Part III Individuals, partnerships, trusts and collective investment schemes etc
Chapter III Collective investment schemes and investment trusts F1etc
99 Application of Act to unit trust schemes.
(1)
This Act shall apply in relation to any unit trust scheme as if—
(a)
the scheme were a company,
(b)
the rights of the unit holders were shares in the company, and
(c)
in the case of an authorised unit trust, the company were resident and ordinarily resident in the United Kingdom,
except that nothing in this section shall be taken to bring a unit trust scheme within the charge to corporation tax on chargeable gains.
(2)
(a)
“unit trust scheme” has the F4meaning given by section 237(1) of the Financial Services and Markets Act 2000,
F5(aa)
“unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme;
(b)
“authorised unit trust” means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that period.
F6(c)
“open-ended investment company” has the meaning given by subsection (10) of section 468 of the Taxes Act, read with subsections (11) to (18) of that section, as those subsections are added by regulation 10(4) of the Open-ended Investment Companies (Tax) Regulations 1997; and accordingly references in subsections (11) to (16) of that section to “the Tax Acts” shall be construed as if they included references to this Act.
(3)
The Treasury may by regulations provide that any scheme of a description specified in the regulations shall be treated as not being a unit trust scheme for the purposes of this Act; and regulations under this section may contain such supplementary and transitional provisions as appear to the Treasury to be necessary or expedient.
F799AAuthorised unit trusts: treatment of umbrella schemes
(1)
In this section an “umbrella scheme” means an authorised unit trust—
(a)
which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them, and
(b)
under which the participants are entitled to exchange rights in one pool for rights in another,
and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.
(2)
For the purposes of this Act (except subsection (1))—
(a)
each of the parts of an umbrella scheme shall be regarded as an authorised unit trust, and
(b)
the scheme as a whole shall not be regarded as an authorised unit trust or as any other form of collective investment scheme.
(3)
In this Act, in relation to a part of an umbrella scheme, any reference to a unit holder is to a person for the time being having rights in the separate pool to which the part of the umbrella scheme relates.
(4)
Nothing in subsections (2) or (3) shall prevent—
(a)
gains accruing to an umbrella scheme being regarded as gains accruing to an authorised unit trust for the purposes of section 100(1) (exemption for authorised unit trusts etc);
(b)
a transfer of business to an umbrella scheme being regarded as a transfer to an authorised unit trust for the purposes of section 139(4) (exclusion of transfers to authorised unit trusts etc);
F8(c)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F999BCalculation of the disposal cost of accumulation units
(1)
For the purposes of computing the gain accruing on a disposal by a unit holder of units in a unit trust scheme and for the purposes of all other provisions of this Act, an amount shall be treated as expenditure falling within section 38(1)(b) if—
(a)
it represents income from the investments subject to the unit trust scheme,
(b)
it has been reinvested in respect of the units on behalf of the unit holder (without an issue of new units), and
(c)
it is either—
(i)
charged to income tax as income of the unit holder (or would be charged to income tax as his income but for a relief which has effect in respect of it) for the purposes of the Income Tax Acts, or
(ii)
taken into account as a receipt in calculating profits, gains or losses of the unit holder for the purposes of the Income Tax Acts.
(2)
Where an amount is treated as expenditure by virtue of subsection (1), the expenditure shall be treated for the purposes of this Act as having been incurred—
(a)
in relation to an authorised unit trust, on the distribution date for the distribution period in respect of which the amount is reinvested, and
(b)
in relation to any other unit trust scheme, on the date on which the amount is reinvested.
(3)
In subsection (2)(a) “distribution date” and “distribution period” shall have the meaning given by F10regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 15 of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964)).
100 Exemption for authorised unit trusts etc.
(1)
Gains accruing to an authorised unit trust, an investment trust F11a venture capital trust or a court investment fund shall not be chargeable gains.
(2)
If throughout a year of assessment all the issued units in a unit trust scheme (other than an authorised unit trust) are assets such that any gain accruing if they were disposed of by the unit holder would be wholly exempt from capital gains tax or corporation tax (otherwise than by reason of residence) gains accruing to the unit trust scheme in that year of assessment shall not be chargeable gains.
F12(2A)
In determining whether subsection (2) applies no account shall be taken of units in a scheme which—
(a)
have been disposed of by a unit holder, and
(b)
are held by the managers of the scheme (in that capacity) pending disposal.
(2B)
In determining whether subsection (2) applies no account shall be taken of the possibility of a charge to corporation tax on income in respect of a gain accruing on a disposal by—
(a)
an insurance company (within the meaning given by section 431 of the Taxes Act), or
(b)
a friendly society (being an incorporated friendly society or registered friendly society within the meaning given by section 466(2) of the Taxes Act).
(3)
In this Act “court investment fund” means a fund established under section 42 of the M1Administration of Justice Act 1982.
101 Transfer of company’s assets to investment trust.
(1)
Where section 139 has applied on the transfer of a company’s business (in whole or in part) to a company which at the time of the transfer was not an investment trust, then if—
(a)
at any time after the transfer the company becomes for an accounting period an investment trust, and
(b)
at the beginning of that accounting period the company still owns any of the assets of the business transferred,
the company shall be treated for all the purposes of this Act as if immediately after the transfer it had sold, and immediately reacquired, the assets referred to in paragraph (b) above at their market value at that time.
F13(1A)
Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the end of the last accounting period to end before the beginning of the accounting period mentioned in that subsection.
F14(1B)
This section does not apply if at the time at which the company becomes an investment trust there has been an event by virtue of which it falls by virtue of section 101B(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above.
(2)
Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of subsection (1) above may be made at any time within 6 years after the end of the accounting period referred to in subsection (1) above, and where under this section a company is to be treated as having disposed of, and reacquired, an asset of a business, all such recomputations of liability in respect of other disposals and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.
F15101ATransfer within group to investment trust.
(1)
This section applies where—
(a)
an asset has been disposed of to a company (the “acquiring company") and the disposal has been treated by virtue of section 171(1) as giving rise to neither a gain nor a loss,
(b)
at the time of the disposal the acquiring company was not an investment trust, and
(c)
the conditions set out in subsection (2) below are satisfied by the acquiring company.
(2)
Those conditions are satisfied by the acquiring company if—
(a)
it becomes an investment trust for an accounting period beginning not more than 6 years after the time of the disposal,
(b)
at the beginning of that accounting period, it owns, otherwise than as trading stock—
(i)
the asset, or
(ii)
property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,
(c)
it has not been an investment trust for any earlier accounting period beginning after the time of the disposal, and
(d)
at the time at which it becomes an investment trust, there has not been an event by virtue of which it falls by virtue of section 179(3) or 101C(3) to be treated as having sold, and immediately reacquired, the asset at the time specified in subsection (3) below.
(3)
The acquiring company shall be treated for all the purposes of this Act as if immediately after the disposal it had sold, and immediately reacquired, the asset at its market value at that time.
(4)
Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the acquiring company on the sale referred to in subsection (3) above shall be treated as accruing to it immediately before the end of the last accounting period to end before the beginning of the accounting period for which the acquiring company becomes an investment trust.
(5)
For the purposes of this section a chargeable gain is carried forward from an asset to other property on a replacement of business assets if—
(a)
by one or more claims under sections 152 to 158, the chargeable gain accruing on a disposal of the asset is reduced, and
(b)
as a result an amount falls to be deducted from the expenditure allowable in computing a gain accruing on the disposal of the other property.
(6)
For the purposes of this section an asset acquired by the acquiring company shall be treated as the same as an asset owned by it at a later time if the value of the second asset is derived in whole or in part from the first asset; and, in particular, assets shall be so treated where—
(a)
the second asset is a freehold and the first asset was a leasehold; and
(b)
the lessee has acquired the reversion.
(7)
Where under this section a company is to be treated as having disposed of and reacquired an asset—
(a)
all such recomputations of liability in respect of other disposals, and
(b)
all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax,
as may be required in consequence of the provisions of this section shall be carried out.
(8)
Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may be made at any time within 6 years after the end of the accounting period referred to in subsection (2)(a) above.
F16101BTransfer of company’s assets to venture capital trust.
(1)
Where section 139 has applied on the transfer of a company’s business (in whole or in part) to a company which at the time of the transfer was not a venture capital trust, then if—
(a)
at any time after the transfer the company becomes a venture capital trust by virtue of an approval for the purposes of F17Part 6 of ITA 2007; and
(b)
at the time as from which the approval has effect the company still owns any of the assets of the business transferred,
the company shall be treated for all the purposes of this Act as if immediately after the transfer it had sold, and immediately reacquired, the assets referred to in paragraph (b) above at their market value at that time.
(2)
Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the time mentioned in subsection (1)(b) above.
(3)
This section does not apply if at the time mentioned in subsection (1)(b) above there has been an event by virtue of which the company falls by virtue of section 101(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above.
(4)
Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the approval mentioned in subsection (1)(a) above has effect as from the beginning of an accounting period, be made at any time within 6 years after the end of that accounting period.
(5)
Where under this section a company is to be treated as having disposed of, and reacquired, an asset of a business, all such recomputations of liability in respect of other disposals and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.
F18101CTransfer within group to venture capital trust.
(1)
This section applies where—
(a)
an asset has been disposed of to a company (the “acquiring company") and the disposal has been treated by virtue of section 171(1) as giving rise to neither a gain nor a loss,
(b)
at the time of the disposal the acquiring company was not a venture capital trust, and
(c)
the conditions set out in subsection (2) below are satisfied by the acquiring company.
(2)
Those conditions are satisfied by the acquiring company if—
(a)
it becomes a venture capital trust by virtue of an approval having effect as from a time (the “time of approval") not more than 6 years after the time of the disposal,
(b)
at the time of approval the company owns, otherwise than as trading stock—
(i)
the asset, or
(ii)
property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,
(c)
it has not been a venture capital trust at any earlier time since the time of the disposal, and
(d)
at the time of approval, there has not been an event by virtue of which it falls by virtue of section 179(3) or 101A(3) to be treated as having sold, and immediately reacquired, the asset at the time specified in subsection (3) below.
(3)
The acquiring company shall be treated for all the purposes of this Act as if immediately after the disposal it had sold, and immediately reacquired, the asset at its market value at that time.
(4)
Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the acquiring company on the sale referred to in subsection (3) above shall be treated as accruing to it immediately before the time of approval.
(5)
Subsections (5) to (7) of section 101A apply for the purposes of this section as they apply for the purposes of that section.
(6)
Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the time of approval is the time at which an accounting period of the company begins, be made at any time within 6 years after the end of that accounting period.
(7)
Any reference in this section to an approval is a reference to an approval for the purposes of F19Part 6 of ITA 2007.
102 Collective investment schemes with property divided into separate parts.
(1)
Subsection (2) below applies in the case of arrangements which constitute a collective investment scheme and under which—
(a)
the contributions of the participants, and the profits or income out of which payments are to be made to them, are pooled in relation to separate parts of the property in question, and
(b)
the participants are entitled to exchange rights in one part for rights in another.
(2)
If a participant exchanges rights in one such part for rights in another, section 127 shall not prevent the exchange constituting a disposal and acquisition for the purposes of this Act.
(3)
The reference in subsection (2) above to section 127—
(a)
includes a reference to that section as applied by section 132, but
(b)
does not include a reference to section 127 as applied by section 135 F20or 136;
and in this section “participant” shall be construed in accordance with F21section 235 of the Financial Services and Markets Act 2000.
F22103 Restriction on availability of indexation allowance.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F23103AApplication of Act to certain offshore funds
(1)
This Act applies in relation to a relevant offshore fund as if—
(a)
the fund were a company, and
(b)
the rights of the participants in the fund were shares in the company.
(2)
An offshore fund is a relevant offshore fund if—
(a)
it is not constituted by a company F24or by two or more persons carrying on a trade or business in partnership, and
(b)
it is not a unit trust scheme (see section 99).
F25(3)
In this section and section 103B—
“offshore fund” has the meaning given in section 355 of TIOPA 2010;
“participant”, in relation to a fund, has the meaning given in section 362(1) of that Act.
F26103BApplication of section 99B to transparent funds
(1)
This section applies in relation to an offshore fund which is a transparent fund but is not a unit trust scheme (“the fund”).
(2)
Section 99B applies for the purposes of computing the gain accruing on a disposal by a participant of an interest in the fund and for all other provisions of this Act as if—
(a)
the fund were a unit trust scheme,
(b)
the interest in the fund were units in a unit trust scheme (but not an authorised unit trust), and
(c)
the participant were a unit holder.
(3)
In this section “transparent fund” has the meaning given by the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) (see regulation 11).