Section 1034: Commencement
3140.This section provides for the commencement of the Act.
3141.Subsection (1) deals with the position both for income tax and corporation tax. This Act is in substance an income tax only Act. But it makes many consequential amendments to corporation tax legislation. Those consequential amendments also require a commencement provision.
3142.Subsection (3) deals with the enterprise investment scheme (EIS). EIS has some distinctive features which could result in very complicated transitional and savings provisions. In contrast to venture capital trusts (VCTs) where there are two sorts of investments, those made in the VCT and those made by the VCT, in EIS there is no intermediate investor. This makes it possible for EIS to have the different commencement basis, expressed in terms of “shares issued”, provided in this subsection.
3143.These features are:
many of the conditions on which eligibility for relief hinge need to be met for the whole of the period prescribed for that particular requirement;
the commencement date for that period is dependent on the date when shares are issued; and
EIS relief is given in the tax year in which the shares are issued and, if the relief is reduced or withdrawn, it is that year which is affected.
3144.It may not be clear in relation to all the sections in Part 5, that the commencement provision in section 1034(1) applies only to new share issues. So section 1034(3) provides that Part 5 does not have effect in relation to shares issued before 6 April 2007.
3145.This means, for instance, that it will be necessary to refer to the provisions of ICTA to determine whether and to what extent relief is to be withdrawn or reduced on a disposal on or after 6 April 2007 of shares acquired before that date.
3146.Section 1034(3) also extends to consequential amendments and repeals. For this reason both Schedules 1 and 3 have a separate Part which has effect in relation to EIS shares issued on or after 6 April 2007.
3147.Section 1034(3) is subject to the general provisions in Part 1 of Schedule 2 (Transitionals and savings). Also there is a specific transitional provision in Part 7 of Schedule 2 which preserves the effect of the FA 2006 amendment of section 293(6A) of ICTA.
