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—

  1. a

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

  2. b

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