59E Further provision as to when corporation tax is due and payable.

1

The Treasury may by regulations make provision, in relation to companies of such descriptions as may be prescribed, for or in connection with treating amounts of corporation tax for an accounting period as becoming due and payable on dates which fall on or before the date on which corporation tax for that period would become due and payable apart from this section.

2

Without prejudice to the generality of subsection (1) above, regulations under this section may make provision—

a

for or in connection with the determination of amounts of corporation tax which are treated as becoming due and payable under the regulations;

b

for or in connection with the determination of the dates on which amounts of corporation tax are treated as becoming due and payable under the regulations;

c

for or in connection with the making of payments to the Board in respect of amounts of corporation tax which are treated as becoming due and payable under the regulations;

d

for or in connection with the determination of the amount of any such payments as are mentioned in paragraph (c) above;

e

for or in connection with the determination of the dates on which any such payments as are mentioned in paragraph (c) above become due and payable;

f

for or in connection with any assumptions which are to be made for any purposes of the regulations;

g

for or in connection with the payment to the Board of interest on amounts of corporation tax which are treated as becoming due and payable under the regulations;

h

for or in connection with the repayment of amounts paid under the regulations;

i

for or in connection with the payment of interest by the Board on amounts paid or repaid under the regulations;

j

with respect to the furnishing of information to the Board;

k

with respect to the keeping, production or inspection of any books, documents or other records;

l

for or in connection with the imposition of such requirements as the Treasury think necessary or expedient for any purposes of the regulations;

m

for or in connection with appeals in relation to questions arising under the regulations.

3

Regulations under this section may make provision—

a

for amounts of corporation tax for an accounting period to be treated as becoming due and payable on dates which fall within the accounting period;

b

for payments in respect of any such amounts of corporation tax for an accounting period as are mentioned in paragraph (a) above to become due and payable on dates which fall within the accounting period.

4

Where interest is charged by virtue of regulations under this section on any amounts of corporation tax for an accounting period which are treated as becoming due and payable under the regulations, the company shall, in such circumstances as may be prescribed, be liable to a penalty not exceeding twice the amount of that interest.

5

Regulations under this section—

a

may make such modifications of any provisions of the Taxes Acts, or

b

may apply such provisions of the Taxes Acts,

as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.

6

Regulations under this section which apply any provisions of the Taxes Acts may apply those provisions either without modifications or with such modifications as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.

7

Regulations under this section—

a

may make different provision for different purposes, cases or circumstances;

b

may make different provision in relation to companies or accounting periods of different descriptions;

c

may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.

8

Subject to subsection (9) below, regulations under this section may make provision in relation to accounting periods beginning before (as well as accounting periods beginning on or after) the date on which the regulations are made.

9

Regulations under this section may not make provision in relation to accounting periods ending before the day appointed under section 199 of the M2Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

10

In this section—

• “modifications” includes amendments, additions and omissions;

• “prescribed” means prescribed by regulations made under this section.

11

Any reference in this section to corporation tax includes a reference—

a

to any amount due from a company under section 419 of the principal Act (loans to participators etc) as if it were an amount of corporation tax chargeable on the company;

b

to any sum chargeable on a company under section 747(4)(a) of the principal Act (controlled foreign companies) as if it were an amount of corporation tax.

2

Paragraph (b) of subsection (1) above does not apply in relation to interest under section 87 or 87A of this Act payable by a company within the charge to corporation tax.

5A

Paragraph (b) of subsection (5) above does not apply in relation to interest payable to a company within the charge to corporation tax.

98 Tied premises: receipts and expenses treated as those of trade.

1

This section applies where a person (“the trader")—

a

carries on a trade,

b

in the course of the trade supplies, or is concerned in the supply of, goods sold or used on premises occupied by another person,

c

has an estate or interest in those premises, and

d

deals with that estate or interest as property employed for the purposes of the trade.

2

Where this section applies the receipts and expenses in connection with the premises that would otherwise fall to be brought into account in computing the profits of a Schedule A business carried on by the trader shall instead be brought into account in computing the profits of the trade.

3

Any necessary apportionment shall be made on a just and reasonable basis of receipts or expenses—

a

which do not relate only to the premises concerned, or

b

where the conditions in subsection (1) are met only in relation to part of the premises.

4

This section applies to premises outside the United Kingdom as if the premises were in the United Kingdom.

4

Where section 98 of the Taxes Act applies (tied premises: receipts and expenses treated as those of trade), the trader shall be treated, to the extent that the conditions in subsection (1) of that section are met in relation to premises, as occupying as well as using the premises for the purposes of the trade.

5A

Where an amount is chargeable to tax under section 140A of the Taxes Act in respect of—

a

the acquisition or disposal of any interest in shares, or

b

any interest in shares ceasing to be only conditional,

the relevant amount is a sum equal to the amount so chargeable.

5B

Where an amount is chargeable to tax under section 140D of the Taxes Act in respect of the conversion of shares, the relevant amount is a sum equal to the amount so chargeable.

8

For the purposes of subsection (5A) above this section shall have effect as if references in this section to shares included anything referred to as shares in section 140A of the Taxes Act.

149B Employee incentive schemes: conditional interests in shares.

1

Where—

a

an individual has acquired an interest in any shares or securities which is only conditional,

b

that interest is one which for the purposes of section 140A of the Taxes Act is taken to have been acquired by him as a director or employee of a company, and

c

by virtue of section 17(1)(b) the acquisition of that interest would, apart from this section, be an acquisition for a consideration equal to the market value of the interest,

section 17 shall not apply for calculating the consideration.

2

Instead, the consideration for the acquisition shall be taken (subject to section 120) to be equal to the actual amount or value of the consideration given for that interest as computed in accordance with section 140B of the Taxes Act.

3

This section shall apply in relation only to the individual making the acquisition and, accordingly, shall be disregarded in calculating the consideration received by the person from whom the interest is acquired.

4

Expressions used in this section and in section 140A of the Taxes Act have the same meanings in this section as in that section.

TABLE A

Cylinder capacity of car in cubic centimetres	Cash equivalent
1,400 or less	£1,010
More than 1,400 but not more than 2,000	£1,280
More than 2,000	£1,890

TABLE AB

Cylinder capacity of car in cubic centimetres	Cash equivalent
2,000 or less	£1,280
More than 2,000	£1,890

TABLE B

Description of car	Cash equivalent
Any car	£1,890

333B Involvement of insurance companies with plans and accounts.

1

The Treasury may make regulations providing exemption from tax for income from, and chargeable gains in respect of, investments and deposits of so much of an insurance company’s long term business fund as is referable to section 333 business.

2

The Treasury may by regulations modify the effect of section 30(4) of the M19Finance (No. 2) Act 1997 (which repeals section 231(2) of the Taxes Act 1988 with effect from 6th April 1999) in relation to distributions which—

a

are made before 6th April 2004; and

b

are received by an insurance company in respect of investments of so much of its long term business fund as is referable to section 333 business.

3

Regulations under this section may make provision for insurance companies that are not resident in the United Kingdom to be treated, in relation to investments of so much of their long term business funds as are referable to section 333 business—

a

as if they were so resident for the purposes of any enactment conferring an entitlement to, or to the payment of, tax credits in respect of investments; and

b

as if such other conditions of any entitlement to, or to the payment of, tax credits were also satisfied.

4

Regulations under section 333 or this section may include provision which, in relation to insurance companies that are not resident in the United Kingdom—

a

requires a person to be appointed to be responsible for securing the discharge of any duties to which such an insurance company is subject under the regulations; and

b

confers rights and powers, and imposes liabilities, on a person so appointed;

and, without prejudice to the generality of paragraphs (a) and (b) above, regulations made by virtue of this subsection may include any provision corresponding to any that, in relation to a European institution, may be made under section 333A.

5

Regulations under this section may provide that an insurance company—

a

shall comply with any notice served on it by the Board which requires it, within a prescribed period, to make available for the Board’s inspection documents (of a prescribed kind) relating to, or to matters connected with, its past or present section 333 business; and

b

shall, within a prescribed period of being required to do so by the Board, furnish to the Board information (of a prescribed kind) about its past or present section 333 business or any matters connected with it.

6

Any power of the Treasury under this section to make provision by regulations in relation to insurance companies shall include power by regulations to make such corresponding provision in relation to friendly societies as the Treasury think fit.

7

Regulations under this section may—

a

for purposes connected with any exemption from tax conferred by virtue of subsection (1) above, apply or modify any provision made by or under the Tax Acts;

b

make different provision for different cases;

c

include such incidental, supplemental, consequential and transitional provision as the Treasury may consider appropriate.

8

Without prejudice to the generality of the powers conferred by subsection (7) above, the provision that may be made in connection with an exemption from tax conferred by virtue of subsection (1) above shall include provision for section 436 to apply (with any such modifications as may be prescribed) in relation to section 333 business as it applies in relation to pension business.

9

In this section—

• “friendly society” has the same meaning as in Chapter II of Part XII;

• “insurance company” means an insurance company within the meaning of the M20Insurance Companies Act 1982;

• “long term business fund” has the same meaning as in Chapter I of Part XII;

• “prescribed” means prescribed by regulations under this section;

• “section 333 business”, in relation to an insurance company, means the business of the company that is attributable to the making of investments with that company under plans for which provision is made by regulations under section 333.

regulations under section 333B;

553A Overseas life assurance business: life policies.

1

A policy of life insurance which, immediately before the happening of a chargeable event or a relevant event—

a

is an overseas policy, but

b

is not a new non-resident policy,

shall, in relation to that event, be treated for the purposes of this Chapter as if it were a new non-resident policy.

2

A policy of life insurance which, immediately before the happening of a relevant event—

a

is an overseas policy, and

b

is a new non-resident policy,

shall, in relation to that event, be taken for the purposes of this Chapter not to be a qualifying policy.

3

Where a chargeable event happens in relation to a new non-resident policy, section 553(7) shall not have effect in relation to the gain treated as arising in connection with the policy on the happening of the chargeable event.

4

In this section—

• “new non-resident policy” means a new non-resident policy as defined in paragraph 24 of Schedule 15 (and in subsections (2) and (3) above includes a policy treated as such by virtue of subsection (1) above);

• “overseas policy” means a policy of life insurance which, by virtue of section 431D(1)(a), forms part of the overseas life assurance business of an insurance company or friendly society;

• “relevant event”, in relation to a policy of life insurance, means an event which would be a chargeable event in relation to that policy if the policy were assumed not to be a qualifying policy.

5

This section applies in relation to chargeable events and relevant events happening on or after 17th March 1998 in relation to policies of life insurance issued in respect of insurances made on or after that date.

6

A policy of life insurance issued in respect of an insurance made before 17th March 1998 shall be treated for the purposes of this section as issued in respect of one made on or after that date if it is varied on or after that date so as to increase the benefits secured or to extend the term of the insurance; and any exercise of rights conferred by the policy shall be regarded for this purpose as a variation.

553B Overseas life assurance business: capital redemption policies.

1

A capital redemption policy which immediately before the happening of a chargeable event—

a

is an overseas policy, but

b

is not a new offshore capital redemption policy,

shall, in relation to that event, be treated for the purposes of this Chapter as if it were a new offshore capital redemption policy.

2

In this section—

• “new offshore capital redemption policy” has the same meaning as in section 553;

• “overseas policy” means a capital redemption policy which, by virtue of section 431D(1)(a), forms part of the overseas life assurance business of an insurance company.

3

This section applies in relation to capital redemption policies where the contract is made after the coming into force of the first regulations under section 458A in consequence of which capital redemption business forms part of the overseas life assurance business of an insurance company.

1A

The tax to be assessed on a person by a self-assessment shall not include any tax which, under Chapter I or IV of Part XIV of the principal Act, is charged on the administrator of a scheme (within the meaning of section 658A of that Act) and is assessable by the Board in accordance with that section.

231AA No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.

1

A person shall not be entitled to a tax credit under section 231 in respect of a qualifying distribution if—

a

he is the borrower under a stock lending arrangement or the interim holder under a repurchase agreement;

b

the qualifying distribution is, or is a payment representative of, a distribution in respect of securities to which the arrangement or agreement relates; and

c

a manufactured dividend representative of that distribution is paid by that person in respect of securities to which the arrangement or agreement relates.

2

In this section “stock lending arrangement” has the same meaning as in section 263B of the 1992 Act and, in relation to any such arrangement, any reference to the borrower, or the securities to which the arrangement relates, shall be construed accordingly.

3

For the purposes of this section the cases where there is a repurchase agreement are the following—

a

any case falling within subsection (1) of section 730A; and

b

any case which would fall within that subsection if the sale price and the repurchase price were different;

and, in any such case, any reference to the interim holder, or the securities to which the agreement relates, shall be construed accordingly.

4

For the purposes of this section “manufactured dividend” has the same meaning as in paragraph 2 of Schedule 23A (and any reference to a manufactured dividend being paid accordingly includes a reference to a payment falling by virtue of section 736B(2) or 737A(5) to be treated for the purposes of Schedule 23A as if it were made).

231AB No tax credit for original owner under repurchase agreement in respect of certain manufactured dividends.

1

A person shall not be entitled to a tax credit under section 231 in respect of a qualifying distribution if—

a

he is the original owner under a repurchase agreement;

b

the qualifying distribution is a manufactured dividend paid to that person by the interim holder under the repurchase agreement in respect of securities to which the agreement relates; and

c

the repurchase agreement is not such that the actual dividend which the manufactured dividend represents is receivable otherwise than by the original owner.

2

For the purposes of this section the cases where there is a repurchase agreement are the following—

a

any case falling within subsection (1) of section 730A; and

b

any case which would fall within that subsection if the sale price and the repurchase price were different;

and, in any such case, any reference to the original owner, the interim holder, or the securities to which the agreement relates, shall be construed accordingly.

3

Subsection (4) of section 231AA applies for the purposes of this section as it applies for the purposes of that section.

2

Where a manufactured dividend is paid by a dividend manufacturer who is a company resident in the United Kingdom, the Tax Acts shall have effect—

a

in relation to the recipient, and persons claiming title through or under him, as if the manufactured dividend were a dividend on the UK equities in question; and

b

in relation to the dividend manufacturer, as if the amount paid were a dividend of his.

798 Restriction of relief on certain interest and dividends.

1

This section applies where—

a

in any chargeable period the profits of a trade carried on by a qualifying taxpayer include an amount computed in accordance with section 795 in respect of foreign interest or foreign dividends;

b

the taxpayer is entitled in accordance with this Chapter to credit for foreign tax on the foreign interest or foreign dividends; and

c

in the case of foreign dividends, the foreign tax mentioned in paragraph (b) above is or includes underlying tax.

2

The amount of the credit for foreign tax referred to in subsection (1)(b) above which, in accordance with this Chapter, is to be allowed against income tax or corporation tax—

a

shall be limited by treating the amount of the foreign interest or foreign dividends (as increased or reduced under section 798A) as reduced (or further reduced) for the purposes of this Chapter by an amount equal to the taxpayer’s financial expenditure in relation to the interest or dividends (as determined in accordance with section 798B); and

b

so far as the credit relates to foreign tax on interest or foreign tax on dividends which is not underlying tax, shall not exceed 15 per cent. of the interest or dividends, computed without regard to paragraph (a) above or to any increase or reduction under section 798A.

3

In this section and sections 798A and 798B—

• “interest”, in relation to a loan, includes any introductory or other fee or charge which is payable in accordance with the terms on which the loan is made or is otherwise payable in connection with the making of the loan;

• “foreign dividends” means dividends payable out of or in respect of the stocks, funds, shares or securities of a body of persons not resident in the United Kingdom;

• “foreign interest” means interest payable by a person not resident in the United Kingdom or by a government or public or local authority in a country outside the United Kingdom.

4

In this section and section 798B “qualifying taxpayer” means, subject to subsection (5) below, a person carrying on a trade which includes the receipt of interest or dividends and is not an insurance business.

5

Where a company which is connected or associated with a qualifying taxpayer is acting in accordance with a scheme or arrangement the purpose, or one of the main purposes, of which is to prevent or restrict the application of this section to the taxpayer—

a

the company shall be treated for the purposes of this section as a qualifying taxpayer; and

b

any foreign interest or foreign dividends received in pursuance of the scheme or arrangement shall be treated for those purposes as profits of a trade carried on by the company.

6

For the purposes of this section and section 798B—

a

section 839 applies; and

b

subsection (10) of section 783 applies as it applies for the purposes of that section.

7

In this section “spared tax” has the same meaning as in section 798A.

10

In subsection (1) above “bank” means a company carrying on, in the United Kingdom or elsewhere, any trade which includes the receipt of interest or dividends, and section 839 applies for the purposes of that subsection.

3

Subject to subsection (5) below, where—

a

any credit for foreign tax has been allowed to a person under any arrangements, and

b

the amount of that credit is subsequently rendered excessive by reason of an adjustment of the amount of any tax payable under the laws of a territory outside the United Kingdom,

that person shall give notice in writing to an officer of the Board that an adjustment has been made that has rendered the amount of the credit excessive.

4

A notice under subsection (3) above must be given within one year from the time of the making of the adjustment.

5

Subsections (3) and (4) above do not apply where the adjustment is one the consequences of which in relation to the credit fall to be given effect to in accordance with regulations made under—

a

section 182(1) of the M29Finance Act 1993 (regulations relating to individual members of Lloyd’s); or

b

section 229 of the M30Finance Act 1994 (regulations relating to corporate members of Lloyd’s).

6

A person who fails to comply with the requirements imposed on him by subsections (3) and (4) above in relation to any adjustment shall be liable to a penalty of an amount not exceeding the amount by which the credit allowed has been rendered excessive by reason of the adjustment.

770A Provision not at arm’s length.

Schedule 28AA (which deals with provision made or imposed otherwise than at arm’s length) shall have effect.

1A

In sub-paragraph (1)(a) above “intellectual property” includes (in particular)—

a

any industrial, commercial or scientific information, knowledge or expertise;

b

any patent, trade mark, registered design, copyright or design right;

c

any licence or other right in respect of intellectual property;

d

any rights under the law of a country outside the United Kingdom which correspond or are similar to those falling within paragraph (b) or (c) above.

c

banking, deposit-taking, money-lending or debt-factoring, or any business similar to banking, deposit-taking, money-lending or debt-factoring;

767AA Change in company ownership: postponed corporation tax.

1

Where it appears to the Board that—

a

there has been a change in the ownership of a company (“the transferred company"),

b

any corporation tax relating to an accounting period ending on or after the change has been assessed on the transferred company or an associated company,

c

that tax remains unpaid at any time more than six months after it was assessed, and

d

the condition set out in subsection (2) below is fulfilled,

any person mentioned in subsection (4) below may be assessed by the Board and charged to an amount of corporation tax not exceeding the amount remaining unpaid.

2

The condition is that it would be reasonable (apart from this section) to infer, from either or both of—

a

the terms of any transactions entered into in connection with the change, and

b

the other circumstances of the change and of any such transactions,

that at least one of those transactions was entered into by one or more of its parties on the assumption, as regards a potential tax liability, that that liability would be unlikely to be met, or met in full, if it were to arise.

3

In subsection (2) above the reference to a potential tax liability is a reference to a liability to pay corporation tax which—

a

in circumstances which were reasonably foreseeable at the time of the change in ownership, or

b

in circumstances the occurrence of which is something of which there was at that time a reasonably foreseeable risk,

would or might arise from an assessment made, after the change in ownership, on the transferred company or an associated company (whether or not a particular associated company).

4

The persons mentioned in subsection (1) above are—

a

any person who at any time during the relevant period had control of the transferred company;

b

any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before the change in the ownership of the transferred company.

5

In subsection (4) above, “the relevant period” means—

a

the period of three years before the change in the ownership of the transferred company; or

b

if during the period of three years before that change (“the later change") there was a change in the ownership of the transferred company (“the earlier change"), the period elapsing between the earlier change and the later change.

6

For the purposes of this section a transaction is entered into in connection with a change in the ownership of a company if—

a

it is the transaction, or one of the transactions, by which that change is effected; or

b

it is entered into as part of a series of transactions, or scheme, of which transactions effecting the change in ownership have formed or will form a part.

7

For the purposes of this section—

a

references to a scheme are references to any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving a single transaction or two or more transactions;

b

it shall be immaterial in determining whether any transactions have formed or will form part of a series of transactions or scheme that the parties to any of the transactions are different from the parties to another of the transactions; and

c

the cases in which any two or more transactions are to be taken as forming part of a series of transactions or scheme shall include any case in which it would be reasonable to assume that one or more of them—

i

would not have been entered into independently of the other or others; or

ii

if entered into independently of the other or others, would not have taken the same form or been on the same terms.

8

In this section references, in relation to the transferred company and an assessment to tax, to an associated company are references to any compnay (whenever formed) which, at the time of the assessment or at an earlier time after the change in ownership—

a>

has control of the transferred company;

b

is a company of which the transferred company has control; or

c

is a company under the control of the same person or persons as the transferred company.

9

A person assessed and charged to tax under this section shall be assessed and charged in the name of the company by whom the tax to which the assessment relates remains unpaid.

10

Any assessment made under this section shall not be out of time if made within three years from the date of the final determination of the liability of the company by whom the tax remains unpaid to corporation tax for the accounting period for which that tax was assessed.

767C Change in company ownership: information.

1

This section applies where it appears to the Board that—

a

there has been a change in the ownership of a company (“the subject company"); and

b

in connection with that change a person (“the seller") may be or become liable to be assessed and charged to corporation tax under section 767A or 767AA.

2

The Board may by notice require any person to supply to them—

a

any document in the person’s possession or power which appears to the Board to be relevant for determining any one or more of the matters referred to in subsection (3) below; or

b

any particulars which appear to them to be so relevant.

3

Those matters are—

a

whether the seller is or may become liable as mentioned in subsection (1) above and the extent of the liability or potential liability; and

b

whether the subject company or an associated company is or may become liable to be assessed to any tax in respect of which the seller is or could become liable as mentioned in subsection (1) above, and the extent of the liability or potential liability of the subject company or associated company.

4

Without prejudice to the following provisions of this section, the references in subsection (2) above to documents and particulars are references to the documents and particulars specified or described in the notice.

5

A notice under subsection (2) above must specify the period, which must not be less than 30 days, within which the notice must be complied with.

6

Any person to whom any documents are supplied under this section may take copies of them or of any extracts from them.

7

A notice under subsection (2) above shall not oblige a person to supply any documents or particulars relating to the conduct of any pending appeal relating to tax.

8

In relation to any notice under subsection (2) above—

a

subsection (4) of section 20B of the M41Taxes Management Act 1970 (rules relating to copies of documents) shall apply as it applies in relation to a notice under section 20(1) of that Act; and

b

subsections (8) to (14) of section 20B of that Act (rules about obtaining documents etc. from professional advisers) shall apply as they apply in relation to a notice under section 20(3) of that Act but as if any reference to an inspector were a reference to the Board;

and subsection (8C) of section 20 of that Act (exclusion of personal records and journalistic material) shall apply for the purposes of this section as it applies for the purposes of that section.

9

In this section references, in relation to the subject company and an assessment to tax, to an associated company are references to any company which, at the time of the assessment or at an earlier time after the change in ownership—

a

has control of the subject company;

b

is a company of which the subject company has control; or

c

is a company under the control of the same person or persons as the subject company.

10

In this section “document” means anything in which information of any description is recorded.

section 767C;

1A

In relation to corporation tax assessed under section 767AA, section 87A of the Management Act shall have effect as if the references to the date when the tax becomes due and payable were references to the date when the tax became due and payable by the transferred company or the associated company (as the case may be).

1AA

The rate of capital gains tax in respect of gains accruing to—

a

the trustees of a settlement, or

b

the personal representatives of a deceased person,

in a year of assessment shall be equivalent to the rate which for that year is applicable to trusts under section 686(1) of the Taxes Act.

2A Taper relief.

1

This section applies where, for any year of assessment—

a

there is, in any person’s case, an excess of the total amount referred to in subsection (2) of section 2 over the amounts falling to be deducted from that amount in accordance with that subsection; and

b

the excess is or includes an amount representing the whole or a part of any chargeable gain that is eligible for taper relief.

2

The amount on which capital gains tax is taken to be charged by virtue of section 2(2) shall be reduced to the amount computed by—

a

applying taper relief to so much of every chargeable gain eligible for that relief as is represented in the excess;

b

aggregating the results; and

c

adding to the aggregate of the results so much of every chargeable gain not eligible for taper relief as is represented in the excess.

3

Subject to the following provisions of this Act, a chargeable gain is eligible for taper relief if—

a

it is a gain on the disposal of a business asset with a qualifying holding period of at least one year; or

b

it is a gain on the disposal of a non-business asset with a qualifying holding period of at least three years.

4

Where taper relief falls to be applied to the whole or any part of a gain on the disposal of a business or non-business asset, that relief shall be applied by multiplying the amount of that gain or part of a gain by the percentage given by the table in subsection (5) below for the number of whole years in the qualifying holding period of that asset.

5

That table is as follows—

Gains on disposals of business assets			Gains on disposals of non-business assets
Number of whole years in qualifying holding period	Percentage of gain chargeable		Number of whole years in qualifying holding period
Percentage of gain chargeable
1	92.5
2	85
3	77.5		3	95
4	70		4	90
5	62.5		5	85
6	55		6	80
7	47.5		7	75
8	40		8	70
9	32.5		9	65
10 or more	25		10 or more	60

6

The extent to which the whole or any part of a gain on the disposal of a business or non-business asset is to be treated as represented in the excess mentioned in subsection (1) above shall be determined by treating deductions made in accordance with section 2(2)(a) and (b) as set against chargeable gains in such order as results in the largest reduction under this section of the amount charged to capital gains tax under section 2.

7

Schedule A1 shall have effect for the purposes of this section.

8

Subject to paragraph 2(4) of that Schedule, references in this section to the qualifying holding period of an asset are references—

a

except in the case of an asset falling within subsection (9) below, to the period after 5th April 1998 for which that asset had been held at the time of its disposal; and

b

in the case of an asset falling within that subsection, to the period mentioned in paragraph (a) above plus one year.

9

An asset falls within this subsection if—

a

the time which, for the purposes of paragraph 2 of Schedule A1, is the time when the asset is taken to have been acquired by the person making the disposal is a time before 17th March 1998; and

b

there is no period which in the case of that asset is a period which by virtue of paragraph 11 or 12 of that Schedule does not count for the purposes of taper relief.

1A

Indexation allowance in respect of changes shown by the retail prices indices for months after April 1998 shall be allowed only for the purposes of corporation tax.

1A

In subsection (1) above—

a

the references to an item of relevant allowable expenditure shall not, except for the purposes of corporation tax, include any item of expenditure incurred on or after 1st April 1998; and

b

the reference to the relevant month is a reference—

i

where that subsection has effect for the purposes of capital gains tax, to April 1998; and

ii

where that subsection has effect for the purposes of corporation tax, to the month in which the disposal occurs.

11A

For the purposes of this section the amount of the gain or loss accruing at any time to a company that is not resident in the United Kingdom shall be computed (where it is not the case) as if that company were within the charge to corporation tax on capital gains.

1A

In a case where the whole of the expenditure comprised in the option consideration was incurred on or after 1st April 1998, this section applies for the purposes of corporation tax only.

aa

does not apply, except for the purposes of corporation tax, to any securities acquired on or after 6th April 1998;

2A

Subsection (2)(aa) above shall not prevent the application of subsection (1) above to any securities that would be treated as acquired on or after 6th April 1998 but for their falling by virtue of section 127 to be treated as the same as securities acquired before that date.

4

For the purposes of this Chapter securities of a company which are held—

a

by a person who acquired them as an employee of the company or of any other person, and

b

on terms which for the time being restrict his right to dispose of them,

shall (notwithstanding that they would otherwise fall to be treated as of the same class) be treated as of a different class from any securities acquired by him otherwise than as an employee of the company or of any other person and also from any shares that are not held subject to restrictions, or the same restrictions, on disposal or in the case of which the restrictions are no longer in force.

106A Identification of securities: general rules for capital gains tax.

1

This section has effect for the purposes of capital gains tax (but not corporation tax) where any securities are disposed of by any person.

2

The securities disposed of shall be identified in accordance with the following provisions of this section with securities of the same class that have been acquired by the person making the disposal.

3

The provisions of this section have effect in the case of any disposal notwithstanding that some or all of the securities disposed of are otherwise identified—

a

by the disposal, or

b

by a transfer or delivery giving effect to it;

but where a person disposes of securities in one capacity, they shall not be identified under those provisions with any securities which he holds, or can dispose of, only in some other capacity.

4

Securities disposed of on an earlier date shall be identified before securities disposed of on a later date; and, accordingly, securities disposed of by a later disposal shall not be identified with securities already identified as disposed of by an earlier disposal.

5

Subject to subsection (4) above, if within the period of thirty days after the disposal the person making it acquires securities of the same class, the securities disposed of shall be identified—

a

with securities acquired by him within that period, rather than with other securities; and

b

with securities acquired at an earlier time within that period, rather than with securities acquired at a later time within that period.

6

Subject to subsections (4) and (5) above, securities disposed of shall be identified with securities acquired at a later time, rather than with securities acquired at an earlier time.

7

Subsection (6) above shall not require securities to be identified with particular securities comprised in a section 104 holding or a 1982 holding.

8

Accordingly, that subsection shall have effect for determining whether, and to what extent, any securities should be identified with the whole or any part of a section 104 holding or a 1982 holding—

a

as if the time of the acquisition of a section 104 holding were the time when it first came into being; and

b

as if 31st March 1982 were the time of the acquisition of a 1982 holding.

9

The identification rules set out in the preceding provisions of this section have effect subject to subsection (1) of section 105, and securities disposed of shall not be identified with securities acquired after the disposal except in accordance with that section or subsection (5) above.

10

In this section—

• “1982 holding” has the same meaning as in section 109;

• “securities” means any securities within the meaning of section 104 or any relevant securities within the meaning of section 108.

11

For the purposes of this section securities of a company shall not be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange, or would be so treated if dealt with on that recognised stock exchange.

2

Where the quantity of securities disposed of by any person exceeds the aggregate quantity of—

a

the securities (if any) which are required by subsection (1) above to be identified with securities acquired on the day of the disposal,

b

the securities (if any) which are required by any of the provisions of section 106 or 106A(5) to be identified with securities acquired after the day of the disposal, and

c

the securities (if any) which are required by any of the provisions of sections 104, 106, 106A or 107, or of Schedule 2, to be identified with securities acquired before the day of the disposal,

the disposal shall be treated as diminishing a quantity of securities subsequently acquired, and as so diminishing any quantity so acquired at an earlier date, rather than one so acquired at a later date.

1

This section has effect for the purposes of corporation tax where any securities are disposed of by a company.

1A

The securities disposed of shall be identified in accordance with the following provisions of this section with securities of the same class that have been acquired by the company making the disposal and could be comprised in that disposal.

2

The provisions of this section have effect in the case of any disposal notwithstanding that some or all of the securities disposed of are otherwise identified—

a

by the disposal, or

b

by a transfer or delivery giving effect to it;

but where a company disposes of securities in one capacity, they shall not be identified with securities which it holds, or can dispose of, only in some other capacity.

A1

This section has effect for the purposes of corporation tax where any relevant securities are disposed of by a company.

110A Indexation for section 104 holdings: capital gains tax.

1

For the purposes of capital gains tax (but not corporation tax) where—

a

there is a disposal on or after 6th April 1998 of a section 104 holding, and

b

any of the relevant allowable expenditure was incurred before 6th April 1998,

this section applies, in place of section 54 and subject to section 105, for computing the indexation allowance.

2

There shall be an indexed pool of expenditure and subsection (2) or, as the case may be, subsection (3) of section 110 shall apply by reference to that pool in relation to the disposal as it would apply (by reference to the pool for which that section provides) for the purposes of corporation tax.

3

The amount at any time of the indexed pool of expenditure shall be determined by—

a

taking the amount which would, under section 110 and section 114, have been the amount of the indexed pool of expenditure for the purposes of a disposal of the whole of the holding at the end of 5th April 1998; and

b

making any adjustments by way of increase or reduction that would be required to be made by virtue of subsection (8) of section 110 on the assumptions set out in subsection (4) below.

4

Those assumptions are—

a

that the indexed pool of expenditure is an indexed pool of expenditure for the purposes of section 110;

b

that no increase or reduction is to be made except for an operative event on or after 6th April 1998; and

c

that paragraph (a) of section 110(8) and section 114 are to be disregarded.

5

For the purposes of making any adjustment in accordance with subsection (3)(b) above, subsection (9) of section 110 shall be assumed to provide only that, where the operative event is a disposal, the calculation of the indexation allowance under subsection (2) of that section, as applied by subsection (2) above, is to be made before the reduction under subsection (8)(c) of that section.

142 Capital gains on stock dividends.

1

This section applies where any share capital to which section 249 of the Taxes Act applies is issued as mentioned in subsection (4), (5) or (6) of that section in respect of shares in the company held by any person.

2

The case shall not constitute a reorganisation of the company’s share capital for the purposes of sections 126 to 128.

3

The person who acquires the share capital by means of its issue shall (notwithstanding section 17(1)) be treated for the purposes of section 38(1)(a) as having acquired that asset for a consideration equal to the appropriate amount in cash (within the meaning of section 251(2) to (4) of the Taxes Act).

10A Temporary non-residents.

1

This section applies in the case of any individual (“the taxpayer") if—

a

he satisfies the residence requirements for any year of assessment (“the year of return");

b

he did not satisfy those requirements for one or more years of assessment immediately preceding the year of return but there are years of assessment before that year for which he did satisfy those requirements;

c

there are fewer than five years of assessment falling between the year of departure and the year of return; and

d

four out of the seven years of assessment immediately preceding the year of departure are also years of assessment for each of which he satisfied those requirements.

2

Subject to the following provisions of this section and section 86A, the taxpayer shall be chargeable to capital gains tax as if—

a

all the chargeable gains and losses which (apart from this subsection) would have accrued to him in an intervening year,

b

all the chargeable gains which under section 13 or 86 would be treated as having accrued to him in an intervening year if he had been resident in the United Kingdom throughout that intervening year, and

c

any losses which by virtue of section 13(8) would have been allowable in his case in any intervening year if he had been resident in the United Kingdom throughout that intervening year,

were gains or, as the case may be, losses accruing to the taxpayer in the year of return.

3

Subject to subsection (4) below, the gains and losses which by virtue of subsection (2) above are to be treated as accruing to the taxpayer in the year of return shall not include any gain or loss accruing on the disposal by the taxpayer of any asset if—

a

that asset was acquired by the taxpayer at a time in the year of departure or any intervening year when he was neither resident nor ordinarily resident in the United Kingdom;

b

that asset was so acquired otherwise than by means of a relevant disposal which by virtue of section 58, 73 or 258(4) is treated as having been a disposal on which neither a gain nor a loss accrued;

c

that asset is not an interest created by or arising under a settlement; and

d

the amount or value of the consideration for the acquisition of that asset by the taxpayer does not fall, by reference to any relevant disposal, to be treated as reduced under section 23(4)(b) or (5)(b), 152(1)(b), 162(3)(b) or 247(2)(b) or (3)(b).

4

Where—

a

any chargeable gain that has accrued or would have accrued on the disposal of any asset (“the first asset”) is a gain falling (apart from this section) to be treated by virtue of section 116(10) or (11), 134 or 154(2) or (4) as accruing on the disposal of the whole or any part of another asset, and

b

the other asset is an asset falling within paragraphs (a) to (d) of subsection (3) above but the first asset is not,

subsection (3) above shall not exclude that gain from the gains which by virtue of subsection (2) above are to be treated as accruing to the taxpayer in the year of return.

5

The gains and losses which by virtue of subsection (2) above are to be treated as accruing to the taxpayer in the year of return shall not include any chargeable gain or allowable loss accruing to the taxpayer in an intervening year which, in the taxpayer’s case, has fallen to be brought into account for that year by virtue of section 10 or 16(3).

6

The reference in subsection (2)(c) above to losses allowable in an individual’s case in an intervening year is a reference to only so much of the aggregate of the losses that would have been available in accordance with subsection (8) of section 13 for reducing gains accruing by virtue of that section to that individual in that year as does not exceed the amount of the gains that would have accrued to him in that year if it had been a year throughout which he was resident in the United Kingdom.

7

Where this section applies in the case of any individual, nothing in any enactment imposing any limit on the time within which an assessment to capital gains tax may be made shall prevent any such assessment for the year of departure from being made in the taxpayer’s case at any time before the end of two years after the 31st January next following the year of return.

8

In this section—

• “intervening year” means any year of assessment which, in a case where the conditions in paragraphs (a) to (d) of subsection (1) above are satisfied, falls between the year of departure and the year of return;

• “relevant disposal”, means a disposal of an asset acquired by the person making the disposal at a time when that person was resident or ordinarily resident in the United Kingdom; and

• “the year of departure” means the last year of assessment before the year of return for which the taxpayer satisfied the residence requirements.

9

For the purposes of this section an individual satisfies the residence requirements for a year of assessment if that year of assessment is one during any part of which he is resident in the United Kingdom or during which he is ordinarily resident in the United Kingdom.

10

This section is without prejudice to any right to claim relief in accordance with any double taxation relief arrangements.

9A

For the purposes of this section an individual shall be deemed to have been resident in the United Kingdom at any time in any year of assessment which in his case is an intervening year for the purposes of section 10A.

9B

If—

a

it appears after the end of any year of assessment that any individual is to be treated by virtue of subsection (9A) above as having been resident in the United Kingdom at any time in that year, and

b

as a consequence, any adjustments fall to be made to the amounts of tax taken to have been chargeable by virtue of this section on any person,

nothing in any enactment limiting the time for the making of any claim or assessment shall prevent the making of those adjustments (whether by means of an assessment, an amendment of an assessment, a repayment of tax or otherwise).