Part III Income tax and corporation tax
Distributions, tax credits etc: avoidance
25 Repeal of s.95(5) of the Taxes Act 1988: consequential amendments.
1
In section 246A(9) of the Taxes Act 1988 (which provides that “fixed-rate preference shares” shall be construed in accordance with section 95(5)) for “section 95(5)” there shall be substituted “
paragraph 13(6) of Schedule 28B
”
.
2
In Schedule 28B to the Taxes Act 1988 (venture capital trusts) paragraph 13 (general interpretation) shall be amended in accordance with subsections (3) and (4) below.
3
In sub-paragraph (5), paragraph (b) (which provides that “fixed-rate preference shares” has the same meaning as in section 95), and the word “and” immediately preceding that paragraph, shall be omitted.
4
After sub-paragraph (5) there shall be inserted—
6
In this paragraph “fixed-rate preference shares” means shares which—
a
were issued wholly for new consideration;
b
do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities; and
c
do not carry any right to dividends other than dividends which—
i
are of a fixed amount or at a fixed rate per cent. of the nominal value of the shares, and
ii
together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued;
and in paragraph (a) above “new consideration” has the meaning given by section 254.
5
In Schedule 7 to the M1Finance Act 1997 (special treatment for certain distributions) paragraph 5 (fixed-rate preference shares) shall be amended in accordance with subsections (6) and (7) below.
6
In sub-paragraph (2) (which defines “fixed-rate preference shares” by reference to section 95 of the Taxes Act 1988)—
a
in paragraph (a) for “section 95 of” there shall be substituted “
paragraph 13 of Schedule 28B to
”
; and
b
in paragraph (b) for “section 95(5)(c)(i) of that Act” there shall be substituted “
paragraph 13(6)(c)(i) of that Schedule
”
.
7
After sub-paragraph (2) there shall be inserted—
3
For the purposes of sub-paragraph (2) above, any reference in paragraph 13(6) of Schedule 28B to shares shall be taken as a reference to shares within the meaning of this Schedule.
8
This section has effect on and after 2nd July 1997.