Finance Act 2022

Determining relevant interests U.K.

5 (1) This paragraph applies for the purpose of determining, at any time, the proportion of profits or assets available for distribution that a person (“the relevant person”) with a relevant interest in a company (“the relevant company”), or with a relevant interest in an enhanced class of the relevant company, is beneficially entitled to.

(2) When making a determination in relation to a relevant interest in the relevant company, only include—

(a) profits that are, or would be if the relevant company were a QAHC, profits of its QAHC ring fence business (see paragraph 20), and

(b) assets that are, or would be, used wholly or partially for the purposes of that business.

(3) When making a determination in relation to a relevant interest in an enhanced class of the relevant company, only include profits or assets falling within that class that fall within sub-paragraph (2)(a) or (b).

(4) Sections 165 and 166 of CTA 2010 (calculation of proportion of assets and profits for distribution) and sections 169 to 178 of that Act (shares or securities with limited or temporary rights and options) apply for the purpose of determining the proportion of profits or assets available for distribution as if—

(a) any reference to company A were to the relevant person,

(b) any reference to company B were to the relevant company,

(c) the references to the relevant accounting period were to the accounting period of the relevant company within which the determination is made,

(d) references in section 165 to “total profits” were to the total profits included in the determination as a result of sub-paragraph (2) or (as the case may be) (3),

(e) references in section 166 to the “assets amount” only included assets of the relevant company included in the determination as a result of sub-paragraph (2) or (3),

(f) references in that section to the “liabilities amount” only included—

(i) where determining relevant interests in the relevant company, such of its liabilities as are, or would be if the relevant company were a QAHC, attributable (on a just and reasonable basis) to its QAHC ring fence business, and

(ii) where determining relevant interests in an enhanced class of the relevant company, such of those liabilities as are also attributable (on a just and reasonable basis) to that class,

(g) subsection (4) of section 165 were omitted,

(h) in section 169(1) for “182” there were substituted “178”,

[F1 (ha) in sections 170(3) and 172(3) (shares or securities with limited or temporary rights), for “less than” there were substituted “more than”,

(hb) in section 174 (option arrangements)—

(i) in subsection (1), in Step 4, for “lowest proportion” there were substituted “highest proportion”, and

(ii) in subsection (2), for “less than” there were substituted “more than”,

(hc) in sections 175(3), 176(3), 177(3) and 178(3) (cases in which more than one of sections 170, 172, and 174 apply), for “lowest proportion” there were substituted “highest proportion”,]

(i) in section 170, subsection (6) were omitted,

(j) in sections 170(4) and 172(4), for “, 178 and 180” there were substituted “and 178”,

(k) in section 174(3), “and 180” were omitted, and

(l) in sections 173 and 174, references to the participating equity holders were—

(i) where determining relevant interests in the relevant company, to persons who have a relevant interest in the relevant company, or

(ii) where determining relevant interests in an enhanced class of the relevant company, to persons who have a relevant interest in that class.

(5) Where a person has a beneficial entitlement to profits that arises under investment management profit-sharing arrangements, use the maximum proportional entitlement that could arise over the life of the arrangements, instead of the actual proportion at any particular time.

(6) For the purposes of sub-paragraph (5) “investment management profit-sharing arrangements” means arrangements under which a person has a variable entitlement to a proportion of the profits of investments in connection with the provision of investment management services in relation to those investments.

(7) Where a person is entitled to a dividend which amounts to a fee for administrative services provided in connection with investment in the relevant company, that entitlement is treated as not amounting to a relevant interest.

Textual Amendments

F1 Sch. 2 para. 5(4)(ha)-(hc) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 4 para. 10