Office of Public Sector Information
SCHEDULE 2 continued PART 10
102 (1) This paragraph applies if the trustees of a settlement incur an allowable expense (see section 484) in a tax year prior to the tax year 2007-08.
(2) So far as the trustees have not paid the expense, the expense cannot, under Chapter 4 of Part 9, be set against the trustees' trust rate income for any tax year.
(3) So far as the expense is paid by the trustees in a tax year (“the relevant tax year”) after the tax year 2006-07, the expense is treated for the purposes of sections 484(1) and 485(1) as if it were incurred in the relevant tax year.
(4) So far as the expense is paid by the trustees in a tax year prior to the tax year 2007-08, section 485 applies in relation to the expense with the following modifications.
(5) It applies as if for subsection (3) there were substituted—
“(3) Condition A is—
(a) that section 686(2AA) of ICTA could not be applied in relation to the allowable expense so as to reduce the trustees' liability to tax for the tax year in which the trustees paid the expense, and
(b) that was the case only because the trustees' section 686 income for that year was insufficient or they had no section 686 income for that year.
“Section 686 income” means income to which section 686 of ICTA applies.”
(6) It applies as if for subsection (4) there were substituted—
“(4) Condition B is that—
(a) for no tax year prior to the tax year 2007-08 has the allowable expense been used to reduce the trustees' liability to tax, and
(b) the allowable expense has not been set against the trustees' trust rate income for a tax year prior to the current tax year as a result of this section.”
103 (1) This paragraph applies for the purposes of section 489 if the relevant shares (see subsection (1) of that section) were acquired by the trustees before 11 May 2001.
(2) That section applies in relation to those shares with the following modifications.
(3) It applies as if subsection (2) were omitted.
(4) It applies as if in subsection (3) the words “If any were” were omitted.
(5) It applies as if in subsection (4)—
(a) for “If none were” there were substituted “But if when the trustees acquired the relevant shares none of the shares in the relevant company were readily convertible assets”, and
(b) in paragraph (b) for “any shares in the relevant company” there were substituted “the relevant shares”.
(6) It applies as if in subsection (5) for “(2) to” there were substituted “(3) and”.
104 (1) Section 497 applies with the following modifications in relation to the trustees of a settlement established prior to the tax year 2007-08 if the current tax year is the tax year 2007-08.
(2) It also so applies if—
(a) the current tax year is a tax year subsequent to the tax year 2007-08, and
(b) the trustees have been UK resident for no tax year prior to the current tax year or the last tax year prior to the current tax year for which they were UK resident is a tax year prior to the tax year 2007-08.
(3) It applies as if in subsection (1) for Step 1 there were substituted—
“Step 1
Take the amount of the trustees' final section 687(3) tax pool and deduct from that amount (but not so that it goes below nil) the total of all tax (if any) treated under section 687(2)(a) of ICTA as being paid as a result of payments made by the trustees in the tax year 2006-07.
“The amount of the trustees' final section 687(3) tax pool” is the total amount—
available to the trustees under section 687(3) of ICTA for setting against tax assessable on them under section 687(2)(b) of that Act for the tax year 2006-07, or
which would have been so available had tax been so assessable.”
(4) It applies as if subsections (2) and (3) were omitted.
105 Section 543(1)(g) and (h) and sections 549 to 557 (non-charitable expenditure: transactions with substantial donors) do not have effect in relation to—
(a) a transaction occurring before 22 March 2006, or
(b) a transaction entered into in pursuance of a contract made before 22 March 2006 (otherwise than in pursuance of a variation on or after that date).
106 For the purposes of section 549 a person may meet the definition of “substantial donor” by reference to gifts made at a time before this Act comes into force.
107 (1) This paragraph applies if, as a result of sections 562 to 564, an amount of expenditure for the tax year 2007-2008 or any subsequent tax year (“the carry back tax year”) is treated as non-charitable expenditure for the tax year 2005-2006 or any earlier tax year.
(2) The amount of relief or exemption to be disallowed in respect of the tax year 2005-2006 or any earlier tax year is not to exceed the amount which would have been disallowed in respect of that tax year if—
(a) sections 562 to 564 had not applied in relation to the carry back tax year, and
(b) the amount of expenditure for the carry back tax year to be treated as non-charitable expenditure for an earlier tax year had instead been calculated in accordance with the provisions mentioned in sub-paragraph (3).
(3) Those provisions are—
(a) sections 505 and 506 of ICTA, and
(b) Part 3 of Schedule 20 to that Act,
as those provisions would have had effect in relation to the carry back tax year if the amendments made to them by section 55 of FA 2006 had not been made and the amendments made to them by this Act had not been made.
108 Sections 592 and 593 do not apply if the qualifying distribution was made before 8 April 1998.
109 (1) Section 592(3) does not apply if the qualifying distribution was received by the borrower before the relevant date.
(2) The relevant date is—
(a) if the borrower is an individual, 6 November 2003, and
(b) if the borrower is not an individual, 17 March 2004.
110 (1) Section 593(3) does not apply if the qualifying distribution was received by the interim holder before the relevant date.
(2) The relevant date is—
(a) if the interim holder is an individual, 6 November 2003, and
(b) if the interim holder is not an individual, 17 March 2004.
111 Section 596 does not apply if the stock lending arrangement was made before 1 July 1997.
112 (1) Section 597 does not apply if the stock lending arrangement was made before 5 December 2005.
(2) In relation to a stock lending arrangement made on or after 5 December 2005 but before 22 March 2006, section 597 has effect with the omission of subsection (6).
(3) If—
(a) a stock lending arrangement was made before 5 December 2005 in respect of any securities (“the original securities”), and
(b) on or after that date the lender under the stock lending arrangement transfers securities (“the substituted securities”) in substitution for some or all of the original securities,
section 597 has effect as if that arrangement were made on the date of the substitution (and the substituted securities were the relevant securities).
113 Sections 596(5) and 599 do not apply in relation to any arrangement made before 22 March 2006.
114 (1) Section 602 does not apply if—
(a) the securities are UK shares or UK securities, and
(b) the agreement to sell them was entered into by the original owner before 1 May 1995.
(2) Section 602 does not apply if—
(a) the securities are overseas securities, and
(b) the agreement to sell them was entered into by the original owner before 6 November 1996.
115 (1) This paragraph applies if an agreement to sell securities was made before 9 April 2003, for the purpose of determining whether (for the purposes of sections 601 and 602) there is a repo in respect of the securities.
(2) Section 569 has effect as if for subsection (4) there were substituted—
“(4) Condition C is that the original owner or a person connected with the original owner—
(a) is required to buy back the securities by the agreement or a related agreement, or
(b) exercises an option to buy back the securities which was acquired under the agreement or a related agreement.”
116 (1) This paragraph applies if an agreement to sell securities was made before 9 April 2003, for the purpose of determining whether section 602 applies.
(2) Section 601 applies with these modifications.
(3) It applies as if in subsection (1)(c) for “the first or second set of relevant conditions” there were substituted “subsection (2)”.
(4) It applies as if in subsection (2) for “This is the first set of relevant conditions” there were substituted “These are the conditions”.
(5) It applies as if subsection (3) were omitted.
117 (1) This paragraph applies if—
(a) an agreement to sell securities was made before 27 June 2006,
(b) the person from whom the securities are to be repurchased (“A”) is not the person to whom the original owner agreed to sell the securities, and
(c) A did not become the person from whom the securities are to be repurchased in consequence of an agreement made on or after 27 June 2006.
(2) Section 602 has effect with the omission of subsections (3) and (4).
118 (1) This paragraph applies if an agreement to sell securities was made before 9 April 2003.
(2) Section 605 has effect with the omission—
(a) in subsection (1), of the words “or B”, and
(b) of subsection (3).
119 Section 607 does not apply if the agreement to sell the securities was entered into before 1 May 1995.
120 (1) This paragraph applies if an agreement to sell securities was made before 9 April 2003, for the purpose of determining whether (for the purposes of section 607) there is a repo in respect of the securities.
(2) Section 569 has effect as if for subsection (4) there were substituted—
“(4) Condition C is that the original owner or a person connected with the original owner—
(a) is required to buy back the securities by the agreement or a related agreement, or
(b) is required to buy back the securities under an obligation imposed as a result of the exercise of an option acquired under the agreement or a related agreement.”
121 (1) This paragraph applies if section 607 applies and the agreement to sell the securities was made before 9 April 2003.
(2) That section has effect with the omission of subsections (6) and (7).
122 (1) This paragraph applies if the agreement to sell the securities to the interim holder was made before 9 April 2003.
(2) Section 608(3) has effect as if for “benefits and risks” there were substituted “benefits or risks”.
123 (1) This paragraph applies if an agreement to sell securities was made before 9 April 2003.
(2) Section 611 applies with these modifications.
(3) It applies as if in subsection (1) after “modifications” there were inserted “in a case where there is a sale and repurchase arrangement in respect of securities”.
(4) It applies as if after subsection (1) there were inserted—
“(1A) For the purposes of subsection (1) there is a sale and repurchase arrangement in respect of securities if—
(a) a person (“the original owner”) has sold the securities to another person under an agreement,
(b) the securities are UK shares, UK securities or overseas securities, and
(c) the original owner or a person connected with the original owner—
(i) is required to buy back the securities by the agreement or a related agreement, or
(ii) acquires, under the agreement or a related agreement, an option to buy back the securities.
(1B) Section 570 (meaning of “buying back” securities etc) applies in the context of subsection (1A) as it applies in the context of a repo.”
124 (1) This paragraph applies if an agreement to sell securities was made before 9 April 2003, for the purpose of determining whether (for the purposes of section 612) there is a repo in respect of the securities.
(2) This paragraph also applies if an agreement to sell securities was made before 9 April 2003, for the purpose of determining whether (for the purposes of section 613) the case involves redemption arrangements.
(3) Section 569 applies with these modifications.
(4) It applies as if for subsection (2) there were substituted—
“(2) Condition A is that a person (“the original owner”) has sold the securities to another person (“the interim owner”) under an agreement.”
(5) It applies as if for subsection (4) there were substituted—
“(4) Condition C is that the original owner or a person connected with the original owner—
(a) is required to buy back the securities by the agreement or a related agreement, or
(b) acquires, under the agreement or a related agreement, an option to buy back the securities.”
125 (1) Section 655 applies only if—
(a) in the case of overseas securities, the agreement to sell the securities mentioned in section 654(2) is entered into after 5 November 1996, and
(b) in any other case, the agreement to sell the securities so mentioned is entered into after 30 April 1995.
(2) In sub-paragraph (1) “overseas securities” has the same meaning as in Part 11 (see section 567).
126 (1) This paragraph applies if the agreement to sell the securities mentioned in section 654(2) was made before 9 April 2003.
(2) Section 655 has effect with the omission of subsection (2).
(3) For the purpose of determining whether (for the purposes of section 655) there is a sale and repurchase arrangement in respect of the securities, section 654(2) has effect with the omission of paragraph (b).
(4) Sub-paragraph (5) applies—
(a) for the purpose of determining whether (for the purposes of section 656) there is a sale and repurchase arrangement in respect of the securities, and
(b) for the purpose of determining whether (for the purposes of section 657) the case involves redemption arrangements.
(5) Section 654(2) has effect with the substitution for paragraphs (b) and (c) of “or
(b) T or a person connected with T acquires, under the agreement or a related agreement, an option to buy back the securities.”
127 Section 661 does not apply if the transferor’s acquisition was before 28 February 1986.
128 If the transfer of securities within section 681(1)(a) occurred before 19 March 1986, section 681(1) has effect with the omission of paragraph (b).
129 (1) Despite anything in this Act, Chapter 1 of Part 17 of ICTA (cancellation of tax advantages from certain transactions in securities) continues to apply so far as required for the purposes of notices under section 703(3) of that Act requiring adjustments to be made affecting tax years before the tax year 2007-08; and a counteraction notice under Chapter 1 of Part 13 (transactions in securities) may not require such an adjustment to be made.
(2) Subject to that, Chapter 1 of Part 13 applies—
(a) whether or not the transaction or transactions, in consequence of which, or of the combined effect of which, the tax advantage has been or will be obtained, occur on or after 6 April 2007, and
(b) whether or not the tax year to which that advantage relates (“the tax advantage year”) is a year before the tax year 2007-08,
but see section 698(5) (under which no assessments may be made as a result of a counteraction notice later than 6 years after the tax advantage year).
(3) This paragraph is to be interpreted as if it were part of Chapter 1 of Part 13.
130 (1) In its application to a transaction in securities that took place before 29 April 1996 or two or more transactions in securities the first of which took place before that date, section 691(1)(b)(i) (meaning of “relevant company”) applies with the substitution for the words “listed in the Official List of” of the words “authorised to be dealt in on”.
(2) In its application to a transaction in securities that took place before 1 January 1997 or two or more transactions in securities the first of which took place before that date, section 691(1) applies as if the companies referred to in paragraph (b) included companies none of whose shares or stocks are dealt in on the Unlisted Securities Market regularly or from time to time.
(3) In this paragraph “companies” and “transaction in securities” have the same meaning as in Chapter 1 of Part 13 (see section 713).
131 If a tribunal has made a determination under section 705(3) of ICTA (determination on rehearing of appeal against notice under section 703 of ICTA) within 30 days before 6 April 2007, the appellant or an officer of Revenue and Customs may require the tribunal to state and sign a case under section 707(2) of this Act, despite not having declared dissatisfaction with the determination.
132 (1) This paragraph applies until paragraph 47 of Schedule 9 to the Constitutional Reform Act 2005 (c. 4) comes into force.
(2) Section 710 has effect until that time as if—
(a) references in subsections (1), (2) and (4) to the Supreme Court were references to the House of Lords, and
(b) in subsection (3) the words “unless leave has been given under and in accordance with section 1 of the Administration of Justice (Appeals) Act 1934” were substituted for the words “except with the leave of the Court of Appeal or the Supreme Court”.
(3) Section 711(4) has effect until that time as if the reference to the Supreme Court were a reference to the House of Lords.
133 (1) Section 732 (non-transferors receiving a benefit as a result of relevant transactions) applies whenever the relevant transfer referred to in that section took place.
(2) But the relevant income referred to in section 733(1) (by reference to which the amount of income treated as arising under section 732 is determined) does not include income that arose before 10 March 1981.
134 (1) This paragraph deals with whether section 475 (residence of trustees) applies in determining if the single person mentioned in section 474 is a person abroad (as defined in section 718) for the purposes of sections 727 to 730 (charge where individuals receive capital sums as a result of transfers of assets abroad etc) (and accordingly whether section 718(2)(b) applies for those purposes).
(2) Section 475 does not apply for the purposes of sections 727 to 730 in relation to income payable before 15 June 1989.
(3) Section 475 does not apply for the purposes of sections 727 to 730 in relation to income payable on or after 15 June 1989 if—
(a) the individual received or became entitled to receive the capital sum mentioned in section 729(1) before that date, and
(b) the capital sum was wholly repaid or the right to it waived before 1 October 1989.
(4) In sub-paragraph (3) “capital sum” has the meaning given in section 729, and subsection (4) of that section applies for the purposes of that sub-paragraph as it applies for the purposes of section 729(1).
135 (1) Sub-paragraph (2) deals with whether section 474 (trustees of settlement to be treated as a single and distinct person) and section 475 (residence of trustees) apply for the purposes of sections 731 to 735 (charge where benefit received) (and accordingly whether section 718(2)(b) applies for those purposes).
(2) Sections 474 and 475 do not apply for the purposes of sections 731 to 735 in relation to benefits received before 15 June 1989.
(3) Sub-paragraphs (4) and (5) apply for the purposes of section 733 (income charged under section 731) in finding the amount of income treated as arising under section 732(2) in respect of benefits received on or after 15 June 1989.
(4) In determining the relevant income of an earlier tax year for the purposes of section 733(1) (see Step 4), income that arose to the trustees of a settlement before 6 April 1989 is treated as arising to persons abroad if one or more of the trustees were resident outside the United Kingdom, even though one or more were not so resident.
(5) But sub-paragraph (4) does not apply if the trustees have been charged to tax on that income.
136 (1) This paragraph deals with whether section 834 (residence of personal representatives) applies in determining if personal representatives are persons abroad (as defined in section 718) for the purposes of sections 727 to 730 (charge where individuals receive capital sums as a result of transfers of assets abroad etc) (and accordingly whether section 718(2)(c) applies for those purposes).
(2) Section 834 does not apply for the purposes of sections 727 to 730 in relation to income payable before 15 June 1989.
(3) Section 834 does not apply for the purposes of sections 727 to 730 in relation to income payable on or after 15 June 1989 if—
(a) the individual received or became entitled to receive the capital sum mentioned in section 729(1) before that date, and
(b) the capital sum was wholly repaid or the right to it waived before 1 October 1989.
(4) In sub-paragraph (3) “capital sum” has the meaning given in section 729, and subsection (4) of that section applies for the purposes of that sub-paragraph as it applies for the purposes of section 729(1).
137 (1) Sub-paragraph (2) deals with whether section 834 (residence of personal representatives) applies for the purposes of sections 731 to 735 (charge where individuals receive a benefit as a result of transfers of assets abroad etc) (and accordingly whether section 718(2)(c) applies for those purposes).
(2) Section 834 does not apply for the purposes of sections 731 to 735 in relation to benefits received before 15 June 1989.
(3) Sub-paragraphs (4) and (5) apply for the purposes of section 733 (income charged under section 731) in finding the amount of income treated as arising under section 732(2) in respect of benefits received on or after 15 June 1989.
(4) In determining the relevant income of an earlier tax year for the purposes of section 733(1) (see Step 4), income that arose to personal representatives before 6 April 1989 is treated as arising to persons abroad if one or more of them were resident outside the United Kingdom, even though one or more were not so resident.
(5) But sub-paragraph (4) does not apply if the personal representatives have been charged to tax on that income.
138 (1) In relation to transfers and associated operations on or after 20 March 1990 and before 30 November 1993, a body corporate regarded as resident in a territory outside the United Kingdom for the purposes of any double taxation arrangements is treated as if it were resident outside the United Kingdom for the purposes of Chapter 2 of Part 13 (transfer of assets abroad).
(2) In this paragraph “transfers” and “associated operations” have the same meaning as in Chapter 2 of Part 13 (see sections 716 and 719 respectively).
139 (1) So far as section 749(6) (restrictions on information to be provided under section 748) applies for the purposes of section 749(2) or (3), it applies in relation to transfers and associated operations on or after 20 March 1990 and before 30 November 1993 with the modification specified in sub-paragraph (2).
(2) The modification is that the reference to bodies corporate resident outside the United Kingdom includes a reference to bodies corporate regarded as resident in a territory outside the United Kingdom for the purposes of any double taxation arrangements.
140 Sections 721(5)(b) and (c) and 728(3)(b) and (c) do not apply if the income arose before 26 November 1996.
141 (1) In relation to any time before 5 December 2005, the reference in section 716(1)(b) (meaning of “relevant transfer”) to income which becomes payable to a person abroad does not include income that becomes so payable just as a result of one or more associated operations.
(2) In relation to any time before 5 December 2005, section 719 (meaning of “associated operation”) applies as if subsection (2) were omitted.
(3) In relation to any time before 5 December 2005, the reference in section 721(2) (individuals with power to enjoy income as a result of relevant transactions) to income which an individual has power to enjoy does not include income which the individual has power to enjoy just as a result of one or more associated operations.
(4) In relation to any time before 5 December 2005, the reference in section 728(1)(a) (individuals receiving capital sums as a result of relevant transactions) to income which has become the income of a person abroad does not include income that has become such income just as a result of one or more associated operations.
(5) In this paragraph—
(a) “associated operation” has the meaning given in section 719, and
(b) references to power to enjoy income are to be read in accordance with section 722 (when an individual has power to enjoy income of a person abroad).
142 In section 792(1)—
(a) the reference to the claiming of relief includes a reference to the claiming of relief as mentioned in section 74(1)(a) and (b) of FA 2005, and
(b) the reference to sections 104, 107 and 110 includes a reference to section 117 of ICTA (including as applied by section 118ZB of that Act) and section 118ZE of that Act.
143 (1) The losses covered by section 794(1) and (2) in relation to a trade include losses within section 74(5) of FA 2005 made in the trade.
(2) The income covered by section 794(3) includes amounts treated as received as a result of the application of section 74 of FA 2005.
(3) Sub-paragraph (4) applies for the purposes of section 794(5) if, as a result of paragraph 142(b), the relevant restriction provision would be section 117 of ICTA (including as applied by section 118ZB of that Act) or section 118ZE of that Act.
(4) The relevant restriction provision is instead taken to be—
(a) in the case of section 117 of ICTA (other than as applied by section 118ZB of that Act), section 104,
(b) in the case of section 117 of ICTA (as applied by section 118ZB of that Act), section 107, and
(c) in the case of section 118ZE of ICTA, section 110.
(5) In section 794(6) the reference to subsection (2)(b) includes a reference to section 74(11)(b) of FA 2005.
144 (1) The claims covered by section 797(1)(a) include claims within section 119(1)(a) of FA 2004.
(2) For the purposes of section 797—
(a) a “relevant disposal” does not include a disposal which was made before 10 December 2003, and
(b) an event occurring before the tax year 2007-08 is an “exit event” if (and only if) it is an “exit event” for the purposes of section 119 of FA 2004.
Income Tax Act 2007