The Ports (Levy on Disposals of Land, etc.) Order (Northern Ireland) 1997

Decrease in equity holding

35.—(1) Where—

(a) there has been a disposal within the levy period of relevant land or a relevant estate in land by one member of the chargeable company’s group to another member of that group (“the acquiring company”);

(b) at a time when the acquiring company is a member of the group there is a decrease in the percentage of the equity of the acquiring company held, whether directly or indirectly by the principal member of the group (not being a decrease therein such as to give rise to a section 178 or 179 disposal); and

(c) the market value—

(i) of that land or estate, or

(ii) if before the time of the decrease the acquiring company has made a part disposal of the land or estate, of such part as remains undisposed;

is at that time greater than—

(A) in a case where the whole of the land or estate still belongs to the acquiring company, the amount or value of the consideration given by the acquiring company for the acquisition of the land or estate (or, if the consideration has on one or more previous occasions been redetermined by virtue of the provisions of this paragraph, the amount or value of the consideration as last so redetermined); or

(B) in a case where the acquiring company has made a part disposal of the land or estate, such part of the consideration (as so redetermined, if so redetermined) as is attributable to the part of the land or estate remaining undisposed of;

as increased (in either case) by the percentage of any increase in the retail prices index between that for the month in which the disposal mentioned in sub-paragraph (a) took place and that for the month immediately preceding the month in which the decrease referred to in sub-paragraph (b) took place;

the gain accruing or treated as accruing on the said disposal shall be recomputed as if the consideration for it had been—

(I) increased by an amount equal to the excess of—

(IA) if the whole of the land or estate still belongs to the acquiring company, the market value of the land or estate at the time of the decrease over the consideration for the disposal (as previously redetermined, if so redetermined, by virtue of the provisions of this paragraph; and as increased in accordance with sub-paragraph (c) by reference to any increase in the retail prices index); or

(IB) if only part of the land or estate still belongs to the acquiring company, the market value of such part thereof as belongs to that company at the time of the decrease over such part of such consideration (as so redetermined, if so redetermined; and as so increased) as is attributable to the part of the land or estate remaining undisposed; and

(II) decreased by an amount calculated in accordance with paragraph (7);

and, subject to paragraph (3), the amount by which the consideration is increased in accordance with (I) is in this Article referred to as the “marginal increment”.

(2) (a) In paragraph (1) the references to such part of the consideration as is attributable to the part of the land or estate remaining undisposed are references to the same proportion of the consideration as the proportion of the section 38(1) sums which, by virtue of section 42 (part disposals) of the 1992 Act as it applies for the purposes of Article 19 of the 1994 Order, is to be attributed to the part of the land or estate remaining undisposed.

(b) In this paragraph, the “section 38(1) sums” means the sums which, under section 38(1)(a) or (b) of the 1992 Act as it applies for the purposes of paragraph (2)(a), are attributable to the land or estate.

(3) Where—

(a) before a decrease such as is referred to in paragraph (1)(b) there have been one or more other such decreases; and

(b) the decrease preceding the first-mentioned decrease or, if there have been two or more preceding decreases, the last of those decreases gave rise to a section 178 or 179 disposal;

the marginal increment shall be the amount (if any) by which—

(i) the market value mentioned in paragraph (1)(c);

exceeds—

(ii) the market value at the time of the section 178 or 179 disposal of the land or estate or of the part thereof remaining undisposed.

(4) For the purposes of this Article, where such a disposal as is referred to in paragraph (1)(a) occurs before the beginning of the levy period, it shall for the purposes of this Article be deemed to have occurred on the first day of the levy period for a consideration of such amount as would secure that no gain accrues to the person making the disposal (and that day shall accordingly be the disposal date in relation to that disposal).

(5) For the purposes of paragraph (1), the percentage of the equity of the acquiring company which is at any time held (directly or indirectly) by the principal company of the group of which the chargeable company is a member shall be the percentage which at that time is the lowest of the following—

(a) the percentage of the ordinary share capital of the acquiring company which is beneficially owned directly or indirectly by the principal company;

(b) the percentage to which the principal company is beneficially entitled of any profits available for distribution to equity holders of the acquiring company; and

(c) the percentage to which the principal company would be beneficially entitled of any assets of the acquiring company available for distribution to its equity holders on a winding-up.

(6) (a) In Article 35(5)(a) “ordinary share capital” has the meaning given to it by section 832(1) of the 1988 Act(1); and

(b) Schedule 18(2) to that Act shall apply for the purpose of supplementing Article 35(5) as it applies for the purpose of supplementing section 413 of that Act.

(7) Where, in consequence of a recomputation pursuant to paragraph (1), the gain accruing on a disposal is increased, the amount of the levy chargeable on the disposal shall be increased accordingly and a sum equal to the increase over the amount previously paid (as increased, where applicable, in consequence of any earlier recomputation pursuant to paragraph (1)) shall be payable to the Department on the quarter date next following the date on which the decrease to which the calculation relates occurred.

(8) The amount referred to in paragraph (1)(II) is equal to the product of P and Q where:

• P is the marginal increment; and

• Q is a number to be determined in accordance with the following rules—

  (a)

  where the disposal occurs within the first five years of the levy period and the decrease occurs within the sixth or seventh year of that period, the number shall be 1/5;

  (b)

  where the disposal occurs within the first five years of the levy period and the decrease occurs within the last three years of that period, the number shall be 3/5;

  (c)

  where the disposal occurs within the sixth or seventh year of the levy period and the decrease occurs within the last three years of that period, the number shall be 1/2; and

  (d)

  in any other case, the number shall be 1.

(9) If—

(a) an option to acquire securities of the acquiring company is at any time within the levy period granted by another member of the chargeable company’s group; and

(b) the exercise of the option would result in a decrease such as is mentioned in paragraph (1)(b);

then the option shall for the purposes of that sub-paragraph be regarded as if it had been exercised at that time, and a decrease such as is mentioned in that sub-paragraph shall accordingly for those purposes be regarded as taking place at that time.

(10) If at any time an option to which paragraph (9) applies has lapsed (without being exercised) or has become incapable of being exercised, then the amount of the gain regarded as accruing on the disposal referred to in paragraph (1) shall be recomputed as if paragraph (9) had not applied to it, and—

(a) if that time is within the levy period, details of the recomputation, shall be provided by the principal member of the group to the Department together with the disposal statement for the disposal period in which the option lapsed or became incapable of being exercised; or

(b) if that time is not within the levy period, the chargeable company shall as soon as may be practicable provide details of the recomputation to the Department.

(11) Upon receipt of details of the recomputation the Department shall inquire into the matter and, if an excessive payment has been made by the chargeable company, the amount thereof (whether levy or interest on unpaid levy or both) shall be repaid—

(a) if the option lapsed or became incapable of being exercised within the levy period, within 20 business days of receipt of the disposal statement referred to in paragraph (10)(a);

(b) in any other case, within 20 business days of the receipt of details of the recomputation or, if it reasonably requests the chargeable company to supply further information for the purpose of its inquiry into the matter pursuant to this paragraph, within 20 such days of receiving such further information.

(12) Where—

(a) the acquiring company makes a part disposal of the land or estate the subject of the disposal to it referred to in paragraph (1)(a); and

(b) the consideration for the disposal to the acquiring company has been redetermined by virtue of the provisions of paragraph (1);

the sum which for the purposes of the part disposal is to be attributable to the land or estate under section 38(1)(a) of the 1992 Act, as it applies for the purposes of Article 19 of the 1994 Order, shall be the amount or value of the consideration as so redetermined or as last so redetermined.

(13) In this Article—

(a) “principal member”, in relation to a chargeable company’s group, means—

(i) that member of which or of an effective subsidiary of which every other member is an effective subsidiary; or

(ii) if there is not one such member, those two or more members of which together or of an effective subsidiary of which together every other member is an effective subsidiary;

(b) a reference to a consideration as redetermined by virtue of the provisions of paragraph (1) is a reference to that consideration as increased in accordance with sub-paragraph (I) and as decreased in accordance with sub-paragraph (II) of that paragraph.

(1)

1988 c. 1

(2)

Schedule 18 was amended by the Finance Act 1989 (c. 26), section 101; and by the Capital Allowances Act 1990 (c. 1), section 164 and Schedule 1, paragraph 8(1) and (40)