(1)Schedule 10 to the Taxes Act 1988 (profit sharing schemes) shall be amended as mentioned in subsections (2) to (4) below.
(2)In paragraph 1 (limitations on contractual obligations of participants) in sub-paragraph (1) the following paragraph shall be inserted after paragraph (c)—
“(cc)directing the trustees to accept an offer of a qualifying corporate bond, whether alone or with cash or other assets or both, for his shares if the offer forms part of a general offer which is made as mentioned in paragraph (c) above; or”.
(3)In paragraph 1 the following sub-paragraph shall be inserted after sub-paragraph (3)—
“(4)In sub-paragraph (1)(cc) above “qualifying corporate bond” shall be construed in accordance with section 117 of the 1992 Act.”
(4)The following paragraph shall be inserted after paragraph 5 (company reconstructions)—
“5A(1)Paragraph 5(2) to (6) above apply where there occurs in relation to any of a participant’s shares (“the original holding”) a relevant transaction which would result in a new holding being equated with the original holding for the purposes of capital gains tax, were it not for the fact that what would be the new holding consists of or includes a qualifying corporate bond; and “relevant transaction” here means a transaction mentioned in Chapter II of Part IV of the 1992 Act.
(2)In paragraph 5(2) to (6) above as applied by this paragraph—
(a)references to a company reconstruction are to the transaction referred to in sub-paragraph (1) above;
(b)references to the new holding are to what would be the new holding were it not for the fact mentioned in sub-paragraph (1) above;
(c)references to the original holding shall be construed in accordance with sub-paragraph (1) above (and not paragraph 5(1));
(d)references to shares, in the context of the new holding, include securities and rights of any description which form part of the new holding.
(3)In sub-paragraph (1) above “qualifying corporate bond” shall be construed in accordance with section 117 of the 1992 Act.”
(5)In paragraph 32(1) of Schedule 9 to the Taxes Act 1988 (requirements applicable to profit sharing schemes) for “or (c)” there shall be substituted “ , (c) or (cc) ”.
(6)In paragraph 33(a) of Schedule 9 to the Taxes Act 1988 (which provides that the trust instrument must contain certain provision by reference to new shares within the meaning of paragraph 5 of Schedule 10) the reference to paragraph 5 of Schedule 10 shall be construed as including a reference to that paragraph as applied by paragraph 5A.
(7)Subsections (2) and (3) above shall have effect where a direction is made on or after the day on which this Act is passed.
(8)Subsection (4) above shall have effect where what would be the new holding comes into being on or after the day on which this Act is passed; but this is subject to subsection (13) below.
(9)Subsection (5) above shall have effect in relation to any scheme not approved before the day on which this Act is passed.
(10)In a case where—
(a)a scheme is approved before the day on which this Act is passed, and
(b)on or after that day the trust instrument is altered in such a way that paragraph 32(1) of Schedule 9 to the Taxes Act 1988 would be fulfilled if subsection (5) above applied in relation to the scheme,
subsection (5) above shall apply in relation to the scheme with effect from the time the alteration is made.
(11)Subsection (6) above shall have effect in relation to any scheme not approved before the day on which this Act is passed.
(12)In a case where—
(a)a scheme is approved before the day on which this Act is passed, and
(b)on or after that day the trust instrument is altered in such a way that paragraph 33(a) of Schedule 9 to the Taxes Act 1988 would be fulfilled if subsection (6) above applied in relation to the scheme,
subsection (6) above shall apply in relation to the scheme with effect from the time the alteration is made.
(13)In a case where—
(a)a scheme is approved before the day on which this Act is passed,
(b)subsection (4) above would apply in relation to the scheme by virtue of subsection (8) above and apart from this subsection, and
(c)the trust instrument is not altered as mentioned in subsection (12)(b) above before what would be the new holding comes into being,
subsection (4) above shall not apply in relation to the scheme.
(14)Subsection (6) above shall not imply a contrary intention for the purposes of section 20(2) of the M1Interpretation Act 1978 in its application to other references to paragraph 5 of Schedule 10 to the Taxes Act 1988.