Finance Act 1990

32 Conditions for relief: supplementary

(1) This section applies for the purposes of section 31 above.

(2) The entitlement period is the period beginning with the disposal, and ending on the expiry of twelve months beginning with the date of the disposal.

(3) The acquisition period is the period beginning with the disposal, and ending on the expiry of six months beginning with—

(a) the date of the disposal, or

(b) if later, the date on which the third condition (set out in section 31(4) above) first becomes fulfilled.

(4) The proscribed period is the period beginning with the disposal, and ending on—

(a) the date of the acquisition, or

(b) if later, the date on which the third condition (set out in section 31(4) above) first becomes fulfilled.

(5) All arrangements are unauthorised unless—

(a) they arise wholly from a restriction authorised by paragraph 7(2) of Schedule 5 to the [1989 c. 26.] Finance Act 1989, or

(b) they only allow one or both of the following as regards shares, interests or rights, namely, acquisition by a beneficiary under the trust and appropriation under an approved profit sharing scheme.

(6) An asset is a chargeable asset in relation to the claimant at a particular time if—

(a) at that time he is resident or ordinarily resident in the United Kingdom, and

(b) were the asset to be disposed of at that time, a gain accruing to him would be a chargeable gain.

(7) An asset is also a chargeable asset in relation to the claimant at a particular time if, were it to be disposed of at that time, any gain accruing to him on the disposal would be a chargeable gain—

(a) in respect of which he would be chargeable to capital gains tax under section 12(1) of the [1979 c. 14.] Capital Gains Tax Act 1979 (non-resident with United Kingdom branch or agency), or

(b) which would form part of his chargeable profits for corporation tax purposes by virtue of section 11(2)(b) of the Taxes Act 1988 (non-resident companies).

(8) But an asset is not a chargeable asset in relation to the claimant at a particular time if, were he to dispose of the asset at that time, he would fall to be regarded for the purposes of any double taxation relief arrangements as not liable in the United Kingdom to tax on any gains accruing to him on the disposal; and “double taxation relief arrangements” means arrangements having effect by virtue of section 788 of the Taxes Act 1988 (as extended to capital gains tax by section 10 of the [1979 c. 14.] Capital Gains Tax Act 1979).

(9) The question whether a trust is at a particular time a qualifying employee share ownership trust shall be determined in accordance with Schedule 5 to the [1989 c. 26.] Finance Act 1989; and “chargeable event” in relation to trustees has the meaning given by section 69 of that Act.

(10) The expressions “holding company”, “trading company” and “trading group” have the meanings given by paragraph 1 of Schedule 20 to the [1985 c. 54.] Finance Act 1985; and “group” (except in the expression “trading group”) shall be construed in accordance with section 272 of the Taxes Act 1970.

(11) “Ordinary share capital” in relation to the founding company means all the issued share capital (by whatever name called) of the company, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company.

(12) Schedule 18 to the Taxes Act 1988 (group relief: equity holders and profits or assets available for distribution) shall apply for the purposes of section 31(4) above as if—

(a) the trustees were a company,

(b) the references to section 413(7) to (9) of that Act were references to section 31(4) above,

(c) the reference in paragraph 7(1)(a) to section 413(7) of that Act were a reference to section 31(4) above, and

(d) paragraph 7(1)(b) were omitted.