Finance Act 2000

Part II Qualifying companies

Company in administration or receivership

9 (1) In section 293 of the Taxes Act 1988 (qualifying companies), before subsection (5) insert—

“(4A) A company which is in administration or receivership shall not be regarded as ceasing to comply with subsection (2) above by reason of anything done as a consequence of its being in administration or receivership.

This subsection has effect subject to subsection (4B) and subsection (5) below.

(4B) Subsection (4A) applies only if—

(a) the making of the order in question, and

(b) everything done as a consequence of the company being in administration or receivership,

is for bona fide commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.”.

(2) In section 289(1D) of the Taxes Act 1988 for “Subsection (6)” substitute “Subsections (4A) and (6)” and for “it applies” substitute “they apply”.

(3) In section 289A of the Taxes Act 1988, after subsection (8) insert—

“(8A) Where the company or subsidiary concerned, by reason of anything done as a consequence of its being in administration or receivership, carries on a trade for a period shorter than four months, subsection (7)(a) above shall have effect as if it referred to that shorter period.

This applies only if—

(a) the making of the order in question, and

(b) everything done as a consequence of the company being in administration or receivership,

is for bona fide commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.”.

(4) In section 312 of the Taxes Act 1988 (interpretation), after subsection (2) insert—

“(2A) References in this Chapter to a company being in administration or receivership shall be construed as follows—

(a) references to a company being “in administration” are to there being in force in relation to it—

(i) an administration order under Part II of the [1986 c. 45.] Insolvency Act 1986 or Part III of the [S.I. 1989/2405 (N.I. 19).] Insolvency (Northern Ireland) Order 1989, or

(ii) any corresponding order under the law of a country or territory outside the United Kingdom;

(b) references to a company being “in receivership” are to there being in force in relation to it—

(i) an order for the appointment of an administrative receiver, a receiver and manager or a receiver under Chapter I or II of Part III of the [1986 c. 45.] Insolvency Act 1986 or Part IV of the [S.I. 1989/2405 (N.I. 19).] Insolvency (Northern Ireland) Order 1989, or

(ii) any corresponding order under the law of a country or territory outside the United Kingdom.”.

Company in liquidation

10 In section 293(6) of the Taxes Act 1988 (circumstances in which liquidation does not affect company’s qualifying status), paragraph (b) (requirement as to period within which company’s net assets are distributed) shall cease to have effect.

Independence of qualifying company

11 In section 293 of the Taxes Act 1988 (qualifying companies), for subsection (8) substitute—

“(8) Subject to section 304A, the company must not at any time in the relevant period—

(a) control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary, or

(b) be—

(i) a 51% subsidiary of another company, or

(ii) under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company,

and no arrangements must be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b) above (whether during that period or otherwise).

(8AA) In subsection (8)(b) above “control” has the meaning given by section 840.”.

Commencement

12 (1) The amendments in this Part of this Schedule have effect—

(a) in relation to shares issued on or after 21st March 2000, and

(b) in respect of the application of section 293 of the Taxes Act 1988 on or after that date in relation to shares—

(i) that were issued after 31st December 1993 but before 21st March 2000, and

(ii) to which income tax relief or deferral relief was attributable immediately before 21st March 2000.

(2) In sub-paragraph (1)—

• “income tax relief” means relief under Chapter III of Part VII of the Taxes Act 1988 (enterprise investment scheme); and

• “deferral relief” has the same meaning as in Schedule 5B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.