(1)For the purposes of section 68 above each of the following is a chargeableevent in relation to the trustees of an employee share ownership trust—
(a)the transfer of securities by the trustees, if the transfer is not aqualifying transfer;
(b)the transfer of securities by the trustees to persons who are at the timeof the transfer beneficiaries under the terms of the trust deed, if the termson which the transfer is made are not qualifying terms;
(c)the retention of securities by the trustees at the expiry of the periodof seven years beginning with the date on which they acquired them;
(d)the expenditure of a sum by the trustees for a purpose other than aqualifying purpose.
(2)For the purposes of subsection (1)(a) above a transfer is a qualifyingtransfer if it is made to a person who at the time of the transfer is abeneficiary under the terms of the trust deed.
(3)For the purposes of subsection (1)(a) above a transfer is also aqualifying transfer if—
(a)it is made to the trustees of a scheme which at the time of the transferis a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988,and
(b)it is made for a consideration which is not less than the price thesecurities might reasonably be expected to fetch on a sale in the open market.
(4)For the purposes of subsection (1)(b) above a transfer of securities ismade on qualifying terms if—
(a)all the securities transferred at the same time are transferred on similarterms,
(b)securities have been offered to all the persons who are beneficiariesunder the terms of the trust deed when the transfer is made, and
(c)securities are transferred to all such beneficiaries who have accepted.
(5)For the purposes of subsection (1)(d) above each of the following is aqualifying purpose—
(a)the acquisition of shares in the company which established the trust;
(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 termsof the trust deed;
(e)the meeting of expenses.
(6)For the purposes of subsection (4) above, the fact that terms varyaccording to the levels of remuneration of beneficiaries, the length of theirservice, or similar factors, shall not be regarded as meaning that the termsare not similar.
(7)In ascertaining for the purposes of this section whether particularsecurities are retained, securities acquired earlier by the trustees shall betreated as transferred by them before securities acquired by them later.
(8)For the purposes of this section trustees—
(a)acquire securities when they become entitled to them (subject to theexceptions in subsection (9) below);
(b)transfer securities to another person when that other becomes entitled tothem;
(c)retain securities if they remain entitled to them.
(9)The exceptions are these—
(a)if securities are issued to trustees in exchange in circumstancesmentioned in section 85(1) of the M1Capital Gains Tax Act1979, they shall be treated as having acquired them when they became entitledto the securities for which they are exchanged;
(b)if trustees become entitled to securities as a result of a reorganisation,they shall be treated as having acquired them when they became entitled to theoriginal shares which those securities represent (construing “reorganisation” and “original shares” in accordance with section77 of that Act).
(10)If trustees agree to take a transfer of securities, for the purposes ofthis section they shall be treated as becoming entitled to them when theagreement is made and not on a later transfer made pursuant to the agreement.
(11)If trustees agree to transfer securities to another person, for thepurposes of this section the other person shall be treated as becomingentitled to them when the agreement is made and not on a later transfer madepursuant to the agreement.
(12)For the purposes of this section the following are securities—
(a)shares;
(b)debentures.
Modifications etc. (not altering text)
C1 See Finance Act 1990 (c. 29) ss.31–40—.roll-over relief for disposal of assets to employeeshare ownership trusts
C2 Definition employed for purposes of Finance Act1990 (c. 29) s. 36—roll-over relief where replacement assetowned
Marginal Citations