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.

In this Act—

• F1“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;

• “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.

• F2“the 1990 Act” means the Capital Allowances Act 1990.

• F3“the 1992 Act” means the Taxation of Chargeable Gains Act 1992.

Section 1 of the M2Family Law Reform Act 1987, the paragraph inserted in Schedule 1 to the M3Interpretation Act 1978 by paragraph 73 of Schedule 2 to that Act and section 1(3) of the M4Law 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).

M5This Act, so far as it relates to capital gains tax, shall be construed as one with the F41992 Act.

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.

M6In 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;

• F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “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 M7Building Societies Act 1986;

• “capital allowance” means any allowance under F40the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act);

• F41“the Capital Allowances Act” means the Capital Allowances Act 2001;

• “chargeable gain” has the same meaning as in the F201992 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;

• F52“estate in land”, in relation to any land in Scotland, includes the land;

• “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;

• F44“for accounting purposes” means for the purposes of accounts drawn up in accordance with generally accepted accounting practice;

• F30“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);

• F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F45“generally accepted accounting practice” F48has the meaning given by section 50(1) of the Finance Act 2004;

• F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “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) F21;

• “industrial assurance business” F43means any such business carried on before the day appointed for the coming into force of section 167(4) of the Finance Act 1996 as was industrial assurance business within the meaning given by section 1(2) of the M8Industrial Assurance Act 1923 or Article 3(1) of the M9Industrial 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;

• F49“international accounting standards” has the meaning given by section 50(2) of the Finance Act 2004;

• F42“investment LLP” and “property investment LLP” have the meaning given by section 842B;

• F22“local authority association” has the meaning given by section 519;

• F23F38“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 F33or in a form authorised (in relation to the case in question) by directions under section 118 of the Finance Act 1998;

• F50“offshore installation” has the meaning given by section 837C;

• F28“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;

• F34 “overseas property business” has the meaning given by section 65A(4) or 70A(4);

• F46“period of account”—

  1. a

     in relation to a person, means any period for which the person draws up accounts, and

  2. b

     in relation to a trade, profession, vocation or other business means any period for which accounts of the business are drawn up;

• F47“permanent establishment”, in relation to a company, has the meaning given by section 148 of the Finance Act 2003;

• “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;

• F24“the rate applicable to trusts” shall be construed in accordance with section 686(1A);

• F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F26“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;

• F39“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);

• F29“the Schedule F ordinary rate” shall be construed in accordance with section 1B(2);

• F29“the Schedule F trust rate” shall be construed in accordance with section 686(1A);

• F29“the Schedule F upper rate” shall be construed in accordance with section 1B(2);

• F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

• F51“UK generally accepted accounting practice” has the meaning given by section 50(4) of the Finance Act 2004;

• “Ulster Savings Certificates” means savings certificates issued or treated as issued under section 15 of the M10Exchequer 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.

M11 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).

M12Except 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.

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.

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.

M13In the Tax Acts any reference to a child, however expressed, shall be construed as including a reference to an adopted child.

M14In the Income Tax Acts references to profits or gains shall not include references to chargeable gains.

M15References 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 F57Office 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 F58that Office.

M18Without 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 F61income which is earned income by virtue of section 529.

M19The provisions of this section are without prejudice to any other provision of the Income Tax Acts directing income to be treated as earned income.

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 F66. . . ;

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

• C2“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;

• F69“chargeable profits”, in relation to a company that is not resident in the United Kingdom—

  1. a

     for corporation tax purposes generally, has the meaning given by section 11(2), and

  2. b

     for the purposes of Chapter 4 of Part 17 (controlled foreign companies), has the meaning given by section 747(6);

• “charges on income” has the meaning given by section F67338A;

• F68“derivative contract” has the same meaning as it has for the purposes of Schedule 26 to the Finance Act 2002;

• “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;

• F64“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.

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;

F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

For all the purposes of the Corporation Tax Acts dividends shall be treated as paid on the date when they become due and payable, F63except in so far as Chapter III of Part XII makes other provision for dividends treated as paid by virtue of that Chapter.

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.

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)).

This is the table—

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.

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

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.

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.

M22Where 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.

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.

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) F70, 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 reducedF71.

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

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)).

This is the table—

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.

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).

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.

Section 23 of the M26General 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.

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.

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

“Research and development” means activities that fall to be treated as research and development in accordance with F119generally accepted accounting practice.

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

F120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

For this purpose “petroleum” has the meaning given in section 1 of the M41Petroleum Act 1998.

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

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

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.

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

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.

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.

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.

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.

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).

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.

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.

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.

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.

In this section—

• “company” includes any body corporate F76(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.

F117. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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 F77Financial Services and Markets Act 2000), or in relation to such of those exchanges as may be prescribed.

In determining the amount of a company’s income for the purposes of subsection (1)(a) above, no account shall be taken of any amount that falls under section 75B(7)(b) to be regarded as income of the company chargeable under Case VI of Schedule D.

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.

In this section “company” and “shares” shall be construed in accordance with sections F8299 and 288 of F83the 1992 ActF94and “scheme of reconstruction” has the same meaning as in section 136 of that Act.

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.

References in subsection (5AA) above to shares in a company include references to any securities of that company.

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.

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.

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.

Schedule 28B shall have effect for construing the references in this section to a qualifying holding.

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 F109. . . right to be redeemed.

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.

Whether a limited liability partnership is an investment LLP or a property investment LLP is determined for each period of account of the partnership.