After section 397A insert—

“397AATax credit under section 397A: conditions

(1)

Section 397A(1) only applies if condition A, B or C is met.

(2)

Condition A is that—

(a)

the relevant distribution is made by a company with issued share capital, and

(b)

at the time the person receives the relevant distribution, the person is a minority shareholder in the company.

(3)

Condition B is that the company that makes the relevant distribution is an offshore fund.

(4)

Condition C is that—

(a)

the company that makes the relevant distribution is a resident of (and only of) a qualifying territory at the time that the relevant distribution is received, and

(b)

if the relevant distribution is one of a series of distributions made as part of a scheme—

(i)

each company that makes a distribution in the series (a “scheme distribution”) is a resident of (and only of) a qualifying territory at the time that the scheme distribution is received, or

(ii)

the scheme is not a tax advantage scheme.

(5)

In this section—

“minority shareholder”, in relation to a company, has the meaning given in section 397C;

“offshore fund” has the same meaning as in Chapter 5 of Part 17 of ICTA (see sections 756A to 756C of that Act);

“qualifying territory” has the meaning given by or under section 397BA;

“relevant distribution” has the same meaning as in section 397A;

“scheme” includes any scheme, arrangements or understanding of any kind, whether or not legally enforceable and whether involving a single transaction or two or more transactions;

“tax advantage scheme” means a scheme that, ignoring any incidental purposes, has as its only purpose or purposes either or both of the following—

(a)

to enable a person to obtain a tax credit under section 397A, and

(b)

to enable a person to obtain (in any territory) any other relief from tax on a distribution.”