Income and Corporation Taxes Act 1988

703 Cancellation of [F1 corporation tax] advantage. U.K.

(1) M1 Where—

(a) in any such circumstances as are mentioned in section 704, and

(b) in consequence of a transaction in securities or of the combined effect of two or more such transactions,

a [F2 company] is in a position to obtain, or has obtained, a [F3 corporation tax] advantage, then unless [F4 it] shows that the transaction or transactions were carried out either for bona fide commercial reasons or in the ordinary course of making or managing investments, and that none of them had as their main object, or one of their main objects, to enable [F3 corporation tax] advantages to be obtained, this section shall apply to [F5 it] in respect of that transaction or those transactions.

(2) For the purposes of this Chapter a [F6 corporation tax] advantage obtained or obtainable by a [F7 company] shall be deemed to be obtained or obtainable by [F8 it] in consequence of a transaction in securities or of the combined effect of two or more such transactions, if it is obtained or obtainable in consequence of the combined effect of the transaction or transactions and the liquidation of a company.

(3) Where this section applies to a [F9 company] in respect of any transaction or transactions, the [F10 corporation tax advantage] obtained or obtainable by [F11 it] in consequence thereof shall be counteracted by such of the following adjustments, that is to say an assessment, the nullifying of a right to repayment or the requiring of the return of a repayment already made (the amount to be returned being chargeable F12 . . . under Case VI of Schedule D and recoverable accordingly), or the computation or recomputation of profits or gains, or [F13 liability to corporation tax], on such basis as the Board may specify by notice served on [F11 it] as being requisite for counteracting the [F10 corporation tax advantage] so obtained or obtainable.

[F14 (3A) F15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(4) F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) M2 In the case of a man and his wife living with him (whether or not she is separately assessed to tax), this Chapter shall, subject to subsection (8)below, be treated as applying to him in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the wife were his property, rights or liabilities in relation to which she had acted only as nominee for him, and shall be treated as applying to the wife in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the man were her property, rights or liabilities in relation to which he had acted only as nominee for herF17 .

(8) No adjustment made under subsection (3)above by reference to any transaction or transactions to counteract any tax advantage shall by virtue of subsection (7)above be so made that a person bears more tax than if the transaction or transactions had not had as a consequence that any relief or increased relief from, or repayment or increased repayment of, income tax, or any deduction in computing profits or gains, was obtained or obtainable, or that the way in which receipts accrued was such that the recipient did not pay or bear tax on themF18 .

(9) The Board shall not give a notice under subsection (3) above until they have notified the [F19 company] in question that they have reason to believe that this section may apply to [F20 it] in respect of a transaction or transactions specified in the notification; and if within 30 days of the issue of the notification that [F19 company], being of opinion that this section does not so apply to [F20 it], makes a statutory declaration to that effect stating the facts and circumstances upon which [F21 its] opinion is based, and sends it to the Board, then subject to subsection (10) below, this section shall not apply to [F20 it] in respect of the transaction or transactions.

(10) If, when a statutory declaration has been sent to the Board under subsection (9) above, they see reason to take further action in the matter—

(a) the Board shall send to the tribunal a certificate to that effect, together with the statutory declaration, and may also send therewith a counter-statement with reference to the matter;

(b) the tribunal shall take into consideration the declaration and the certificate, and the counter-statement, if any, and shall determine whether there is or is not a prima facie case for proceeding in the matter, and if they determine that there is no such case this section shall not apply to the [F22 company] in question in respect of the transaction or transactions;

but any such determination shall not affect the operation of this section in respect of transactions which include that transaction or some or all of those transactions and also include another transaction or other transactions.

(11) F23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12) This section applies whether the [F24 corporation tax advantage] in question relates to a chargeable period ending before or after the commencement of this Act, but nothing in this section shall authorise the making of an assessment later than six years after the [F25 accounting period] to which the [F24 corporation tax advantage] relates; and no other provision contained in the [F26 Corporation Tax Acts] shall be construed as limiting the powers conferred by this section.

Textual Amendments

F1 Words in s. 703 sidenote substituted (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. 154(10) (with Sch. 2)

F2 Word in s. 703(1) substituted (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. 154(2)(a) (with Sch. 2)

F3 Words in s. 703(1) substituted (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. 154(2)(b) (with Sch. 2)

F4 Word in s. 703(1) substituted (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. 154(2)(c) (with Sch. 2)

F5 Word in s. 703(1) substituted (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. 154(2)(d) (with Sch. 2)

F6 Words in s. 703(2) substituted (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. 154(3)(a) (with Sch. 2)

F7 Word in s. 703(2) substituted (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. 154(3)(b) (with Sch. 2)

F8 Word in s. 703(2) substituted (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. 154(3)(c) (with Sch. 2)

F9 Word in s. 703(3) substituted (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. 154(4)(b) (with Sch. 2)

F10 Words in s. 703(3) substituted (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. 154(4)(a) (with Sch. 2)

F11 Words in s. 703(3) substituted (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. 154(4)(c) (with Sch. 2)

F12 Words in s. 703(3) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(4)(d), Sch. 3 Pt. 1 (with Sch. 2)

F13 Words in s. 703(3) substituted (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. 154(4)(e) (with Sch. 2)

F14 S. 703(3A) inserted (with effect in accordance with Sch. 3 para. 32(4) of the amending Act) by Finance Act 1998 (c. 36), Sch. 3 para. 32(2)

F15 S. 703(3A) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(5), Sch. 3 Pt. 1 (with Sch. 2)

F16 S. 703(4)-(6) repealed (with effect in accordance with Sch. 3 para. 32(5) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 32(3), Sch. 27 Pt. 3(2), Note

F17 Repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

F18 Repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

F19 Words in s. 703(9) substituted (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. 154(6)(a) (with Sch. 2)

F20 Words in s. 703(9) substituted (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. 154(6)(b) (with Sch. 2)

F21 Word in s. 703(9) substituted (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. 154(6)(c) (with Sch. 2)

F22 Word in s. 703(10) substituted (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. 154(7) (with Sch. 2)

F23 S. 703(11) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(8), Sch. 3 Pt. 1 (with Sch. 2)

F24 Words in s. 703(12) substituted (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. 154(9)(a) (with Sch. 2)

F25 Words in s. 703(12) substituted (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. 154(9)(b) (with Sch. 2)

F26 Words in s. 703(12) substituted (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. 154(9)(c) (with Sch. 2)

Marginal Citations

M1 Source—1970 s.460(1)-(3)

M2 Source—1970 s.460(5)-(9)