PART XVII TAX AVOIDANCE

CHAPTER VI MISCELLANEOUS

Other provisions

777 Provisions supplementary to F1section 776.

M11

This section has effect to supplement F4section 776.

2

In applying F5section 776 and this section account shall be taken of any method, however indirect, by which—

a

any property or right is transferred or transmitted; or

b

the value of any property or right is enhanced or diminished;

and accordingly the occasion of the transfer or transmission of any property or right, however indirect, and the occasion when the value of any property or right is enhanced, may be an occasion when, under F6section 776, tax becomes chargeable.

3

Subsection (2) above applies in particular—

a

to sales, contracts and other transactions made otherwise than for full consideration or for more than full consideration; and

b

to any method by which any property or right, or the control of any property or right, is transferred or transmitted by assigning share capital or other rights in a company or any partnership or interest in settled property; and

c

to the creation of any option or consent or embargo affecting the disposition of any property or right, and to the consideration given for the option, or for the giving of the consent or the release of the embargo; and

d

to the disposal of any property or right on the winding up, dissolution or termination of any company, partnership or trust.

4

In ascertaining for the purposes of F7section 776 and this section the intentions of any person, the objects and powers of any company, partners or trustees, as set out in any memorandum, articles of association or other document, shall not be conclusive.

5

In order to ascertain whether and to what extent the value of any property or right is derived from any other property or right, value may be traced through any number of companies, partnerships and trusts, and the property held by any company, partnership or trust shall be attributed to the shareholders, partners or beneficiaries at each stage in such manner as is appropriate in the circumstances.

6

In applying F8section 776 and this section—

a

any expenditure or receipt or consideration or other amount may be apportioned by such method as is just and reasonable in the circumstances;

b

all such valuations shall be made as are appropriate to give effect to F9section 776.

7

For the purposes of F10section 776 and this section partners, or the trustees of settled property, or personal representatives, may be regarded as persons distinct from the individuals or other persons who are for the time being partners or trustees or personal representatives.

8

Where F11a company is assessed to F12corporation tax under section 776 in respect of consideration receivable by another person—

a

F13it shall be entitled to recover from that other person any part of that tax which F13it has paid; and

b

if any part of that tax remains unpaid at the expiration of six months from the date when it became due and payable, it shall be recoverable from that other person as though he were F14the company assessed, but without prejudice to the right to recover it from F14the company actually assessed;

and for the purposes of paragraph (a) above the Board or an inspector shall on request furnish a certificate specifying the amount of income in respect of which tax has been paid, and the amount of tax so paid; and the certificate shall be conclusive evidence of any facts stated in it.

F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

F17Section 776 has effect subject to F3Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor) and to any other provision of the Tax Acts deeming income to belong to a particular person.

11

Where under section 776(2)(c) any F18company is charged to tax on the realisation of a gain, and the computation of the gain proceeded on the footing that the land or some other property was appropriated at any time as trading stock, that land or other property shall be treated on that footing also for the purposes of section F2161 of the 1992 Act (property becoming or ceasing to be stock in trade).

F1912

Where under section 776(8) the company charged to corporation tax is not the person (“P”) by whom the gain was realised and the tax has been paid, then for the purposes of sections 37 and 39 of the 1992 Act (profits taxable as income excluded from tax on chargeable gains) P shall be regarded as having been charged to that tax.

13

For the purposes of F20section 776 F21of this Act and Chapter 3 of Part 13 of ITA 2007 and this section—

  • F22“capital”, in relation to a gain, means that, apart from section 776, the gain does not fall to be included in any calculation of income for F23purposes of the Tax Acts;

  • “company” includes any body corporate; and

  • “share” includes stock;

F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .