SCHEDULE 21 continued
| “holding an interest in property (for the purposes of the taxable property provisions) | paragraph 13 of Schedule 29A”; |
| “holding directly an interest in a vehicle (for the purposes of the taxable property provisions) | paragraph 20(3) of Schedule 29A”; |
| “holding directly an interest in property (for the purposes of the taxable property provisions) | paragraphs 14 and 15 of Schedule 29A”; |
| “holding indirectly an interest in a vehicle (for the purposes of the taxable property provisions) | paragraph 20(4) of Schedule 29A”; |
| “holding indirectly an interest in property (for the purposes of the taxable property provisions) | paragraph 16(1) of Schedule 29A”; |
| “investment-regulated pension scheme (for the purposes of the taxable property provisions) | paragraphs 1 to 3 of Schedule 29A”; |
| “residential property (for the purposes of the taxable property provisions) | paragraphs 7(1), 8 and 9 of Schedule 29A”; |
| “scheme-held taxable property | section 185B(3)”; |
| “sums and assets held for the purposes of an arrangement (for the purposes of the taxable property provisions) | paragraph 5 of Schedule 29A”; |
| “taxable property (for the purposes of the taxable property provisions) | paragraphs 6, 10 and 11 of Schedule 29A”; |
| “the taxable property provisions | paragraph 1(3) of Schedule 29A”; |
| “vehicle (in the taxable property provisions) | paragraph 20(2) of Schedule 29A”. |
13 After Schedule 29 insert—
Section 174A
1 (1) For the purposes of the taxable property provisions a registered pension scheme which is not an occupational pension scheme is an investment-regulated pension scheme if one or more of its members meets the condition in sub-paragraph (2).
(2) The condition is that either—
(a) the member, or
(b) a person related to the member,
is or has been able (directly or indirectly) to direct, influence or advise on the manner of investment of any of the sums and assets held for the purposes of an arrangement under the pension scheme relating to the member.
(3) In this Part “the taxable property provisions” means—
(a) section 173(7A) (exception from benefit charge where taxable property held by investment-regulated pension scheme),
(b) section 174A and this Schedule,
(c) sections 185A to 185I (income and gains from taxable property),
(d) section 273ZA (member liability for scheme sanction charge where pension scheme non-UK resident), and
(e) paragraphs 37A to 37I of Schedule 36 (transitional provisions).
2 (1) For the purposes of the taxable property provisions a registered pension scheme which is an occupational pension scheme is an investment-regulated pension scheme if—
(a) there are 50 or fewer members of the pension scheme, and one or more of those members meets the condition in sub-paragraph (2), or
(b) at least 10% of the members of the pension scheme meet that condition.
(2) The condition is that either—
(a) the member, or
(b) a person related to the member,
is or has been able (directly or indirectly) to direct, influence or advise on the manner of investment of any of the sums and assets held for the purposes of the pension scheme.
3 (1) This paragraph applies in the case of an arrangement under a registered pension scheme if—
(a) the pension scheme is an occupational pension scheme,
(b) the pension scheme is not an investment-regulated pension scheme by virtue of paragraph 2, and
(c) one or more members of the pension scheme meet the condition in sub-paragraph (2).
(2) The condition is that either—
(a) the member, or
(b) a person related to the member,
is or has been able (directly or indirectly) to direct, influence or advise on the manner of investment of any sums or assets which are linked to an arrangement relating to the member.
(3) For the purposes of sub-paragraph (2) sums or assets are linked to an arrangement relating to a member if—
(a) they are held for the purposes of an arrangement under the pension scheme relating to the member, but
(b) they are not held for the purposes of the arrangement merely by virtue of a just and reasonable apportionment of the sums and assets held for the purposes of the pension scheme.
(4) Where this paragraph applies the arrangement is to be treated for the purposes of this Part as if it were an investment-regulated pension scheme.
(5) The Treasury may by regulations—
(a) amend sub-paragraph (3), and
(b) provide for any of the provisions of this Part to apply to the arrangement with modifications.
4 (1) For the purposes of this Part of this Schedule a person is related to a member of a pension scheme if—
(a) the person and the member are connected persons, or
(b) the person acts on behalf of the member or a person connected with the member.
(2) Section 839 of ICTA (connected persons) applies for the purposes of sub-paragraph (1).
5 Where sums or assets held for the purposes of an investment-regulated pension scheme—
(a) are held otherwise than for the purposes of the administration or management of the pension scheme, and
(b) would not, apart from this paragraph, be treated as held for the purposes of any arrangement relating to a member under the pension scheme,
for the purposes of the taxable property provisions the sums or assets are to be treated as held for the purposes of the arrangements under the pension scheme by reference to the respective rights under the scheme of the members to which the arrangements relate.
6 For the purposes of the taxable property provisions property is taxable property if—
(a) it is residential property (see paragraphs 7 to 10), or
(b) it is tangible moveable property (but subject to paragraph 11).
7 (1) Subject as follows, for the purposes of the taxable property provisions “residential property” means—
(a) a building that is used or suitable for use as a dwelling,
(b) any land consisting of, or forming part of, the garden or grounds of such a building (including a building on any such land) which is used or intended for use for a purpose connected with the enjoyment of the building,
(c) hotel or similar accommodation (but see paragraph 14(2)), or
(d) a beach hut,
in the United Kingdom or elsewhere.
(2) For the purposes of the taxable property provisions “building” includes—
(a) a structure, and
(b) part of a building or structure.
8 (1) For the purposes of the taxable property provisions a building used for any of the following purposes is not residential property—
(a) a home or other institution providing residential accommodation for children;
(b) a hall of residence for students;
(c) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disability, past or present dependence on alcohol or drugs or past or present mental disorder;
(d) a hospital or hospice;
(e) a prison or similar establishment.
(2) Where—
(a) a building is used for a purpose specified in sub-paragraph (1),
(b) a building which is not in use was, immediately before it ceased to be in use, used for such a purpose, or
(c) a building which has never been in use is more suitable for use for such a purpose than for use for any other purpose,
no account is to be taken for the purposes of the taxable property provisions of its suitability for use as a dwelling.
9 (1) The Treasury may by order amend this Part of this Schedule to specify descriptions of buildings which are, or are not, to be treated as residential property.
(2) An order under this paragraph which amends this Part of this Schedule in a way that results in buildings becoming treated as not being residential property may provide that the amendment has effect from a date earlier than that on which the order was made.
10 (1) Residential property is not taxable property in relation to a pension scheme if Condition A or B is met.
(2) Condition A is met if the property is (or, if unoccupied, is to be) occupied by an employee who—
(a) is neither a member of the pension scheme nor connected with such a member,
(b) is not connected with the employer, and
(c) is required as a condition of employment to occupy the property.
(3) Condition B is met if the property is (or, if unoccupied, is to be)—
(a) occupied by a person who is neither a member of the pension scheme nor connected with such a member, and
(b) used in connection with business premises held as an investment of the pension scheme.
(4) Section 839 of ICTA (connected persons) applies for the purposes of this paragraph.
11 (1) The Treasury may by order provide that, for the purposes of the taxable property provisions, any specified description of tangible moveable property is treated as not being taxable property.
(2) An order under this paragraph may include provision having effect in relation to times before it is made.
12 (1) For the purposes of the taxable property provisions an investment-regulated pension scheme acquires an interest in property if it comes to hold the interest.
(2) Sub-paragraph (1) applies however the pension scheme comes to hold the interest, whether that is—
(a) by act of the parties to a transaction,
(b) by order of a court or other authority,
(c) by or under any statutory provision, or
(d) by operation of law.
(3) For instances of deemed acquisition, see paragraphs 27 to 29.
13 (1) For the purposes of the taxable property provisions an investment-regulated pension scheme holds an interest in property if the scheme holds the interest directly or indirectly.
(2) In the taxable property provisions references to a person holding an interest in property include, in the case of—
(a) an investment-regulated pension scheme,
(b) an arrangement under a pension scheme, or
(c) a trust which is not a pension scheme,
references to the interest in the property being held for the purposes of the pension scheme, the arrangement or the trust.
14 (1) For the purposes of the taxable property provisions a person holds an interest in property directly if the person (whether jointly, in common or alone)—
(a) holds the property or any estate, interest, right or power in or over the property,
(b) has the right to use, or participate in arrangements relating to the use of, that property or a description of property to which that property belongs, or
(c) has the benefit of any obligation, restriction or condition affecting the value of any estate, interest, right or power in or over the property,
under the law of any country or territory.
(2) But a person does not hold an interest in residential property consisting of hotel accommodation directly unless—
(a) the person holds part only of the hotel accommodation or any estate, interest, right or power in or over such a part and, as a result, any person has a right to use or occupy that or any other part of the hotel accommodation, or
(b) the person has a right to use, or participate in arrangements relating to the use of, part only of the hotel accommodation or a description of property to which that part belongs.
(3) For the purposes of the taxable property provisions a person holds an interest in property directly if the person is entitled (whether jointly, in common or alone) to receive payments determined by reference to the value of or the income from the property.
(4) Sub-paragraph (3) is subject to paragraph 15.
15 (1) A person does not hold an interest in taxable property directly by virtue of paragraph 14(3) where Conditions A to C are met.
(2) Condition A is that—
(a) the person is entitled to receive the payments by virtue of a policy of life insurance, a contract for a life annuity or a capital redemption policy, and
(b) the policy or contract is issued by an insurance company.
(3) Condition B is that the property—
(a) does not constitute a linked asset, or
(b) has been appropriated by the insurance company to an internal linked fund.
(4) Condition C is that—
(a) where the person is an occupational pension scheme, the policy or contract, either by itself or taken together with one or more associated policies, does not entitle the pension scheme, either alone or together with one or more associated persons, to receive payments representing 10% or more of the market value of or the income from the property,
(b) where the person is a pension scheme other than an occupational pension scheme, the policy or contract, either by itself or taken together with one or more associated policies, does not entitle an arrangement under the pension scheme, either alone or together with one or more associated persons, to receive such payments, or
(c) otherwise, the policy or contract does not entitle the person to receive such payments.
(5) But for the purposes of applying paragraph 14(3) for determining whether a pension scheme holds an interest in taxable property directly or indirectly, this paragraph does not apply if the purpose or one of the purposes for which the person holds rights under the policy or contract is to enable a member of the pension scheme or a person connected with such a member to occupy or use the property.
(6) For the purposes of sub-paragraph (4) “associated policy” means a policy or contract which entitles an associated person to receive payments determined by reference to the value of or the income from the property.
(7) For the definition of “associated person” see paragraph 30.
(8) For the purposes of this paragraph—
“capital redemption policy” means a contract made in the course of a capital redemption business, as defined in section 458(3) of ICTA;
“internal linked fund” has the meaning given by—
the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under FISMA 2000, or
rules made by the Authority under that Act and having effect for the time being in place of the Sourcebook; and
“linked asset” means an asset of the insurance company which is identified in its records as an asset by reference to the value of which benefits provided for under a policy or contract are to be determined.
(9) For the purposes of this paragraph an annuity is a life annuity if it is—
(a) granted for consideration in money or money’s worth in the ordinary course of a business of granting annuities on human life, and
(b) payable for a term ending at a time ascertainable only by reference to the end of a human life,
and for this purpose it does not matter that the annuity may in some circumstances end before or after the life.
16 (1) For the purposes of the taxable property provisions a person holds an interest in property indirectly if the person does not hold the interest directly but (whether jointly, in common or alone)—
(a) holds an interest in a person who holds the interest in the property directly, or
(b) holds an interest in a person who holds the interest in the property indirectly by virtue of paragraph (a) or this paragraph.
(2) For the purposes of the taxable property provisions a person holds an interest in another person if—
(a) the person holds an interest, right or power in or over that other person, or
(b) the person lends money to that other person to fund the acquisition by that other person of an interest in taxable property.
(3) But sub-paragraph (2)(b) does not apply where—
(a) the loan is an authorised employer loan made by a pension scheme to or in respect of a sponsoring employer (see section 179),
(b) the interest in the property is acquired so that the property may be used for the purposes of a trade, profession or vocation carried on by the sponsoring employer or for the purposes of the sponsoring employer’s administration or management, and
(c) after the acquisition, the property is not occupied or used by a member of the pension scheme or a person connected with such a member.
(4) In the taxable property provisions references to a person holding an interest in another person include, in the case of—
(a) an investment-regulated pension scheme,
(b) an arrangement under a pension scheme, or
(c) a trust which is not a pension scheme,
references to the interest in the other person being held for the purposes of the pension scheme, the arrangement or the trust.
(5) Paragraphs 17 to 19 explain what it means for a person to hold an interest in another person by virtue of sub-paragraph (2)(a) in a case where that other person is a company, collective investment scheme or trust.
(6) The Treasury may by regulations—
(a) amend paragraphs 17 to 19, or
(b) amend this Part of this Schedule for the purposes of explaining what it means for a person to hold an interest, right or power in or over another person in other cases.
(7) This paragraph is subject to paragraphs 20 to 26.
17 (1) For the purposes of paragraph 16 a person holds an interest in a company if—
(a) the person has, or is entitled to acquire, share capital or voting rights in the company,
(b) the person has, or is entitled to acquire, a right to receive or participate in distributions of the company,
(c) the person is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for the person’s benefit, or
(d) the person, either alone or together with other persons, has control of the company.
(2) In sub-paragraph (1) references to a person being entitled to do anything apply where a person—
(a) is currently entitled to do it at a future date, or
(b) will at a future date be entitled to do it.
(3) In sub-paragraph (1) “control” has the meaning given by section 416 of ICTA.
18 (1) For the purposes of paragraph 16 a person holds an interest in a collective investment scheme if the person is a participant in the scheme.
(2) In this Schedule—
(a) “collective investment scheme” has the meaning given by section 235 of FISMA 2000, and
(b) “participant”, in relation to such a scheme, has the meaning given by subsection (2) of that section.
19 (1) For the purposes of paragraph 16 a pension scheme holds an interest in a trust if Condition A or B is met.
(2) Condition A is that—
(a) the pension scheme has a relevant interest in the trust,
(b) the pension scheme, a member of the pension scheme or a person connected with such a member has made a payment to the trust on or after the acquisition of the interest, and
(c) the payment is not one to which sub-paragraph (7) applies.
(3) Condition B is that—
(a) a member of the pension scheme or a person connected with such a member has a relevant interest in the trust,
(b) the pension scheme has made a payment to the trust on or after the acquisition of the interest, and
(c) the payment is not one to which sub-paragraph (7) applies.
(4) For the purposes of applying paragraph 16 for determining whether a pension scheme holds an interest in property indirectly, a person other than the pension scheme holds an interest in a trust if —
(a) the person has a relevant interest in the trust,
(b) the person has made a payment to the trust on or after the acquisition of the interest, and
(c) the payment is not one to which sub-paragraph (7) applies.
(5) For the purposes of this paragraph a person has a relevant interest in a trust if—
(a) any property which may at any time be comprised in the trust or any derived property is, or will or may become, payable to or applicable for the benefit of the person in any circumstances, or
(b) the person enjoys a benefit deriving directly or indirectly from any property which is comprised in the trust or any derived property.
(6) In sub-paragraph (5) “derived property”, in relation to any property, means income from that property or any other property directly or indirectly representing proceeds of, or income from, that property.
(7) This sub-paragraph applies to a payment if—
(a) it is made as part of an arm’s length transaction by which property or a benefit is to be provided in return for the payment, and
(b) it is made otherwise than for the purposes of enabling a member of the pension scheme or a person connected with such a member to occupy or use any property.
(8) Section 839 of ICTA (connected persons) applies for the purposes of this paragraph.
(9) This paragraph does not apply in relation to a unit trust scheme within the meaning of section 237(1) of FISMA 2000 (but see paragraph 18).
20 (1) A pension scheme does not hold an interest in property indirectly through a vehicle through which the pension scheme would otherwise hold the interest in the property indirectly where one of the following paragraphs applies in relation to the vehicle, and, in particular—
(a) paragraph 21 makes provision in relation to holding through vehicles which carry on trading activities,
(b) paragraph 22 makes provision in relation to holding through Real Estate Investment Trusts,
(c) paragraphs 23 to 25 make provision in relation to holding through other kinds of vehicles, and
(d) paragraph 26 makes provision in relation to holding through a vehicle which holds the interest in the property directly by virtue of paragraph 14(3) (receipt of payments determined by reference to value of or income from property).
(2) In the taxable property provisions “vehicle”, in relation to a pension scheme which holds an interest in taxable property indirectly, means a person through whom the pension scheme holds the interest in the property.
(3) For the purposes of the taxable property provisions a person holds an interest in a vehicle directly if the person holds an interest of the kind mentioned in paragraph 16(2) in the vehicle.
(4) For the purposes of the taxable property provisions a person holds an interest in a vehicle indirectly if the person does not hold the interest directly but—
(a) holds an interest in a person who holds an interest in the vehicle directly, or
(b) holds an interest in a person who holds the interest in the vehicle indirectly by virtue of paragraph (a) or this paragraph.
21 (1) This paragraph applies to a vehicle in which a pension scheme directly or indirectly holds an interest where—
(a) the vehicle’s main activity is the carrying on of a trade, profession or vocation,
(b) the pension scheme does not, whether alone or together with one or more associated persons, have control of the vehicle, and
(c) neither a member of the pension scheme nor a person connected with such a member is a controlling director of the vehicle or any other vehicle which holds an interest in the vehicle directly or indirectly.