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Finance Act 1939

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This is the original version (as it was originally enacted).

15Extended powers as to apportionment of income of investment companies

(1)If in the case of any investment company the Special Commissioners are of opinion that any person who is not a member of the company for the purposes of section twenty-one of the Finance Act, 1922, and the enactments relating thereto is, or is likely to be, able to secure that income or assets, whether present or future, of the company will be applied either directly or indirectly for his benefit, they may, if they think fit, treat him as a member of the company for the said purposes.

(2)In apportioning for the purposes of the said section twenty-one the income of an investment company—

(a)to any person who is treated as a member of the company by virtue of the preceding subsection; or

(b)to any person who is a member of the company but has no relevant interests in the company, and in their opinion is, or is likely to be, able to secure that income or assets, whether present or future, of the company will be applied either directly or indirectly for his benefit; or

(c)to any person who is a member of the company and in their opinion is, or is likely to be, able to secure that income or assets, whether present or future, of the company will be applied either directly or indirectly for his benefit to a greater extent than is represented in the value for apportionment purposes of his relevant interests in the company, considered in relation to the value for those purposes of the relevant interests of other persons therein;

the Special Commissioners may apportion to him such part of the income of the company as appears to them to be appropriate and may adjust the apportionment of the remainder of the company's income as they may consider necessary.

(3)For the purposes of this section, a person shall be deemed to be able to secure that income or assets will be applied for his benefit if he is in fact able so to do by any means whatsoever, whether he has any rights at law or in equity in that behalf or not, and the Special Commissioners may draw the inference that a person is likely to be able to secure that assets or income of a company will be applied for his benefit, or, as the case may be, will be so applied to a greater extent than is represented in the value for apportionment purposes of any relevant interests which he has in the company, if and only if they are satisfied—

(a)that he has, directly or indirectly, transferred - assets to the company the value of which is not represented, or is not adequately represented, in the value for apportionment purposes of any relevant interests which he has in the company; and

(b)that the persons who, whether as directors or shareholders or in any other capacity, have, or will at any material time have, powers or rights affecting the disposal or application of the income or assets of the company are likely to act in accordance with his wishes or that he is able to secure that persons who at the material times will have such powers or rights will be persons likely to act in accordance with his wishes.

(4)Where the Special Commissioners have, under the provisions of this section, apportioned income of a company for any year or period, and the amount apportioned to any member is less than the amount of income distributed to that member by the company in respect of the said year or period in such manner that the amount distributed would, apart from this subsection, fall to be included in the statement of total income to be made by that member for the purposes of surtax, the excess of the amount so distributed over the amount apportioned to that member shall be deemed not to form part of the member's total income from all sources for tax purposes:

Provided that where notice of appeal is given against the apportionment, the reference in this subsection to the amount apportioned to the member shall be construed as a reference to the amount apportioned to him on the final determination of the appeal.

(5)The provisions of paragraphs 1 to 3 of the First Schedule to the Finance Act, 1922 (which relate to appeals), shall apply in relation to an apportionment made by the Special Commissioners under the provisions of this section as they apply in relation to a direction given by those Commissioners under section twenty-one of the said Act, and so much of paragraph 10 of the First Schedule to the said Act as relates to appeals shall not apply.

(6)For the purposes of this section—

(a)references to a person shall, in the case of an individual, be deemed to include the wife or husband of the individual;

(b)the expression " assets " includes property or rights of any kind, and the expression " transfer," in relation to rights, includes the creation of those rights;

(c)the expression " relevant interests " means, in relation to a person connected in any way with a company, interests by reference to which income of the company could be apportioned to him for the purposes of section twenty-one of the Finance Act, 1922, apart from the provisions of this section, and the expression " value for apportionment purposes " means, in relation to any relevant interests in any company, the value falling to be put thereon in apportioning income of the company for the purposes of the said section twenty-one;

(d)references to apportioning income shall be construed as including references both to apportioning by means of original apportionments within the meaning of section thirty-two of the Finance Act, 1927 (which applies the said section twenty-one to interconnected companies) and to apportioning by means of any such apportionment as is provided for by the said section thirty-two.

(7)This section shall apply for the purpose of assessment to surtax for the year 1938-39 and subsequent years.

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