This is the original version (as it was originally made). This item of legislation is currently only available in its original format.
(This note is not part of the Order)
Paragraph 4 of Schedule 10 to the Finance Act 1996 (c. 8) (“Schedule 10”) makes provision relating to the taxation of a company’s loan relationships in cases where the company holds rights under a unit trust scheme or any relevant interest in an offshore fund during an accounting period, and the scheme or fund fails to satisfy the non-qualifying investments test at any time in that period.
Paragraph 8 of Schedule 10 (“paragraph 8”) defines the non-qualifying investments test by reference to whether at any time in the accounting period the market value of the qualifying investments of the scheme or fund exceeds 60 per cent. of the market value of all the investments of the scheme or fund. Sub-paragraph (2) of paragraph 8 defines “qualifying investments”, and sub-paragraph (8) of that paragraph enables the Treasury by order to amend the paragraph so as to extend or restrict the descriptions in sub-paragraph (2) of investments that are qualifying investments. Paragraph 9(1) of Schedule 10 enables the Treasury to make supplemental provisions in an order made under any provision of the Schedule.
This Order amends paragraph 8 so as to extend the descriptions of investments that are qualifying investments. The amendments update the list of qualifying investments in paragraph 8 to bring this list into line with commercial practice and to include further investments which produce returns similar to interest-bearing investments. The amendments will also have the effect of bringing the definition of the non-qualifying investments test in paragraph 8 into alignment with the non-qualifying investments test as it will apply for the purposes of the taxation of authorised investment funds: see the Authorised Investment Funds (Tax) Regulations 2006: S.I. 2006/964.
This Order imposes no new costs on business.
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