The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004

Change in ownership of investment company: deductions

39.—(1) Schedule 28A(1) is amended as follows.

(2) In Part 2 (amounts in issue for the purpose of section 768B) in paragraph 6(a)(2) for—

• “the amount of any sums (including commissions) actually disbursed as expenses of management for the accounting period”

substitute “the amount of any expenses of management referable to the accounting period (within the meaning of section 75)”.

(3) In paragraph 6(c) for “section 75(3)” substitute “section 75(9)”.

(4) In paragraph 6(d) for “section 75(4)” substitute “section 75(7)”.

(5) In Part 3 (apportionment for purposes of section 768B) for paragraph 7(1)(a), substitute—

“(a) in the case of the sums mentioned in paragraph 6(a) above, by apportioning to each accounting period the amounts that would fall to be brought into account in that period as such sums, if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice;

(aa) in the case of the charges mentioned in paragraph 6(b) above, by reference to the time when the charge is due to be paid;”.

(6) In paragraph 7(1)(e) (apportionment in case of debits falling to be brought into account on the assumption that interest does not accrue until paid etc)(3) for sub-paragraphs (iii) and (iv) substitute—

“and

(iii) so falls to be brought into account—

• on the assumption mentioned in paragraph (d)(iii) above, or

• with such an adjustment as is mentioned in paragraph (d)(iv) above,”.

(7) In Part 4 (disallowed debits)(4) in paragraph 11(1) (debits that fall within paragraph 11)(5) for paragraphs (b) and (bb) substitute—

“(b) so falls to be brought into account—

(i) with an adjustment under paragraph 17 or 18 of Schedule 9 to that Act (debit relating to amount of discount referable to the relevant accounting period to be brought into account instead for the accounting period in which the security is redeemed); or

(ii) on the assumption, specified in sub-paragraph (2) of paragraph 2 of that Schedule, that the interest to which it relates does not accrue until it is paid; and”.

(8) In Part 5 (amounts in issue for the purposes of section 768C) in paragraph 13(1)(6)—

(a) in paragraph (b) for—

“the amount of any sums (including commissions) actually disbursed as expenses of management for the accounting period”

• substitute—

  • “the amount of any expenses of management referable to the accounting period (within the meaning of section 75)”; and

  (b)

  in paragraph (d) for “section 75(3)” substitute “section 75(9)”; and

  (c)

  in paragraph (e) for “section 75(4)” substitute “section 75(7)”.

(9) In Part 6 (apportionment for purposes of section 768C) for paragraph 16(1)(a), substitute—

“(a) in the case of the sums mentioned in paragraph 13(1)(b) above, by apportioning to each accounting period the amounts that would fall to be brought into account in that period as such sums, if it were a period of account for which accounts were drawn up in accordance with generally accepted accounting practice;

(aa) in the case of the charges mentioned in paragraph 13(1)(c) above, by reference to the time when the charge is due to be paid;”.

(10) In paragraph 16(1)(e) (manner of apportionment in case of debits falling to be brought into account on the assumption that interest does not accrue until paid)(7) for sub-paragraphs (iii) and (iv) substitute—

“and

(iii) so falls to brought into account—

• on the assumption mentioned in paragraph (d)(iii) above, or

• with such an adjustment as is mentioned in paragraph (d)(iv) above,”.

(11) The heading to the Schedule accordingly becomes “Change in ownership of company with investment business: deductions”.

(1)

Schedule 28A was inserted by paragraph 5 of Schedule 6 to the Finance Act 1995 (c. 4).

(2)

There are amendments to paragraph 6 which are not relevant for present purposes.

(3)

Paragraph 7(1)(e)(iv) was inserted by paragraph 58(4) of Part 2 of Schedule 25 to the Finance Act 2002 (c. 23).

(4)

Part 4 was substituted by paragraph 54(4) of Schedule 14 to the Finance Act 1996 (c. 8).

(5)

The relevant amendment to paragraph 11 is that made by paragraph 58 of Part 2 of Schedule 25 to the Finance Act 2002.

(6)

There are amendments to paragraph 13 which are not relevant for present purposes.

(7)

Paragraph 16(1)(e) was inserted by paragraph 54(7) of Schedule 14 to the Finance Act 1996 and amended by paragraph 58(9) of Part 2 of Schedule 25 and Part 3(12) of Schedule 40 to the Finance Act 2002.