Income and Corporation Taxes Act 1988

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Claims

306

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Withdrawal of relief

307

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application to subsidiaries

308

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further provisions as to subsidiaries

309

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information

310

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nominees, bare trustees and approved investment funds

311

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Chapter III

312

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — SPECIAL PROVISIONS

Taxation of consideration for certain restrictive undertakings

313

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Divers and diving supervisors

314

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wounds and disability pensions

315

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allowances, bounties and gratuities

316

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Victoria Cross and other awards

317

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other pensions in respect of death due to war service etc

318

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Crown servants: foreign service allowance

319

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commonwealth Agents-General and official agents etc

320

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consuls and other official agents

321

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consular officers and employees

322

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Visiting forces

323

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Designated international organisations

324

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest on deposits with National Savings Bank

325

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest etc. under contractual savings schemes

326

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disabled person’s vehicle maintenance grant

327

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funds in court

328

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest on damages for personal injuries

329

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation for National-Socialist persecution

330

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Scholarship income

331

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenditure and houses of ministers of religion

332

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Personal equity plans

333

Regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) may include provision generally for the purpose of the administration of corporation tax in relation to plans.

CHAPTER V — RESIDENCE OF INDIVIDUALS

Commonwealth citizens and others temporarily abroad

334

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Residence of persons working abroad

335

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Temporary residents in the United Kingdom

336

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART VIII — TAXATION OF INCOME AND CHARGEABLE GAINS OF COMPANIES

Taxation of income

Companies beginning or ceasing to carry on a trade

337

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allowance of charges on income and capital

338

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charges on income: donations to charity

339

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charges on income: interest payable to non-residents

340

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments of interest etc. between related companies

341

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax on company in liquidation

342

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company reconstructions without a change of ownership

343

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company reconstructions: supplemental

344

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chargeable gains

Computation of chargeable gains

345

Capital distribution of chargeable gains: recovery of tax from shareholder

346

Tax on one member of group recoverable from another member

347

PART IX — ANNUAL PAYMENTS AND INTEREST

Annual payments

Payments out of profits or gains brought into charge to income tax: deduction of tax

348

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments not out of profits or gains brought into charge to income tax, and annual interest

349

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax where payments made under section 349

350

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Small maintenance payments

351

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certificates of deduction of tax

352

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief for payments of interest (excluding MIRAS)

General provision

353

• (1) Where a person pays interest in any year of assessment, that person, if he makes a claim to the relief, shall for that year of assessment be entitled (subject to . . . section 52 of ITTOIA 2005) to relief in accordance with this section in respect of so much (if any) of the amount of that interest as is eligible for relief under this section by virtue of section 365.

• (1A) Where a person is entitled for a year of assessment to relief under this section in respect of an amount of interest which is eligible for relief by virtue of section 365, the relief is given as a tax reduction for that tax year.

• (1AA) The amount of the tax reduction is 23% of the amount of the interest.

• (1AB) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007.

• (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1E) Where any person is entitled for any year of assessment to relief . . . in respect of any amount of interest as is eligible for that relief partly as mentioned in subsection (1A) above and partly as mentioned in section 383 of ITA 2007 (relief for interest payments), that amount of interest shall be apportioned between the cases to which each of those provisions applies without regard to what parts of the total amount borrowed remain outstanding but according to . . . —

• (a) the proportions of the total amount borrowed which were applied for different purposes; . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and subsection (1A) above or section 383 of ITA 2007 shall apply accordingly to the case in which that subsection or section applies.

• (1F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1H) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) This section does not apply to a payment of relevant loan interest to which section 369 applies.

• (3) Relief under this section shall not be given in respect of—

• (a) interest on a debt incurred by overdrawing an account or by debiting the account of any person as the holder of a credit card or under similar arrangements; or

• (b) where interest is paid at a rate in excess of a reasonable commercial rate, so much of the interest as represents the excess.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loans to buy land etc

354

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Matters excluded from section 354

355

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Job-related accommodation

356

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limit on amount of loan eligible for relief by virtue of section 354

357

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief where borrower deceased

358

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loan to buy machinery or plant

359

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loan to buy interest in close company

360

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loan to buy interest in co-operative or employee-controlled company

361

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loan to buy into partnership

362

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 360 to 362

363

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loan to pay inheritance tax

364

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loan to buy life annuity

365

• (1) Subject to the following provisions of this section, interest is eligible for relief under section 353 if it is interest on a loan in respect of which the following conditions are satisfied—

• (aa) that the loan was made before 9th March 1999;

• (a) that the loan was made as part of a scheme under which not less than nine-tenths of the proceeds of the loan were applied to the purchase by the person to whom it was made of an annuity ending with his life or with the life of the survivor of two or more persons (“the annuitants”) who include the person to whom the loan was made;

• (b) that at the time the loan was made the person to whom it was made or each of the annuitants had attained the age of 65 years;

• (c) that the loan was secured on land in the United Kingdom or the Republic of Ireland and the person to whom it was made or one of the annuitants owns an estate or interest in that land; and

• (d) that, if the loan was made after 26th March 1974, the person to whom it was made or each of the annuitants used the land on which it was secured as his only or main residence immediately before 9th March 1999 .

• (1AA) Where—

• (a) a loan made on or after 9th March 1999 was made in pursuance of an offer made by the lender before that date, and

• (b) the offer was either in writing or evidenced by a note or memorandum made by the lender before that date,

the loan shall be deemed for the purposes of subsection (1)(aa) above to have been made before that date.

• (1AB) Subject to subsection (1AC) below, the conditions in paragraphs (aa) and (a) of subsection (1) above shall be treated as satisfied in relation to a loan (“the new loan”) if—

• (a) the new loan was made on or after the day on which the Finance Act 1999 was passed;

• (b) the new loan was made as part of a scheme (“the scheme”) under which the whole or any part of the proceeds of the loan was used to defray money applied in paying off another loan (“the old loan”); and

• (c) the conditions in subsection (1) above were, or were treated by virtue of this subsection as, satisfied with respect to the old loan.

• (1AC) If only part of the proceeds of the new loan was used to defray money applied in paying off the old loan, subsection (1AB) above applies only if, under the scheme, not less than nine-tenths of the remaining part of the proceeds of the new loan was applied to the purchase by the person to whom it was made of an annuity ending with his life or with the life of the survivor of two or more persons who include him.

• (1AD) In subsection (1AC) above “the remaining part” means the part of the proceeds of the new loan that was not used to defray money applied in paying off the old loan.

• (1A) The condition in subsection (1)(d) above shall be treated as satisfied in relation to a loan if—

• (a) the person to whom the loan was made, or any of the annuitants, ceased to use the land as his only or main residence at a time falling within the period of twelve months ending with 8th March 1999, and

• (b) the intention at that time of the person to whom the loan was made, or each of the annuitants owning an estate or interest in the land, was to take steps, before the end of the period of twelve months after the day on which the land ceased to be so used, with a view to the disposal of his estate or interest.

• (1B) If it appears to the Board reasonable to do so, having regard to all the circumstances of a particular case, they may direct that in relation to that case subsection (1A) above shall have effect as if for the reference to 12 months there were substituted a reference to such longer period as meets the circumstances of that case.

• (2) Interest is not eligible for relief by virtue of this section unless it is payable by the person to whom the loan was made or by one of the annuitants.

• (3) If the loan was made after 26th March 1974 interest on it is eligible for relief by virtue of this section only to the extent that the amount on which it is payable does not exceed the sum of £30,000; and if the interest is payable by two or more persons the interest payable by each of them is so eligible only to the extent that the amount on which it is payable does not exceed such amount as bears to that sum the same proportion as the interest payable by him bears to the interest payable by both or all of them.

Information

366

• (1) A person who claims relief under section 353 in respect of any payment of interest shall furnish to the inspector a statement in writing by the person to whom the payment is made, showing—

• (a) the date when the debt was incurred;

• (b) the amount of the debt when incurred;

• (c) the interest paid in the year of assessment for which the claim is made . . . ; and

• (d) the name and address of the debtor.

• (2) Where any such interest as is mentioned in section 353 is paid, the person to whom it is paid shall, if the person who pays it so requests in writing, furnish him with such statement as regards that interest as is mentioned in subsection (1) above; and the duty imposed by this subsection shall be enforceable at the suit or instance of the person making the request.

• (3) Subsections (1) and (2) above do not apply to interest paid to a building society, or to a local authority.

Provisions supplementary to sections 354 to 366

367

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) In section 365(3) references to the qualifying maximum for the year of assessment are references to such sum as Parliament may determine for the purpose for that year.

Exclusion of double relief etc

368

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mortgage interest relief at source

Mortgage interest payable under deduction of tax

369

• (1) If a person who is a qualifying borrower makes a payment of relevant loan interest to which this section applies, he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to the applicable percentage thereof.

• (1A) In subsection (1) above “the applicable percentage” means 23 per cent..

• (2) Where a sum is deducted under subsection (1) above from a payment of relevant loan interest—

• (a) the person to whom the payment is made shall allow the deduction on receipt of the residue;

• (b) the borrower shall be acquitted and discharged of so much money as is represented by the deduction as if the sum had been actually paid; and

• (c) the sum deducted shall be treated as income tax paid by the person to whom the payment is made.

• (3) The following payments, that is to say—

• (a) payments of relevant loan interest to which this section applies, and

• (b) payments which would be such payments but for section 373(5),

shall not be allowable as deductions for any purpose of the Income Tax Acts except in so far as they fall to be treated as such payments by virtue only of section 375(2) and would be allowable apart from this subsection.

• (6) Sections 967(2) and 968(2) of CTA 2010 do not apply to a payment of relevant loan interest to which this section applies, but any person by whom such a payment is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (2)(c) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the payment of relevant loan interest to which it relates.

• (7) The following provisions of the Management Act, namely—

• (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act;

• (b) section 30 (tax repaid in error etc.) apart from subsection (1B),

• (c) section 86 (interest), and

• (d) section 95 (incorrect return or accounts),

shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.

• (8) In the application of section 86 of the Management Act by virtue of subsection (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment (“the relevant year of assessment”) under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—

• (a) is 1st January in the relevant year of assessment in a case where the person falling within subsection (6) above has made a relevant interim claim; and

• (b) in any other case, is the later of the following dates, that is to say—

• (i) 1st January in the relevant year of assessment; or

• (ii) the date of the making of the payment by the Board which gives rise to the assessment.

• (9) In this section—

• “financial year”, in relation to any person, means a financial year of that person for the purposes of the relevant regulations;

• “interim claim” means an interim claim within the meaning of the relevant regulations;

• “relevant interim claim” means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person’s financial year, an interim claim made for a period falling wholly or partly within that financial year; and

• “the relevant regulations” means regulations made under section 378(3) for the purposes of subsection (6) above.

Relevant loan interest

370

• (1) Subject to this section and sections 373 to 376, in this Part “relevant loan interest” means interest which is paid and payable in the United Kingdom to a qualifying lender and to which subsection (2) . . . below applies.

• (2) Subject to subsection (4) below, this subsection applies to interest if, disregarding section 353(2) and any other provision applying to interest falling to be treated as relevant loan interest—

• (a) it is interest falling within section . . . 365; and

• (b) apart (where applicable) from section . . . 365(3), the whole of the interest would be eligible for relief under section 353;. . .

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) In determining whether subsection (2) above applies to any interest, section 365 shall have effect as if the words “or the Republic of Ireland” were omitted.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Second loans

371

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Home improvement loans

372

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loans in excess of the qualifying maximum, and joint borrowers

373

• (1) The provisions of this section have effect in relation to a loan where, by virtue of . . . section 365(3), only part of the interest on the loan would (apart from section 353(2)) be eligible for relief under section 353; and in this section any such loan is referred to as a “limited loan”.

• (2) None of the interest on a limited loan is relevant loan interest unless—

• (a) the loan is made on or after 6th April 1987; or

• (b) the qualifying lender to whom the interest is payable has given notice to the Board in accordance with regulations that he is prepared to have limited loans of a description which includes that limited loan brought within the tax deduction scheme.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) Where the condition in paragraph (a) or (b) of subsection (2) above is fulfilled . . . only so much of the interest as (apart from section 353(2)) would be eligible for relief under section 353 is relevant loan interest.

• (6) Where a loan on which interest is payable by the borrower was made jointly to the borrower and another person who is not the borrower’s husband or wife, the interest on the loan is not relevant loan interest unless—

• (a) each of the persons to whom the loan was made is a qualifying borrower; and

• (b) in relation to each of them considered separately, the whole of that interest is relevant loan interest, in accordance with section 370 and this section.

• (7) In subsection (6) above references to the borrower’s husband or wife do not include references to a separated husband or wife . . . .

Conditions for application of section 369

374

• (1) Section 369 does not apply to any relevant loan interest unless—

• (a) in the case of a loan of a description specified by regulations for the purposes of this paragraph, the borrower or, in the case of joint borrowers, each of them has given notice to the lender in the prescribed form certifying—

• (i) that he is a qualifying borrower; and

• (ii) that the interest is relevant loan interest; and

• (iii) such other matters as may be prescribed; or

• (b) the Board have given notice to the lender and the borrower that the interest may be paid under deduction of tax; or

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) the loan to which the interest relates is of a description specified by regulations for the purposes of this paragraph and was made—

• (i) if sub-paragraph (2) of paragraph 2 of Schedule 7 to the Finance Act 1982 applied to interest on the loan which became due on or after a date earlier than 6th April 1983, being a date specified by the Board in pursuance of sub-paragraph (5) of that paragraph, before that earlier date; or

• (ii) if the qualifying lender is a building society or a local authority, before 1st April 1983; or

• (iii) if sub-paragraphs (i) and (ii) above do not apply and the interest falls within section 370(2), before 6th April 1983.

• (2) Where notice has been given as mentioned in paragraph (a) or (b) of subsection (1) above, section 369 applies to any relevant loan interest to which the notice relates and which becomes due on or after the relevant date, as defined by subsection (3) below; and in a case falling within paragraph . . . (d) of subsection (1) above, section 369 applies to the relevant loan interest referred to in that paragraph.

• (3) In subsection (2) above “the relevant date” means—

• (a) in the case of a notice under subsection (1)(a) above, the date the notice is given, and

• (b) in the case of a notice under subsection (1)(b) above, a date specified in the notice as being the relevant date (which may be earlier than the date so specified as the date from which the interest may be paid under deduction of tax).

Interest ceasing to be relevant loan interest, etc

375

• (1) If at any time—

• (a) the interest on a loan ceases to be relevant loan interest; or

• (b) a person making payments of relevant loan interest ceases to be a qualifying borrower;

the borrower shall give notice of the fact to the lender.

• (2) Without prejudice to subsection (3) below, in relation to a payment of interest—

• (a) which is due after the time referred to in subsection (1) above and before the date on which notice is given under that subsection, and

• (aa) as respects which any of the conditions mentioned in section 374(1) is fulfilled, and

• (b) from which a deduction was made as mentioned in section 369(1),

section 369 shall have effect as if the payment were a payment of relevant loan interest made by a qualifying borrower.

• (3) Nothing in subsection (2) above shall be taken as regards the borrower as entitling him to any deduction or to retain any amount deducted and, accordingly, where any amount that has been deducted exceeds the amount which ought to have been deducted, he shall be liable to make good the excess and an inspector may make such assessments as may in his judgment be required for recovering the excess.

• (4) The Management Act shall apply to an assessment under subsection (3) above as if it were an assessment to income tax for the year of assessment in which the deduction was made.

• (4A) If there is any unreasonable delay in the giving of a notice under subsection (1) above, the borrower shall be liable to a penalty not exceeding so much of the aggregate amount that he is liable to make good under subsection (3) above as is attributable to that delay.

• (5) If, as a result of receiving a notice under subsection (1) above or otherwise, a qualifying lender has reason to believe that any interest is no longer relevant loan interest or that a borrower is no longer a qualifying borrower, the lender shall furnish the Board with such information as is in his possession with respect to those matters.

• (6) Where it appears to the Board that any of the provisions of sections 370 to 373 is not or may not be fulfilled with respect to any interest, or that a qualifying borrower has or may have ceased to be a qualifying borrower, they shall give notice of that fact to the lender and the borrower specifying the description of relevant loan interest concerned or, as the case may be, that the borrower has or may have ceased to be a qualifying borrower.

• (7) Section 369 shall not apply to any payment of relevant loan interest of a description to which a notice under subsection (6) above relates and which becomes due or is made after such date as may be specified in the notice and before such date as may be specified in a further notice given by the Board to the lender and the borrower.

• (8) In any case where—

• (a) section 369 applies to any relevant loan interest by virtue of a notice under section 374(1)(b), and

• (b) the relevant date specified in the notice is earlier than the date from which the interest begins to be paid under deduction of tax, and

• (c) a payment of that interest was made on or after the relevant date but not under deduction of tax,

regulations may provide for a sum to be paid by the Board of an amount equal to that which the borrower would have been able to deduct from that payment by virtue of section 369 if it had been made after the relevant date.

• (8A) In any case where an amount to which a person is not entitled is paid to him by the Board in pursuance of regulations made by virtue of subsection (8) above, regulations may—

• (a) provide for an officer of the Board to make such assessments as may in his judgment be required for recovering that amount from that person; and

• (b) make provision corresponding to that made by subsection (4A) above and subsections (4) and (5) of section 374A.

• (8B) Subsections (1), (5) and (6) above shall not apply where interest ceases to be relevant loan interest by virtue of section 38 of the Finance Act 1999.

• (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying borrowers and qualifying lenders

376

• (1) Subject to subsection (2) below, an individual is a qualifying borrower with respect to the interest on any loan.

• (2) In relation to interest paid at a time when the borrower or the borrower’s husband or wife holds an office or employment which would, but for some special exemption or immunity from tax, be a taxable employment under Part 2 of ITEPA 2003 (as defined by section 66(3) of that Act), the borrower is not a qualifying borrower.

• (3) In subsection (2) above references to the borrower’s husband or wife do not include references to a separated husband or wife . . . .

• (4) The following bodies are qualifying lenders:—

• (a) a building society;

• (b) a local authority;

• (c) the Bank of England;

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (e) a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance;

• (f) any company to which property and rights belonging to a trustee savings bank were transferred by section 3 of the Trustee Savings Bank Act 1985;

• (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (h) a development corporation within the meaning of the New Towns Act 1981 or the New Towns (Scotland) Act 1968;

• (j) the Homes and Communities Agency;

• (ja) the Greater London Authority so far as exercising its housing or regeneration functions or its new towns and urban development functions;

• (k) the Regulator of Social Housing,

• (ka) the Secretary of State if the loan is made by him under section 79 of the Housing Associations Act 1985;

• (l) the Northern Ireland Housing Executive;

• (m) the Scottish Special Housing Association;

• (n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (o) the Church of England Pensions Board;

• (p) any body which is for the time being registered under section 376A.

• (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Variation of terms of repayment of certain loans

377

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary regulations

378

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) The Board may by regulations make provision—

• (a) for the purposes of any provision of sections 369 to 376A which relates to any matter or thing to be specified by or done in accordance with regulations;

• (b) for the application of those sections in relation to loan interest paid by personal representatives and trustees;

• (c) with respect to the furnishing of information by borrowers or lenders, including, in the case of lenders, the inspection of books, documents and other records on behalf of the Board;

• (d) for, and with respect to, appeals to the tribunal against the refusal of the Board to issue a notice under section 374(1)(b) or the issue of a notice under section 375(6) or (7); and

• (e) generally for giving effect to sections 369 to 376A.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 369 to 378

379

In sections 369 to 378—

• “contracts of general insurance” means contracts which fall within Part I of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contracts of long-term insurance” means contracts which fall within Part II of that Schedule;

• “prescribed” . . . means prescribed by the Board;

• “qualifying borrower” has the meaning given by section 376(1) to (3);

• “qualifying lender” has the meaning given by section 376(4) . . . ;

• “regulations” . . . means regulations made by the Board under section 378;

• “relevant loan interest” has the meaning given by section 370(1);

• “separated” means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent.

PART X — LOSS RELIEF AND GROUP RELIEF

CHAPTER I — LOSS RELIEF: INCOME TAX

Trade etc. losses

Set-off against general income

380

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further relief for individuals for losses in early years of trade

381

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 380 and 381

382

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extension of right of set-off to capital allowances

383

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restrictions on right of set-off

384

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-forward against subsequent profits

385

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-forward where business transferred to a company

386

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-forward as losses of amounts taxed under section 350

387

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-back of terminal losses

388

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions relating to carry-back of terminal losses

389

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of interest as a loss for purposes of carry-forward and carry-back

390

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Losses from trade etc. carried on abroad

391

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Case VI losses

Case VI losses

392

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — LOSS RELIEF: CORPORATION TAX

Trade etc. losses

Losses other than terminal losses

393

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Terminal losses

394

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Leasing contracts and company reconstructions

395

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Case VI losses

Case VI losses

396

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — LOSS RELIEF: MISCELLANEOUS PROVISIONS

Restriction of relief in case of farming and market gardening

397

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions in deposits with and without certificates or in debts

398

Where a company sustains a loss on the exercise or disposal of a right to receive any amount, being a right to which section 56(2) . . . applies, in a case where—

• (a) if a profit had arisen from that exercise or disposal, that profit would have been chargeable to corporation tax by virtue of section 56(2) . . . , and

• (b) the company is chargeable to corporation tax under Part 5 of CTA 2009 (loan relationships) in respect of interest payable on that amount,

then the amount of that interest shall be included in the amounts against which the amount of its loss may be set off under section 91 of CTA 2010.

Dealings in commodity futures etc: withdrawal of loss relief

399

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Write-off of government investment

400

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief for pre-trading expenditure

401

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — GROUP RELIEF

Surrender of relief between members of groups and consortia

402

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Losses etc. which may be surrendered by way of group relief

403

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limitation of group relief in relation to certain dual resident companies

404

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Claims relating to losses etc. of members of both group and consortium

405

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Claims relating to losses etc. of consortium company or group member

406

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relationship between group relief and other relief

407

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corresponding accounting periods

408

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies joining or leaving group or consortium

409

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arrangements for transfer of company to another group or consortium

410

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exclusion of double allowances

411

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Claims and adjustments

412

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Chapter IV

413

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XI — CLOSE COMPANIES

CHAPTER I — INTERPRETATIVE PROVISIONS

Close companies

414

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certain quoted companies not to be close companies

415

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “associated company” and “control”

416

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “participator”, “associate”, “director” and “loan creditor”

417

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Additional matters to be treated as distributions

“Distribution” to include certain expenses of close companies

418

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — CHARGES TO TAX IN CONNECTION WITH LOANS

Loans to participators etc

419

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exceptions from section 419

420

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxation of borrower when loan under section 419 released etc

421

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extension of section 419 to loans by companies controlled by close companies

422

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — APPORTIONMENT OF UNDISTRIBUTED INCOME ETC.

Apportionment of certain income, deductions and interest

423

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exclusions from section 423

424

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Manner of apportionment

425

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to income tax where apportionment is to an individual

426

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reduction of charge under section 426 in certain cases

427

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increase of apportioned sum etc. by reference to ACT

428

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment and collection of income tax

429

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequences of apportionment: ACT

430

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XII — SPECIAL CLASSES OF COMPANIES AND BUSINESSES

CHAPTER I — INSURANCE COMPANIES, UNDERWRITERS AND CAPITAL REDEMPTION BUSINESS

Insurance companies: general

Interpretative provisions relating to insurance companies

431

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Separation of different classes of business

432

• (1) Where an insurance company carries on life assurance business in conjunction with insurance business of any other category, the life assurance business shall, for the purposes of the Corporation Tax Acts, be treated as a separate business from any other category of business carried on by the company.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Profits reserved for policy holders and annuitants

433

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Franked investment income etc

434

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxation of gains reserved for policy holders and annuitants

435

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annuity business and pension business: separate charge on profits

436

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General annuity business

437

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pension business: exemption from tax

438

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restricted government securities

439

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Identification or exchange of long term assets

440

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign life assurance funds

441

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Overseas business of U.K. companies

442

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life policies carrying rights not in money

443

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life policies issued before 5th August 1965

444

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions applying only to overseas life insurance companies

Charge to tax on investment income

445

Annuity business

446

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Set-off of income tax and tax credits against corporation tax

447

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying distributions and tax credits

448

Double taxation agreements

449

Underwriters

Assessment, set-off of losses and reinsurance

450

Regulations

451

Special reserve funds

452

Payments into premiums trust fund on account of losses

453

Income tax consequences on payments into and out of special reserve fund

454

Income tax consequences on death of underwriter

455

Unearned income, variation of arrangements and cancellation of approval etc

456

Interpretation of sections 450 to 456

457

Capital redemption business

Capital redemption business

458

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — FRIENDLY SOCIETIES, TRADE UNIONS AND EMPLOYERS’ ASSOCIATIONS

Unregistered friendly societies

Exemption from tax

459

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registered friendly societies

Exemption from tax in respect of life or endowment business

460

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxation in respect of other business

461

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions for tax exempt business

462

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life or endowment business: application of the Corporation Tax Acts

463

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum benefits payable to members

464

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Old societies

465

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Chapter II

466

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trade unions and employers’ associations

Exemption for trade unions and employers' associations

467

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.

Unit trust schemes

Authorised unit trusts

468

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other unit trusts

469

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transitional provisions relating to unit trusts

470

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dealers in securities, banks and insurance businesses

Exchange of securities in connection with conversion operations, nationalisation etc

471

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Distribution of securities issued in connection with nationalisation etc

472

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conversion etc. of securities held as circulating capital

473

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of tax-free income

474

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax-free Treasury securities: exclusion of interest on borrowed money

475

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — BUILDING SOCIETIES, BANKS, SAVINGS BANKS, INDUSTRIAL AND PROVIDENT SOCIETIES AND OTHERS

Building societies: regulations for payment of tax

476

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investments becoming or ceasing to be relevant building society investments

477

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Building societies: time for payment of tax

478

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest paid on deposits with banks etc

479

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deposits becoming or ceasing to be composite rate deposits

480

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“Deposit-taker”, “deposit” and “relevant deposit”

481

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions

482

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Determination of reduced rate for building societies and composite rate for banks etc

483

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) If the order made under section 26 of the Finance Act 1984 in the year 1987-88 is made in pursuance of subsection (4) of that section, that order shall, notwithstanding that that subsection is not re-enacted by this Act, apply for the purposes of sections 476 and 479 for the year 1988-89.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Savings banks: exemption from tax

484

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Savings banks: supplemental

485

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Industrial and provident societies and co-operative associations

486

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Credit unions

487

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Co-operative housing associations

488

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Self-build societies

489

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies carrying on a mutual business or not carrying on a business

490

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Distribution of assets of body corporate carrying on mutual business

491

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V

Treatment of oil extraction activities etc. for tax purposes

492

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Valuation of oil disposed of or appropriated in certain circumstances

493

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charges on income

494

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regional development grants

495

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tariff receipts

496

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on setting ACT against income from oil extraction activities etc

497

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limited right to carry back surrendered ACT

498

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Surrender of ACT where oil extraction company etc. owned by a consortium

499

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deduction of PRT in computing income for corporation tax purposes

500

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest on repayment of PRT

501

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Chapter V

502

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VI — MISCELLANEOUS BUSINESSES AND BODIES

Letting of furnished holiday accommodation treated as a trade

503

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions

504

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charities: general

505

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying expenditure and non-qualifying expenditure

506

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The National Heritage Memorial Fund, the Historic Buildings and Monuments Commission for England and the British Museum

507

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Scientific research organisations

508

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reserves of marketing boards and certain other statutory bodies

509

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Agricultural societies

510

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Electricity Council and Boards, the Northern Ireland Electricity Service and the Gas Council

511

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Atomic Energy Authority and National Radiological Protection Board

512

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

British Airways Board and National Freight Corporation

513

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funds for reducing the National Debt

514

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signatories to Operating Agreement for INMARSAT

515

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Government securities held by non-resident central banks

516

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issue departments of the Reserve Bank of India and the State Bank of Pakistan

517

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Harbour reorganisation schemes

518

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Local authorities

519

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XIII — MISCELLANEOUS SPECIAL PROVISIONS

CHAPTER I — INTELLECTUAL PROPERTY

Patents and know-how

Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure

520

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 520

521

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allowances for expenditure on purchase of patent rights: pre-1st April 1986 expenditure

522

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lapses of patent rights, sales etc

523

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxation of receipts from sale of patent rights

524

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital sums: death, winding up or partnership change

525

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief for expenses

526

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Spreading of royalties over several years

527

• (1) Where—

• (a) a royalty or other sum is paid to a company in respect of the user of a patent,

• (b) the user extended over a period of six complete years or more, and

• (c) the payment is one from which a sum representing income tax must be deducted under section 903 of ITA 2007,

the company may on the making of a claim require that the corporation tax payable by it by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of corporation tax which would have been payable by it if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.

• (2) Subsection (1) above shall apply in relation to a royalty or other sum where the period of the user is two complete years or more but less than six complete years as it applies to the royalties and sums mentioned in that subsection, but with the substitution for the reference to six equal instalments of a reference to so many equal instalments as there are complete years comprised in that period.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Manner of making allowances and charges

528

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Patent income to be earned income in certain cases

529

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disposal of know-how

530

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 530

531

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of the 1968 Act

532

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 520 to 532

533

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Copyright and public lending right

Relief for copyright payments etc

534

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief where copyright sold after ten years or more

535

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxation of royalties where owner abroad

536

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Public lending right

537

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Artists’ receipts

Relief for painters, sculptors and other artists

538

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — LIFE POLICIES, LIFE ANNUITIES AND CAPITAL REDEMPTION POLICIES

Introductory

539

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life policies: chargeable events

540

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life policies: computation of gain

541

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life annuity contracts: chargeable events

542

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life annuity contracts: computation of gain

543

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Second and subsequent assignment of life policies and contracts

544

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital redemption policies

545

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation of certain amounts for purposes of sections 540, 542 and 545

546

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Method of charging gain to tax

547

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deemed surrender of certain loans

548

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certain deficiencies allowable as deductions

549

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief where gain charged at a higher rate

550

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Right of individual to recover tax from trustees

551

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information: duty of insurers

552

• (1) Where a chargeable event . . . has happened in relation to any policy or contract, the body by or with whom the policy or contract was issued, entered into or effected shall—

• (a) unless satisfied that no gain is to be treated as arising by reason of the event, deliver to the appropriate policy holder before the end of the relevant three month period a certificate specifying the information described in subsection (5) below; and

• (b) if the condition in paragraph (a) or (b) of subsection (2) below is satisfied, deliver to the inspector before the end of the relevant three month period a certificate specifying the information described in subsection (5) below together with the name and address of the appropriate policy holder.

• (2) For the purposes of this section—

• (a) the condition in this paragraph is that the event is an assignment for money or money’s worth of the whole of the rights conferred by the policy or contract; or

• (b) the condition in this paragraph is that the amount of the gain, or the aggregate amount of the gain and any gains connected with it, exceeds one half of the basic rate limit for the relevant year of assessment.

• (3) If, in the case of every certificate which a body delivers under subsection (1)(a) above which relates to a gain attributable to a year of assessment . . . , the body also delivers to the inspector—

• (a) before the end of the relevant three month period for the purposes of subsection (1)(b) above,

• (b) by a means prescribed by the Board for the purposes of this subsection under section 552ZA(5), and

• (c) in a form so prescribed in the case of that means,

a certificate specifying the same information as the certificate under subsection (1)(a) together with the name and address of the appropriate policy holder, the body shall be taken to have complied with the requirements of subsection (1)(b) above in relation to that year of assessment . . . so far as relating to the chargeable events to which the certificates relate.

• (4) Where a certificate is not required to be delivered under subsection (1)(b) above in the case of any chargeable event—

• (a) the inspector may by notice require the body to deliver to him a copy of any certificate that the body was required to deliver under subsection (1)(a) above which relates to the chargeable event; and

• (b) it shall be the duty of the body to deliver such a copy within 30 days of receipt of the notice.

• (5) The information to be given to the appropriate policy holder pursuant to subsection (1)(a) above or the inspector pursuant to subsection (1)(b) above is—

• (a) any unique identifying designation given to the policy or contract;

• (b) the nature of the chargeable event and—

• (i) the date on which it happened; and

• (ii) if it is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 (chargeable events where transaction-related calculations show gains), the date on which the insurance year ends;

• (c) if the event is the assignment of all the rights conferred by the policy or contract, such of the following as may be required for computing the amount of the gain to be treated as arising by virtue of . . . Chapter 9 of Part 4 of ITTOIA 2005—

• (i) . . . the amount or value of any capital sums of a kind referred to in section 492(1)(b) to (e) of ITTOIA 2005;

• (ii) the amounts previously paid under the policy or contract by way of premiums or otherwise by way of consideration for an annuity;

• (iii) . . . the amount of so much of any payment previously made on account of an annuity as is exempt under section 717 of ITTOIA 2005;

• (iv) the value of any previously assigned parts of or shares in the rights conferred by the policy or contract;

• (v) . . . the total of the amounts of gains treated as arising on previous chargeable events within section 509(1) or 514(1) of ITTOIA 2005;

• (d) except where paragraph (c) above applies, the amount of the gain treated as arising by reason of the event;

• (e) the number of years relevant for computing the annual equivalent of the amount of the gain for the purposes of subsection (1) of section 536 of ITTOIA 2005 (top slicing relieved liability: one chargeable event), apart from subsections (6) and (8) of that section;

• (f) on the assumption that section 465 of ITTOIA 2005 (person liable: individuals) has effect in relation to the gain —

• (i) whether an individual would fall to be treated as having paid income tax at the basic rate on the amount of the gain in accordance with section 530 of that Act; and

• (ii) if so, except in a case where paragraph (c) above applies, the amount of such tax that would fall to be so treated as paid.

• (6) For the purposes of subsection (1)(a) above, the relevant three month period is whichever of the following periods ends the latest—

• (a) the period of three months following the happening of the chargeable event;

• (b) if the event is a surrender or assignment which is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 . . . , the period of three months following the end of the insurance year in which the event happens;

• (c) if the event is a death or an assignment of the whole of the rights or a surrender or assignment which is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 . . . , the period of three months beginning with receipt of written notification of the event.

• (7) For the purposes of subsection (1)(b) above, the relevant three month period is whichever of the following periods ends the latest—

• (a) the period of three months following the end of the year of assessment . . . in which the event happened;

• (b) if the event is a surrender or assignment which is a chargeable event by virtue of section 514(1) of ITTOIA 2005, the period of three months following the end of the insurance year in which the event happens;

• (c) if the event is a death or an assignment, the period of three months beginning with receipt of written notification of the event;

• (d) if a certificate under subsection (1)(b) above would not be required in respect of the event apart from the happening of another event, and that other event is one of those mentioned in paragraph (c) above, the period of three months beginning with receipt of written notification of that other event.

• (8) For the purposes of this section the cases where a gain is connected with another gain are those cases where—

• (a) both gains arise in connection with policies or contracts containing obligations which, immediately before the chargeable event, were obligations of the same body;

• (b) the policy holder of those policies or contracts is the same;

• (c) both gains are attributable to the same year of assessment . . . ;

• (d) the terms of the policies or contracts are the same, apart from any difference in their maturity dates; and

• (e) the policies or contracts were issued in respect of insurances made, or were entered into or effected, on the same date.

• (9) For the purposes of this section, the year of assessment . . . to which a gain is attributable is—

• (a) in the case of a gain treated as arising by virtue of subsection (1) of section 514 of ITTOIA 2005, the year of assessment which includes the end of the insurance year mentioned in subsection (3) and (4) of that section; or

• (b) in any other case, the year of assessment . . . in which happens the chargeable event by reason of which the gain is treated as arising.

• (10) In this section—

• “amount”, in relation to any gain, means the amount of the gain apart from . . . section 528 of ITTOIA 2005;

• “appropriate policy holder” means—in relation to an assignment of part of or a share in the rights conferred by a policy or contract, any person who is both—the policy holder, or one of the policy holders, immediately before the assignment; andthe assignor or one of the assignors; andin relation to any other chargeable event, the person who is the policy holder immediately before the happening of the event;

• “chargeable event” means an event which is a chargeable event within the meaning of . . . Chapter 9 of Part 4 of ITTOIA 2005;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “insurance year” has the same meaning as in Chapter 9 of Part 4 of ITTOIA 2005 (see section 499 of that Act);

• “the relevant year of assessment”, in the case of any gain, means—the year of assessment to which the gain is attributable, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (12) This section is supplemented by section 552ZA.

• (13) For the purposes of this section—

• (a) section 491(2) of ITTOIA 2005 is taken to have effect as if, in the definition of “PG”, the words from “but” to the end were omitted, and

• (b) no account is to be taken of the effect of section 465B or 541A of that Act.

• (14) For the purposes of this section no account is to be taken of the effect of sections 528 and 528A of ITTOIA 2005.

Non-resident policies and off-shore capital redemption policies

553

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Borrowings on life policies to be treated as income in certain cases

554

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — ENTERTAINERS AND SPORTSMEN

Payment of tax

555

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Activity treated as trade etc. and attribution of income

556

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge on profits or gains

557

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions

558

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY

Deductions on account of tax etc. from payments to certain sub-contractors

559

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Persons who are sub-contractors or contractors for purposes of Chapter IV

560

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exceptions from section 559

561

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions to be satisfied by individuals

562

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions to be satisfied by partners who are individuals

563

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions to be satisfied by firms

564

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions to be satisfied by companies

565