Finance Act 1989

6 (1) The trust deed must require that any sum received by the trustees—

(a) must be expended within the relevant period,

(b) may be expended only for one or more of the qualifying purposes, and

(c) must, while it is retained by them, be kept as cash or be kept in an account with a bank or building society.

(2) For the purposes of sub-paragraph (1) above the relevant period is the period of nine months beginning with the day found as follows—

(a) in a case where the sum is received from the founding company, or a company which is controlled by that company at the time the sum is received, the day following the end of the period of account in which the sum is charged as an expense of the company from which it is received;

(b) in any other case, the day the sum is received.

(3) For the purposes of sub-paragraph (1) above each of the following is a qualifying purpose—

(a) the acquisition of shares in the founding company;

(b) the repayment of sums borrowed;

(c) the payment of interest on sums borrowed;

(d) the payment of any sum to a person who is a beneficiary under the terms of the trust deed;

(e) the meeting of expenses.

(4) The trust deed must provide that, in ascertaining for the purposes of a relevant rule whether a particular sum has been expended, sums received earlier by the trustees shall be treated as expended before sums received by them later; and a relevant rule is one which is included in the trust deed and conforms with sub-paragraph (1) above.

(5) The trust deed must provide that, where the trustees pay sums to different beneficiaries at the same time, all the sums must be paid on similar terms.

(6) For the purposes of sub-paragraph (5) above, the fact that terms vary according to the levels of remuneration of beneficiaries, the length of their service, or similar factors, shall not be regarded as meaning that the terms are not similar.