(b) any later accounting period ending no more than three years after the making of the further issue.]

(6) The Board may withdraw their approval of a company for the purposes of this section wherever it at any time appears to them that there are reasonable grounds for believing—

(a) that the conditions for the approval of the company were not fulfilled at the time of the approval;

(b) in a case where the Board were satisfied for the purposes of subsection (3) or (4) above that a condition would be fulfilled in relation to any period, that that condition is one which will not be or, as the case may be, has not been fulfilled in relation to that period;

(c) in the case of a company approved in pursuance of subsection (4) above, that the company has not fulfilled such other conditions as may be prescribed by regulations made by the Board in relation to, or to any part of, the period of three years mentioned in subsection (4)(b) above;

[F168 (ca) in a case where the use of any money falls to be disregarded for any accounting period in accordance with subsection (5B) above—

(i) that the first accounting period of the company for which the use of that money will not be disregarded will be a period in relation to which a condition specified in subsection (2) above will fail to be fulfilled; or

(ii) that the company has not fulfilled such other conditions as may be prescribed by regulations made by the Board in relation to, or to any part of, an accounting period for which the use of that money falls to be disregarded;] or

(d) that the company’s most recent complete accounting period or its current one is a period in relation to which there has been or will be a failure of a condition specified in subsection (2) above to be fulfilled, not being a failure which, at the time of the approval, was allowed for in relation to that period by virtue of subsection (4) above.

(7) Subject to subsections (8) and (9) below, the withdrawal of the approval of any company for the purposes of this section shall have effect as from the time when the notice of the withdrawal is given to the company.

(8) If, in the case of a company approved for the purposes of this section in exercise of the power conferred by subsection (4) above, the approval is withdrawn at a time before all the conditions specified in subsection (2) above have been fulfilled with respect to that company in relation either—

(a) to a complete accounting period of twelve months, or

(b) to successive complete accounting periods constituting a continuous period of twelve months or more,

the withdrawal of the approval shall have the effect that the approval shall, for all purposes, be deemed never to have been given.

(9) A notice withdrawing the approval of a company for the purposes of this section may specify a time falling before the time mentioned in subsection (7) above as the time as from which the withdrawal is to be treated as having taken effect for the purposes of section 100 of the 1992 Act; but the time so specified shall be no earlier than the beginning of the accounting period in relation to which it appears to the Board that the condition by reference to which the approval is withdrawn has not been, or will not be, fulfilled.

(10) Notwithstanding any limitation on the time for making assessments, an assessment to any tax chargeable in consequence of the withdrawal of any approval given for the purposes of this section may be made at any time before the end of the period of three years beginning with the time when the notice of withdrawal is given.

(11) The following provisions of section 842 shall apply as follows for the purposes of this section as they apply for the purposes of that section, that is to say—

(a) subsections (1A) and (2) of that section shall apply in relation to subsection (2)(d) above (but with the omission of subsection (2)(a) of that section) as they apply in relation to subsection (1)(b) of that section;

(b) subsections (2A) to (2C) of that section shall apply in relation to subsection (2)(f) above as they apply in relation to subsection (1)(e) of that section; and

(c) without prejudice to their application in relation to provisions applied by paragraph (a) or (b) above, subsections (3) and (4) of that section shall apply in relation to any reference in this section to a holding or an addition to a holding as they apply in relation to any such reference in that section.

(12) In this section, and in the provisions of section 842 as applied for the purposes of this section, “securities”, in relation to any company—

(a) includes any liability of the company in respect of a loan (whether secured or not) which has been made to the company on terms that do not allow any person to require the loan to be repaid, or any stock or security relating to that loan to be re-purchased or redeemed, within the period of five years from the making of the loan or, as the case may be, the issue of the stock or security; but

(b) does not include any stock or security relating to a loan which has been made to the company on terms which allow any person to require the loan to be repaid, or the stock or security to be re-purchased or redeemed, within that period.

(13) Schedule 28B shall have effect for construing the references in this section to a qualifying holding.

(14) In this section “eligible shares” means shares in a company which are comprised in the ordinary share capital of the company and carry no present or future preferential right to dividends or to the company’s assets on its winding up and no present or future F169 . . . right to be redeemed.]

Textual Amendments

F163 S. 842AA inserted (1.5.1995) by Finance Act 1995 (c. 4), s. 70(1)

F164 Words in s. 842AA(2)(e) substituted (with effect in accordance with Sch. 38 para. 7(3)(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 7(1)(2)(c)

F165 S. 842AA(5AA)-(5AC) inserted (16.6.1999 with effect in accordance with s. 69(5)(a) of the amending Act) by Finance Act 1999 (c. 16), s. 69(4)(5)

F166 S. 842AA(5AD)(5AE) inserted (with effect in accordance with Sch. 18 para. 8(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 18 para. 8(2)

F167 S. 842AA(5A)(5B) inserted (retrospectively) by Finance Act 1997 (c. 16), s. 75(1)

F168 S. 842AA(6)(ca) inserted (retrospectively) by Finance Act 1997 (c. 16), s. 75(2)

F169 Word in s. 842AA(14) repealed (with effect in accordance with s. 73(6) of the repealing Act) by Finance Act 1998 (c. 36), s. 73(1)(a), Sch. 27 Pt. 3(13), Note 1

[F170 842A Local authorities. U.K.

(1) Except so far as the context otherwise requires, in the Tax Acts “local authority” means—

(a) in relation to England and Wales, an authority of a description specified for the purposes of this paragraph [F171 or the Service Authority for the National Criminal Intelligence Service or the Service Authority for the National Crime Squad].

(b) in relation to Scotland, an authority of a description specified for the purposes of this paragraph [F172 or the Service Authority for the National Criminal Intelligence Service], and

(c) in relation to Northern Ireland, an authority of a description specified for the purposes of this paragraph [F173 or the Service Authority for the National Criminal Intelligence Service].

(2) The following are the descriptions of authority specified for the purposes of paragraph (a) of subsection (1) above—

[F174 (a) a billing authority as defined in section 69 of the Local Government Finance Act 1992;

(b) a precepting authority as defined in that section;

(c) a body having power by virtue of regulations under section 74 of the M61 Local Government Finance Act 1988 to issue a levy;]

(d) a body having power by virtue of regulations under section 75 of that Act to issue a special levy;

F175 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f) a fire authority constituted by a combination scheme under the M62 Fire Services Act 1947;

(g) an authority having power to make or determine a rate;

[F176 (h) a residuary body established by order under section 22(1) of the M63 Local Government Act 1992.]

(3) The following are the descriptions of authority specified for the purposes of paragraph (b) of subsection (1) above—

[F177 (a) a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994];

(d) a joint board or committee within the meaning of the M64 Local Government (Scotland) Act 1973;

(e) an authority having power to requisition any sum from an authority [F178 such as is mentioned in paragraph (a) above].

(4) The following are the descriptions of authority specified for the purposes of paragraph (c) of subsection (1) above—

(a) an authority having power to make or determine a rate;

(b) an authority having power to issue a precept, requisition or other demand for the payment of money to be raised out of a rate.

(5) In this section “rate” means a rate the proceeds of which are applicable for public local purposes and which is leviable by reference to the value of land or other property.]

Textual Amendments

F170 S. 842A inserted (1.4.1990) by Finance Act 1990 (c. 29), s.127(1)(4)

F171 Words in s. 842A(1)(a) inserted (1.4.1998) by Police Act 1997 (c. 50), s. 135(1), Sch. 9 para. 53(a); S.I. 1998/354, art. 2(1)(2)(bb)

F172 Words in s. 842A(1)(b) inserted (1.4.1998) by Police Act 1997 (c. 50), s. 135(1), Sch. 9 para. 53(b); S.I. 1998/354, art. 2(1)(2)(bb)

F173 Words in s. 842A(1)(c) inserted (1.4.1998) by Police Act 1997 (c. 50), s. 135(1), Sch. 9 para. 53(c); S.I. 1998/354, art. 2(1)(2)(bb)

F174 S. 842A(2)(a)-(c) substituted (1.4.1993) by Local Government Finance Act 1992 (c. 14), s. 117(1), Sch. 13 para. 57 (with s. 118(1)(2)(4)); S.I. 1992/2454, art. 3(1)(a)

F175 S. 842A(2)(e) repealed (1.4.1995) by Police and Magistrates' Courts Act 1994 (c. 29), s. 94(1), Sch. 9 Pt. 1; S.I. 1994/3262, art. 4, Sch.

F176 S. 842A(2)(h) inserted (retrospective to 29.11.1994) by Finance Act 1995 (c. 4), s. 144

F177 S. 842A(3)(a) substituted (1.4.1996) for s. 842A(3)(a)-(c) by Local Government etc. (Scotland) Act 1994 (c. 39), s. 184(2), Sch. 13 para. 155(a); S.I. 1996/323, art. 4(1)(c)

F178 Words in s. 842A(3)(e) substituted (1.4.1996) by Local Government etc. (Scotland) Act 1994 (c. 39), s. 184(2), Sch. 13 para. 155(b); S.I. 1996/323, art. 4(1)(c)

Marginal Citations

M61 1988 c. 41.

M62 1947 c. 41.

M63 1992 c. 19.

M64 1973 c. 65.

Valid from 06/04/2001

[F179 842B Meaning of “investment LLP” and “property investment LLP” U.K.

(1) In this Act—

(a) an “investment LLP” means a limited liability partnership whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom; and

(b) a “property investment LLP” means a limited liability partnership whose business consists wholly or mainly in the making of investments in land and the principal part of whose income is derived therefrom.

(2) Whether a limited liability partnership is an investment LLP or a property investment LLP is determined for each period of account of the partnership.

A “period of account” means any period for which accounts of the partnership are drawn up.]

Textual Amendments

F179 S. 842B inserted (6.4.2001 with effect in accordance with s. 76(1) of the amending Act) by Finance Act 2001 (c. 9), s. 76(2), Sch. 25 para. 1(1)

Commencement, savings, repeals etc. U.K.

843 Commencement. U.K.

(1) Except as otherwise provided by the following provisions of this section, this Act shall come into force in relation to tax for the year 1988-89 and subsequent years of assessment, and for companies’ accounting periods ending after 5th April 1988.

(2) Except as otherwise provided by the following provisions of this section, such of the provisions of this Act as relate to capital gains tax (including the provisions of Part XVIII as applied to capital gains tax by section [F180 277 of [F181 the 1992 Act]]) shall come into force in relation to that tax for the year 1988-89 and subsequent years of assessment.

(3) The following provisions of this Act, that is to say—

(a) so much of any provision as authorises the making of any Order in Council or regulations or other instrument;

(b) so much of any provision as relates to the making of a return, the furnishing of a certificate or the giving of any other information, including any such provision which imposes a duty on the Board or an officer of the Board as well as any such provision which imposes a duty on any other person;

(c) so much of any provision as imposes any penalty;

(d) except where the tax concerned is all tax for years of assessment before the year 1988-89 or accounting periods ending before 6th April 1988, so much of any other provision as confers any power or imposes any duty the exercise or performance of which operates or may operate in relation to tax for more than one chargeable period,

shall come into force for all purposes on 6th April 1988 to the exclusion of the corresponding enactments repealed by this Act.

(4) This section has effect except as otherwise provided by any other provision of this Act, and in particular except as provided by sections 96, 380 to 384, 393, F182 . . ., 400, 703 and 812.

Textual Amendments

F180 Words in s. 843(2) substituted (with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(56) (with ss. 60, 101(1), 171, 201(3))

F181 Words in s. 843(2) substituted (retrospectively) by Finance Act 1994 (c. 9), Sch. 17 para. 8

F182 Words in s. 843(4) repealed by Finance Act 1991 (c. 31, SIF 63:1), ss. 73(3)(4)(5), 123, Sch. 15 para. 24, Sch. 19 Pt. V, Note 4

844 Savings, transitional provisions, consequential amendments and repeals. U.K.

(1) Schedule 29, which makes amendments to other enactments consequential on the passing of this Act, shall have effect.

(2) Schedule 29, section 843 and this section are without prejudice to the provisions of the M65 Interpretation Act 1978 as respects the effect of repeals.

(3) Schedule 30 which contains savings and transitional provisions shall have effect.

(4) The enactments mentioned in Schedule 31 are hereby repealed to the extent specified in the third column of that Schedule.

(5) Subject to subsection (6) below, section 843(3), Schedule 30 and to any other provision of this Act by which any provision is brought into force to the exclusion of the corresponding enactments repealed by this Act, those repeals shall come into force in accordance with subsections (1) and (2) of section 843.

(6) No provision mentioned in subsection (5) above shall be taken as bringing a repeal into force except to the extent that the repealed enactment is being superseded.

Marginal Citations

M65 1978 c. 30.

845 Short title. U.K.

This Act may be cited as the Income and Corporation Taxes Act 1988.