Office of Public Sector Information
PART III continued CHAPTER I continued
(4) The persons mentioned in subsection (1) above are—
(a) any person who at any time during the relevant period had control of the transferred company;
(b) any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before the change in the ownership of the transferred company.
(5) In subsection (4) above, “the relevant period” means—
(a) the period of three years before the change in the ownership of the transferred company; or
(b) if during the period of three years before that change (“the later change”) there was a change in the ownership of the transferred company (“the earlier change”), the period elapsing between the earlier change and the later change.
(6) For the purposes of this section a transaction is entered into in connection with a change in the ownership of a company if—
(a) it is the transaction, or one of the transactions, by which that change is effected; or
(b) it is entered into as part of a series of transactions, or scheme, of which transactions effecting the change in ownership have formed or will form a part.
(7) For the purposes of this section—
(a) references to a scheme are references to any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving a single transaction or two or more transactions;
(b) it shall be immaterial in determining whether any transactions have formed or will form part of a series of transactions or scheme that the parties to any of the transactions are different from the parties to another of the transactions; and
(c) the cases in which any two or more transactions are to be taken as forming part of a series of transactions or scheme shall include any case in which it would be reasonable to assume that one or more of them—
(i) would not have been entered into independently of the other or others; or
(ii) if entered into independently of the other or others, would not have taken the same form or been on the same terms.
(8) In this section references, in relation to the transferred company and an assessment to tax, to an associated company are references to any compnay (whenever formed) which, at the time of the assessment or at an earlier time after the change in ownership—
(a) has control of the transferred company;
(b) is a company of which the transferred company has control; or
(c) is a company under the control of the same person or persons as the transferred company.
(9) A person assessed and charged to tax under this section shall be assessed and charged in the name of the company by whom the tax to which the assessment relates remains unpaid.
(10) Any assessment made under this section shall not be out of time if made within three years from the date of the final determination of the liability of the company by whom the tax remains unpaid to corporation tax for the accounting period for which that tax was assessed.”
(2) Subsection (1) above has effect in relation to changes in ownership occurring on or after 2nd July 1997 other than any change occurring in pursuance of a contract entered into before 2nd July 1997.
(1) After section 767B of the Taxes Act 1988, there shall be inserted the following section—
(1) This section applies where it appears to the Board that—
(a) there has been a change in the ownership of a company (“the subject company”); and
(b) in connection with that change a person (“the seller”) may be or become liable to be assessed and charged to corporation tax under section 767A or 767AA.
(2) The Board may by notice require any person to supply to them—
(a) any document in the person’s possession or power which appears to the Board to be relevant for determining any one or more of the matters referred to in subsection (3) below; or
(b) any particulars which appear to them to be so relevant.
(3) Those matters are—
(a) whether the seller is or may become liable as mentioned in subsection (1) above and the extent of the liability or potential liability; and
(b) whether the subject company or an associated company is or may become liable to be assessed to any tax in respect of which the seller is or could become liable as mentioned in subsection (1) above, and the extent of the liability or potential liability of the subject company or associated company.
(4) Without prejudice to the following provisions of this section, the references in subsection (2) above to documents and particulars are references to the documents and particulars specified or described in the notice.
(5) A notice under subsection (2) above must specify the period, which must not be less than 30 days, within which the notice must be complied with.
(6) Any person to whom any documents are supplied under this section may take copies of them or of any extracts from them.
(7) A notice under subsection (2) above shall not oblige a person to supply any documents or particulars relating to the conduct of any pending appeal relating to tax.
(8) In relation to any notice under subsection (2) above—
(a) subsection (4) of section 20B of the [1970 c. 9.] Taxes Management Act 1970 (rules relating to copies of documents) shall apply as it applies in relation to a notice under section 20(1) of that Act; and
(b) subsections (8) to (14) of section 20B of that Act (rules about obtaining documents etc. from professional advisers) shall apply as they apply in relation to a notice under section 20(3) of that Act but as if any reference to an inspector were a reference to the Board;
and subsection (8C) of section 20 of that Act (exclusion of personal records and journalistic material) shall apply for the purposes of this section as it applies for the purposes of that section.
(9) In this section references, in relation to the subject company and an assessment to tax, to an associated company are references to any company which, at the time of the assessment or at an earlier time after the change in ownership—
(a) has control of the subject company;
(b) is a company of which the subject company has control; or
(c) is a company under the control of the same person or persons as the subject company.
(10) In this section “document” means anything in which information of any description is recorded.”
(2) In the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties in respect of certain information provisions), after the entry in the first column relating to section 765A of the Taxes Act 1988, there shall be inserted the following entry— “section 767C;”.
(3) The preceding provisions of this section have effect in relation to changes in ownership occurring on or after 2nd July 1997 other than any change occurring in pursuance of a contract entered into before 2nd July 1997.
(1) After subsection (1) of section 767B of the Taxes Act 1988 (supplementary provision about changes of company ownership), there shall be inserted the following subsection—
“(1A) In relation to corporation tax assessed under section 767AA, section 87A of the Management Act shall have effect as if the references to the date when the tax becomes due and payable were references to the date when the tax became due and payable by the transferred company or the associated company (as the case may be).”
(2) In subsection (2) of that section—
(a) after “767A” there shall be inserted “or 767AA”; and
(b) at the end there shall be added “or the transferred company or associated company (as the case may be)”.
(3) In subsection (4) of that section, for “section 767A” there shall be substituted “sections 767A, 767AA and 767C”.
(4) In subsection (10) of that section, for “section 767A” there shall be substituted “sections 767A and 767AA”.
(5) In section 769 of that Act (rules for ascertaining change in ownership of a company)—
(a) in subsections (1) and (5), after “767A,” there shall be inserted “767AA, 767C,”;
(b) in subsection (2)(d), after “767A,” there shall be inserted “767AA,”; and
(c) in subsections (2A) and (9), after “767A” there shall be inserted “, 767AA or 767C”.
(6) The preceding provisions of this section have effect in relation to changes in ownership occurring on or after 2nd July 1997 other than any change occurring in pursuance of a contract entered into before 2nd July 1997.
(1) The provisions of Schedule 18 to this Act have effect in place of—
(a) the provisions of Parts II and IV of the [1970 c. 9.] Taxes Management Act 1970 (returns, assessment and claims), so far as they relate to corporation tax,
(b) certain related provisions of Part X of that Act (penalties),
(c) Schedule 17A to the Taxes Act 1988 (group relief: claims), and
(d) Schedule A1 to the [1990 c. 1.] Capital Allowances Act 1990 (corporation tax allowances: claims).
(2) Schedule 18 to this Act, the [1970 c. 9.] Taxes Management Act 1970 and the Tax Acts shall be construed and have effect as if that Schedule were contained in that Act.
(3) The enactments mentioned in Schedule 19 to this Act have effect with the amendments specified there, which are minor amendments and amendments consequential on Schedule 18.
(4) Except as otherwise provided, the provisions of Schedules 18 and 19 to this Act have effect in relation to accounting periods ending on or after the self-assessment appointed day.
(5) In this section “the self-assessment appointed day” means the day appointed by the Treasury under section 199 of the [1994 c. 9.] Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).
(1) Subject to the following provisions of this section, the Board may, by publishing them in such manner as they think fit, give such general directions for the purposes of income tax as they consider appropriate with respect to—
(a) the circumstances in which, and
(b) the conditions subject to which,
claims under the Tax Acts may be made by individuals by the use of a telecommunication system (within the meaning of the [1984 c. 12.] Telecommunications Act 1984) or otherwise without producing a claim in writing.
(2) If directions of the Board under this section are for the time being in force with respect to the making to the Board or an officer of the Board of claims of any description, then, notwithstanding any enactment or subordinate legislation requiring claims of that description to be made in writing or by notice, claims of that description may be made to the Board or, as the case may be, an officer of the Board in any manner authorised by the directions.
(3) Where directions of the Board under this section are for the time being in force with respect to the making of claims of any description, claims of that description that are made without producing the claim in writing must be made in accordance with the directions.
(4) The power of the Board to give directions under this section—
(a) shall not be exercisable in relation to the making of any claim by an individual in his capacity as a trustee, partner or personal representative; but
(b) subject to that, shall be exercisable in relation to claims made by an individual through another person acting on his behalf.
(5) The Board shall not give directions under this section with respect to—
(a) the making of any claim to which Schedule 1B to the [1970 c. 9.] Taxes Management Act 1970 applies; or
(b) the making of any claim under any provision of the [1990 c. 1.] Capital Allowances Act 1990.
(6) Directions under this section—
(a) shall not be capable of modifying any requirement by or under any enactment as to the period within which any claim is to be made or as to the contents of any claim; but
(b) may include provision as to how any requirement as to the contents of a claim is to be fulfilled when the claim is not produced in writing.
(7) Different provision may be made by directions under this section with respect to the making of claims of different descriptions; and a direction under this section may revoke or vary any previous direction given under this section.
(8) References in the preceding provisions of this section to the making of a claim include references to any of the following—
(a) the making of an election,
(b) the giving of a notification or notice,
(c) the amendment of any return, claim, election, notification or notice,
(d) the withdrawal of any claim, election, notification or notice,
and references in those provisions to a claim shall be construed accordingly.
(9) In this section—
“return” includes any statement or declaration under the Income Tax Acts;
“subordinate legislation” has the same meaning as in the [1978 c. 30.] Interpretation Act 1978.
(10) In section 832(1) of the Taxes Act 1988 (interpretation), in the definition of “notice”, after “writing” there shall be inserted “or in a form authorised (in relation to the case in question) by directions under section 118 of the Finance Act 1998”.
In section 203 of the Taxes Act 1988 (PAYE regulations), after subsection (9) there shall be inserted the following subsection—
“(10) Without prejudice to the generality of the powers conferred by the preceding provisions of this section, regulations under this section may include provision as to the manner of proving any of the matters for which the regulations provide and, in particular, of proving the contents or transmission of anything that, by virtue of the regulations, takes an electronic form or is transmitted to any person by electronic means.”
(1) In section 4 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (rates of capital gains tax), after subsection (1) there shall be inserted the following subsection—
“(1AA) The rate of capital gains tax in respect of gains accruing to—
(a) the trustees of a settlement, or
(b) the personal representatives of a deceased person,
in a year of assessment shall be equivalent to the rate which for that year is applicable to trusts under section 686(1) of the Taxes Act.”
(2) Subsection (1) above applies for the year 1998-99 and subsequent years of assessment.
(1) The following section shall be inserted after section 2 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992—
(1) This section applies where, for any year of assessment—
(a) there is, in any person’s case, an excess of the total amount referred to in subsection (2) of section 2 over the amounts falling to be deducted from that amount in accordance with that subsection; and
(b) the excess is or includes an amount representing the whole or a part of any chargeable gain that is eligible for taper relief.
(2) The amount on which capital gains tax is taken to be charged by virtue of section 2(2) shall be reduced to the amount computed by—
(a) applying taper relief to so much of every chargeable gain eligible for that relief as is represented in the excess;
(b) aggregating the results; and
(c) adding to the aggregate of the results so much of every chargeable gain not eligible for taper relief as is represented in the excess.
(3) Subject to the following provisions of this Act, a chargeable gain is eligible for taper relief if—
(a) it is a gain on the disposal of a business asset with a qualifying holding period of at least one year; or
(b) it is a gain on the disposal of a non-business asset with a qualifying holding period of at least three years.
(4) Where taper relief falls to be applied to the whole or any part of a gain on the disposal of a business or non-business asset, that relief shall be applied by multiplying the amount of that gain or part of a gain by the percentage given by the table in subsection (5) below for the number of whole years in the qualifying holding period of that asset.
(5) That table is as follows—
| Gains on disposals of business assets | Gains on disposals of non-business assets | |||
|---|---|---|---|---|
| Number of whole years in qualifying holding period | Percentage of gain chargeable | Number of whole years in qualifying holding period | Percentage of gain chargeable | |
| 1 | 92.5 | — | — | |
| 2 | 85 | — | — | |
| 3 | 77.5 | 3 | 95 | |
| 4 | 70 | 4 | 90 | |
| 5 | 62.5 | 5 | 85 | |
| 6 | 55 | 6 | 80 | |
| 7 | 47.5 | 7 | 75 | |
| 8 | 40 | 8 | 70 | |
| 9 | 32.5 | 9 | 65 | |
| 10 or more | 25 | 10 or more | 60 | |
(6) The extent to which the whole or any part of a gain on the disposal of a business or non-business asset is to be treated as represented in the excess mentioned in subsection (1) above shall be determined by treating deductions made in accordance with section 2(2)(a) and (b) as set against chargeable gains in such order as results in the largest reduction under this section of the amount charged to capital gains tax under section 2.
(7) Schedule A1 shall have effect for the purposes of this section.
(8) Subject to paragraph 2(4) of that Schedule, references in this section to the qualifying holding period of an asset are references—
(a) except in the case of an asset falling within subsection (9) below, to the period after 5th April 1998 for which that asset had been held at the time of its disposal; and
(b) in the case of an asset falling within that subsection, to the period mentioned in paragraph (a) above plus one year.
(9) An asset falls within this subsection if—
(a) the time which, for the purposes of paragraph 2 of Schedule A1, is the time when the asset is taken to have been acquired by the person making the disposal is a time before 17th March 1998; and
(b) there is no period which in the case of that asset is a period which by virtue of paragraph 11 or 12 of that Schedule does not count for the purposes of taper relief.”
(2) Before Schedule 1 to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 there shall be inserted, as Schedule A1 to that Act, the Schedule set out in Schedule 20 to this Act.
(3) Schedule 21 to this Act (which makes incidental and consequential provision in connection with the introduction of taper relief) shall have effect.
(4) This section and those two Schedules have effect for the year 1998-99 and subsequent years of assessment.
(1) In section 53 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (indexation allowance), after subsection (1) there shall be inserted the following subsection—
“(1A) Indexation allowance in respect of changes shown by the retail prices indices for months after April 1998 shall be allowed only for the purposes of corporation tax.”
(2) In subsection (1) of section 54 of that Act (calculation of indexation allowance), in the definition of “RD”, for “the month in which the disposal occurs” there shall be substituted “the relevant month”.
(3) After that subsection there shall be inserted the following subsection—
“(1A) In subsection (1) above—
(a) the references to an item of relevant allowable expenditure shall not, except for the purposes of corporation tax, include any item of expenditure incurred on or after 1st April 1998; and
(b) the reference to the relevant month is a reference—
(i) where that subsection has effect for the purposes of capital gains tax, to April 1998; and
(ii) where that subsection has effect for the purposes of corporation tax, to the month in which the disposal occurs.”
(4) In section 13 of that Act (attribution of gains to non-resident companies), the following subsection shall be inserted after subsection (11)—
“(11A) For the purposes of this section the amount of the gain or loss accruing at any time to a company that is not resident in the United Kingdom shall be computed (where it is not the case) as if that company were within the charge to corporation tax on capital gains.”
(5) In section 145 of that Act (call options: indexation allowance), in subsection (1), after the word “applies”, in the first place where it occurs, there shall be inserted “(subject to subsection (1A) below)”; and after that subsection there shall be inserted the following subsection—
“(1A) In a case where the whole of the expenditure comprised in the option consideration was incurred on or after 1st April 1998, this section applies for the purposes of corporation tax only.”
(6) Subject to subsection (7) below, the preceding provisions of this section have effect in relation to disposals on or after 6th April 1998.
(7) This section does not affect the computation of the amount of so much of any gain as—
(a) is treated for the purposes of the taxation of chargeable gains as having accrued on a disposal on or after 6th April 1998; but
(b) is taken for those purposes to be equal to the whole or any part of a gain that—
(i) would (but for any enactment relating to the taxation of chargeable gains) have accrued on an actual disposal made before that date, or
(ii) would have accrued on a disposal assumed under any such enactment to have been made before that date.
(1) In subsection (2) of section 104 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (cases where share pooling does not apply), before the word “and” at the end of paragraph (a) there shall be inserted—
“(aa) does not apply, except for the purposes of corporation tax, to any securities acquired on or after 6th April 1998;”.
(2) After that subsection there shall be inserted the following subsection—
“(2A) Subsection (2)(aa) above shall not prevent the application of subsection (1) above to any securities that would be treated as acquired on or after 6th April 1998 but for their falling by virtue of section 127 to be treated as the same as securities acquired before that date.”
(3) In subsection (3) of that section (interpretation), for ““a new holding” is” there shall be substituted ““a section 104 holding” is”.
(4) For subsection (4) of that section there shall be substituted the following subsection—
“(4) For the purposes of this Chapter securities of a company which are held—
(a) by a person who acquired them as an employee of the company or of any other person, and
(b) on terms which for the time being restrict his right to dispose of them,
shall (notwithstanding that they would otherwise fall to be treated as of the same class) be treated as of a different class from any securities acquired by him otherwise than as an employee of the company or of any other person and also from any shares that are not held subject to restrictions, or the same restrictions, on disposal or in the case of which the restrictions are no longer in force.”
(5) In the following enactments for the words “new holding”, wherever they occur, there shall be substituted “section 104 holding”, namely—
(a) in section 440A of the Taxes Act 1988 (securities held by insurance companies); and
(b) in sections 104(6), 107 and 110 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.
(6) The preceding provisions of this section have effect in relation to any disposal on or after 6th April 1998 of any securities (whenever acquired).
(7) The powers of the Treasury to make provision by regulations under one or both of—
(a) section 333 of the Taxes Act 1988 (regulations providing for exemptions in respect of investment plans), and
(a) section 151 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (capital gains tax and investment plans),
shall include power to provide, to such extent as appears to them to be appropriate for purposes connected with the enactment of this section and section 124 below, for any provision contained in any such regulations to have effect retrospectively in relation to such times falling on or after 17th March 1998 as may be specified in the regulations.
(1) After section 106 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 there shall be inserted the following section—
(1) This section has effect for the purposes of capital gains tax (but not corporation tax) where any securities are disposed of by any person.
(2) The securities disposed of shall be identified in accordance with the following provisions of this section with securities of the same class that have been acquired by the person making the disposal.
(3) The provisions of this section have effect in the case of any disposal notwithstanding that some or all of the securities disposed of are otherwise identified—
(a) by the disposal, or
(b) by a transfer or delivery giving effect to it;
but where a person disposes of securities in one capacity, they shall not be identified under those provisions with any securities which he holds, or can dispose of, only in some other capacity.
(4) Securities disposed of on an earlier date shall be identified before securities disposed of on a later date; and, accordingly, securities disposed of by a later disposal shall not be identified with securities already identified as disposed of by an earlier disposal.
(5) Subject to subsection (4) above, if within the period of thirty days after the disposal the person making it acquires securities of the same class, the securities disposed of shall be identified—
(a) with securities acquired by him within that period, rather than with other securities; and
(b) with securities acquired at an earlier time within that period, rather than with securities acquired at a later time within that period.
Finance Act 1998 (C. 36)