Income and Corporation Taxes Act 1988

302 Replacement capital. U.K.

[F1 M1 (1) Any relief attributable to any shares in a company held by an individual shall be withdrawn if—

(a) at any time in the relevant period, the company or any subsidiary—

(i) begins to carry on as its trade or as part of its trade a trade which was previously carried on at any time in that period otherwise than by the company or any subsidiary, or

(ii) acquires the whole, or a greater part, of the assets used for the purposes of a trade previously so carried on, and

(b) subsection (2) below applies in relation to that individual]

(2) This subsection applies in relation to an individual where—

(a) any person or group of persons to whom an interest amounting in the aggregate to more than a half share in the trade (as previously carried on) belonged, at any time in the relevant period, is or are a person or group of persons to whom such an interest in the trade carried on by the company belongs or has, at any such time, belonged; or

(b) any person or group of persons who control or, at any such time, have controlled the company is or are a person or group of persons who, at any such time, controlled another company which previously carried on the trade;

and the individual is that person or one of those persons.

(3) [F2 Any relief attributable to any shares in a company held by an individual shall be withdrawn if]—

(a) the company comes to acquire all of the issued share capital of another company, at any time in the relevant period; and

(b) any person or group of persons who control or have, at any such time, controlled the company is or are a person or group of persons who, at any such time, controlled that other company;

and that individual is that person or one of those persons.

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

(a) the persons to whom a trade belongs and, where a trade belongs to two or more persons, their respective shares in that trade shall be determined in accordance with section 344(1)(a) and (b), (2) and (3); and

(b) any interest, rights or powers of a person who is an associate of another person shall be treated as those of that other person.

[F3 (4A) In determining whether any relief attributable to any shares in a company (the “issuing company”) held by a person who—

(a) is a director of, or of a company which is a partner of, the issuing company or any subsidiary, and

(b) is in receipt of, or entitled to receive, remuneration as such a director falling within section 291A(5)(a),

is to be withdrawn, the second reference in paragraph (b) of each of subsections (2) and (3) above and, so far as relating to those paragraphs, in subsection (1)(a)(i) above to any time in the relevant period shall be read as a reference to any time before the end of the relevant period.

(4B) Section 291(4) applies for the purposes of subsection (4A) above as it applies for the purposes of section 291A, and in subsection (4A) above “remuneration” includes any benefit or facility.]

(5) In this section—

• [F4 “subsidiary” means a company which would be a subsidiary if the relevant period for the purposes of section 308 were the period referred to in section 312(1A)(a)]; and

• “trade” includes any business, profession or vocation, and references to a trade previously carried on include references to part of such a trade;

[F5 and section 312(1A)(a) applies to determine the relevant period for the purposes of this section].

Textual Amendments

F1 S. 302(01) substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 16(a)

F2 Words in s. 302(3) substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 16(b)

F3 S. 302(4A)(4B) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 16(c)

F4 S. 302(5): definition of "subsidiary" substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 16(d)(i)

F5 Words in s. 302(5) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 16(d)(ii)

Modifications etc. (not altering text)

C1 See 1988(F) s.50and Sch.4 para.9(1), (2)for changes applicable in respect of shares issued on or after 29July 1988and before the end of 1993in respect of private rented housing.

C2 See 1988(F) s.50and Sch.4 para.9(3)for changes applicable in respect of shares issued on or after 29July 1988and before the end of 1993in respect of private rented housing.

C3 Definition of

“trade”

omitted by 1988(F) Sch.4 para.9(4)where s.50 (changes applicable in respect of shares issued on or after 29July 1988and before the end of 1993in respect of private rented housing)applies.

Marginal Citations

M1 Source-1983 Sch.5 9; 1983 (No.2) Sch.1 6