Finance Act 1975

13 (1) Subject to the following provisions of this paragraph, where any of the tax payable on the value transferred by a chargeable transfer made on death is attributable to the value of.—

(a) land of any description, wherever situated ; or

(b) shares or securities of a company which gave the deceased control of the company immediately before his death ; or

(c) shares or securities of a company not falling under paragraph (b) above and not quoted on a recognised stock exchange, if either the condition stated in sub-paragraph (2) below is fulfilled or the Board are satisfied that the tax attributable to their value cannot be paid in one sum without undue hardship ; or

(d) shares of a company not falling under paragraph (b) above and not quoted on a recognised stock exchange, if the conditions stated in sub-paragraph (3) below are fulfilled;

the tax so attributable may, if the person paying it by notice in writing to the Board so elects, be paid at his option either by eight equal yearly instalments or by sixteen equal half-yearly instalments, of which the first shall be payable six months after the end of the month in which the death occurred ; and interest under paragraph 19 below on the unpaid portion of the tax shall be added to each instalment and paid accordingly, except as otherwise provided in paragraph 16 below.

(2) The condition mentioned in sub-paragraph (1)(c) above is that not less than 20 per cent, of so much of the tax chargeable on the value transferred by the chargeable transfer as is tax for which the person paying the tax attributable as mentioned in sub-paragraph (1) above is liable (in the same capacity) consists of tax attributable to the value of those shares or securities or such other tax (if any) as may by virtue of this paragraph or paragraph 14 below be paid by instalments.

(3) The conditions mentioned in sub-paragraph (1)(d) above are that so much of the value transferred as is attributable to the shares exceeds £5,000 and that either—

(a) the nominal value of the shares is not less than 10 percent, of the nominal value of all the shares of the company at the time of the death ; or

(b) the shares are ordinary shares and their nominal value is not less than 10 per cent, of the nominal value of all ordinary shares of the company at the time of the death.

(4) Notwithstanding the making of an election under this paragraph, the tax for the time being unpaid, with interest to the time of payment, may be paid at any time, and if at any time (whether before or after the expiration of the six months mentioned in sub-paragraph (1) above) the whole or any part of the land, shares or securities is sold, the tax unpaid (or in the case of a sale of part, the proportionate part of that tax) shall become payable forthwith (or, if the said six months have not expired, on their expiration), together with any interest accrued under paragraph 19 below.

(5) Sub-paragraphs (1) and (4) above shall apply also in relation to a chargeable transfer made otherwise than on death, if either—

(a) the tax attributable as mentioned in sub-paragraph (1) above is borne by the person benefiting from the transfer ; or

(b) the transfer is made under paragraph 4, 6(2), 12 or 15 of Schedule 5 to this Act and the land, shares or securities to the value of which the tax is attributable continue to be comprised in the settlement;

and shall then apply subject to the modifications mentioned in sub-paragraph (6) below.

(6) Where sub-paragraphs (1) and (4) above apply by virtue of sub-paragraph (5) above, they shall apply as if—

(a) references to the date on which the death occurred were references to the date of the chargeable transfer;

(b) references to the time six months after the end of the month in which that date falls were references to the time when the tax would be due if it were not payable by instalments ;

(c) references to the deceased were references to the transferor or, if the transfer is made under paragraph 6, 12 or 15 of Schedule 5 to this Act, to the trustees of the settlement;

(d) the reference to the land, shares or securities being sold—

(i) in a case within sub-paragraph (5)(a), included a reference to any chargeable transfer in which the value transferred is wholly or partly attributable to the value of the land, shares or securities, other than a transfer made on death ; and

(ii) in a case within sub-paragraph (5)(b), were a reference to the land, shares or securities ceasing to be comprised in the settlement; and

(e) the reference to the condition stated in sub-paragraph (2) were omitted ; and

(f) the reference in sub-paragraph (3) to the value transferred were a reference to that value calculated as if no tax were chargeable on it;

and the question whether tax could be paid in one sum without undue hardship shall be determined on the assumption that the shares or securities concerned would be retained by the persons liable to pay the tax.

(7) For the purposes of this paragraph a person has control of a company at any time if he then has the control of powers of voting on all questions, or on any particular question, affecting the company as a whole which if exercised would yield a majority of the votes capable of being exercised thereon ; and—

(a) shares or securities shall be deemed to give a person control of a company if, together with any shares or securities which are related property within the meaning of paragraph 7 of Schedule 10 to this Act, they would be sufficient to give him control of the company (as defined in the preceding provisions of this sub-paragraph); and

(b) where shares or securities are comprised in a settlement, any powers of voting which they give to the trustees of the settlement shall be deemed to be given to the person beneficially entitled in possession to the shares or securities (except in a case where no individual is so entitled).

(8) In this paragraph " ordinary shares" means shares which carry either—

(a) a right to dividends not restricted to dividends at a fixed rate; or

(b) a right to conversion into shares carrying such a right as is mentioned in paragraph (a) above.