Income and Corporation Taxes Act 1988

312 Interpretation of Chapter III. U.K.

(1) M1 In this Chapter—

• “associate” has the meaning given in subsections (3) and (4) of section 417 except that in those subsections “relative” shall not include a brother or sister;

• “appraisal licence” means an appraisal licence incorporating the model clauses set out in Schedule 4 to the 1984 Regulations or a Northern Ireland licence granted for the five year renewal term and includes in either case any modified appraisal licence;

• “control”, except in sections [F1 291B(4) and 308(2)], shall be construed in accordance with section 416(2) to (6);

• “debenture” has the meaning given by section 744 of the M2 Companies Act 1985;

• “development licence” means a development licence incorporating the model clauses set out in Schedule 5 to the 1984 Regulations or a Northern Ireland licence granted for the 30 year renewal term and includes in either case any modified development licence;

• “director” shall be construed in accordance with section 417(5);

• [F2 “eligible for relief” has the meaning given by section 289(1);

• “eligible shares” has the meaning given by section 289(7);]

• “exploration licence” means an exploration licence incorporating the model clauses set out in Schedule 3 to the 1984 Regulations or a Northern Ireland licence granted for the initial term and includes in either case any modified exploration licence;

• F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “modified appraisal licence”, “modified development licence” and “modified exploration licence” mean, respectively, any appraisal licence, development licence or exploration licence in which any of the relevant model clauses have been modified or excluded by the Secretary of State or in Northern Ireland the Department of Economic Development;

• “new consideration” has the same meaning as in Part VI;

• “Northern Ireland licence” means a licence granted under the M3 Petroleum (Production) Act (Northern Ireland) 1964 and incorporating the model clauses set out in Schedule 2 to the M4 Petroleum Production (Licences) Regulations (Northern Ireland) 1965, and in relation to such a licence the references above to “the initial term”, “the 30 year renewal term” and “the five year renewal term” shall be construed in accordance with Clause 2 of Schedule 2 to those Regulations;

• “oil” and “oil extraction activities” have the same meanings as they have in Chapter V of Part XII;

• “oil exploration” means searching for oil;

• “ordinary shares” means shares forming part of a company’s ordinary share capital;

• F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “research and development” means any activity which is intended to result in a patentable invention (within the meaning of the M5 Patents Act 1977) or in a computer program;

• [F4 “relief” means relief under this Chapter,

• “subsidiary”, in relation to any company (except in the expression “51 per cent. subsidiary” or where otherwise defined), means a subsidiary of that company of a kind which that company may hold under section 308,

• “51 per cent. subsidiary”, in relation to any company, means (except in the case of references to a company which is a 51 per cent. subsidiary on a particular date or at a particular time) a company which is a 51 per cent. subsidiary of that company at any time in the relevant period (applying subsection (1A)(a) below),]

• [F5 “unquoted company” means a company none of whose shares, stocks, debentures or other securities are marketed to the general public,]

and “the 1984 Regulations” means the M6 Petroleum (Production) (Landward Areas) Regulations 1984.

[F6 (1A) In any provision of this Chapter “relevant period”, in relation to relief in respect of any eligible shares issued by a company, means whichever of the following periods is applied for the purposes of that provision (disregarding section 289B(5))—

(a) the period beginning with the incorporation of the company (or, if the company was incorporated more than two years before the date on which the shares were issued, beginning two years before that date) and ending five years after the issue of the shares, and

(b) the period beginning with the date on which the shares were issued and ending either—

(i) three years after that date, or

(ii) in a case falling within section 289(2)(a) where the company or subsidiary concerned had not begun to carry on the trade in question on that date, three years after the date on which it begins to carry on that trade.

(1B) For the purposes of the definition of “unquoted company” in subsection (1) above, shares, stocks, debentures or other securities are marketed to the general public if they are—

(a) listed on a recognised stock exchange,

(b) listed on a designated exchange in a country outside the United Kingdom, or

(c) dealt in on the Unlisted Securities Market or dealt in outside the United Kingdom by such means as may be designated.

(1C) In subsection (1B) above “designated” means designated by an order made by the Board for the purposes of that subsection; and an order made for the purposes of paragraph (b) of that subsection may designate an exchange by name, or by reference to any class or description of exchanges, including a class or description framed by reference to any authority or approval given in a country outside the United Kingdom.

(1D) Section 828(1) does not apply to an order made for the purposes of subsection (1B) above.

(1E) Where a company is an unquoted company at the time when any shares are issued, it shall not be treated for the purposes of this Chapter as ceasing to be an unquoted company in relation to those shares at any subsequent time by reason only that any shares, stocks, debentures or other securities of the company are at that time listed on an exchange, or dealt in by any means, designated by such an order if the order was made after the shares were issued.]

(2) M7 Section 839 applies for the purposes of this Chapter other than [F7 sections 291 to 291B].

(3) References in this Chapter to a disposal of shares include references to a disposal of an interest or right in or over the shares and an individual shall be treated for the purposes of this Chapter as disposing of any shares which he is treated by virtue of section [F8 136(1) of the 1992 Act] as exchanging for other shares.

[F9 (4) In this Chapter—

(a) references in any provision to the reduction of any relief attributable to any shares include a reference—

(i) to the reduction of the relief to nil, and

(ii) where no relief has yet been given, to the reduction of the amount which apart from that provision would be the relief, and

(b) references to the withdrawal of any relief, in respect of any shares, are to the withdrawal of the relief attributable to those shares or, in a case where no relief has yet been given, to ceasing to be eligible for relief in respect of those shares.

(5) For the purposes of this Chapter, the market value at any time of any asset shall be taken to be the price which it might reasonably be expected to fetch on a sale at that time in the open market free from any interest or right which exists by way of security in or over it.]

(6) References in this Chapter to relief given to an individual in respect of eligible shares, and to the withdrawal of such relief, include respectively references to relief given to him in respect of those shares at any time after he has disposed of them and references to the withdrawal of such relief at any such time.

(7) In relation to any case falling within [F10 289(2)(c)], any reference in that section to any licence being held by, or granted to, any person shall be read as including a reference to such a licence being held by, or (as the case may be) granted to, that person together with one or more other persons.

(8) The Treasury may by order amend any of the definitions set out in subsection (1) above which relate to licences under the M8 Petroleum (Production) Act 1934 or the M9 Petroleum (Production) Act (Northern Ireland) 1964.

Textual Amendments

F1 S. 312(1): words in definition of "control" substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(a)(i)

F2 S. 312(1): definitions of "eligible for relief" and "eligible shares" inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(a)(ii)

F3 S. 312(1): definitions of "fixed-rate preference share capital" and "the relevant period" repealed (with effect as mentioned in s. 137(1)(2), Sch. 26 Pt. 5(17) Note of the repealing Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(a)(iii)(iv), Sch. 26 Pt. 5(17)

F4 S. 312(1): definitions of "relief", "subsidiary" and "51 per cent. subsidiary" substituted for "the relief" and "relief" (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(a)(v)

F5 S. 312(1): definition of "unquoted company" substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(a)(vi)

F6 S. 312(1A)-(1E) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(b)

F7 Word in s. 312(2) substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(c)

F8 Words in s. 312(3)(5)(b) 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(18) (with ss. 60, 101(1), 171, 201(3)).

F9 S. 312(4)(5) substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(d)

F10 Words in s. 312(7) substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 27(e)

Modifications etc. (not altering text)

C1 S. 312(1A)(a) applied (1.5.1995) by Taxation of Chargeable Gains Act 1992 (c. 12), s. 150A(8C)(b) (as inserted by Finance Act 1995 (c. 4), Sch. 13 para. 2(4))

S. 312(1A)(a) applied (with effect in accordance with Sch. 13 para. 4(4) of the 1995 amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), Sch. 5B para. 3(2)(a)(b) (as inserted by Finance Act 1995 (c. 4), Sch. 13 para. 4(3))

Marginal Citations

M1 Source-1981 s.67; 1983 Sch.5 20(1), (2); 1985 s.44(6); 1986 Sch.9 21(1), (2)

M2 1985 c. 6.

M3 1964 c. 28 (N.I.).

M4 S.R.& O.(N.I.) 1965 No.47.

M5 1977 c. 37.

M6 S.I. 1984/1832.

M7 Source-1981 s.67(2)-(4); 1983 Sch.5 20(1)

M8 1934 c. 36.

M9 1964 c. 28 (N.I.).