Income and Corporation Taxes Act 1988

710 Meaning of “securities”, “transfer” etc. for purposes of sections 711 to 728. U.K.

(1) M1 This section has effect for the interpretation of sections 711 to 728.

[F1 (1A) Sections 711 to 728 shall not apply for the purposes of corporation tax except as respects transfers of securities taking place before 1st April 1996.]

(2) “Securities” does not [F2 , except as provided by subsection (2A) below,] include shares in a company but, subject to subsection (3) below, includes any loan stock or similar security—

(a) whether of the government of the United Kingdom, any other government, any public or local authority in the United Kingdom or elsewhere, or any company or other body; and

(b) whether or not secured, whether or not carrying a right to interest of a fixed amount or at a fixed rate per cent. of the nominal value of the securities, and whether or not in bearer form.

[F3 (2A) “Securities” includes shares in a building society which are qualifying shares for the purposes of section [F4 117(4) of the 1992 Act]] (qualifying corporate bonds).

(3) “Securities” does not include—

(a) F5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) national savings certificates (including Ulster Savings Certificates [F6 , as defined in section 693(7) of ITTOIA 2005]);

(c) war savings certificates;

[F7 (ca) uncertificated eligible debt security units within the meaning of section 552(2) of that Act;]

(d) certificates of deposit (within the meaning of [F8 section 552(2) of that Act]);

[F9 (da) any security which [F10 is a right falling within section 552(1)(c) of that Act] at the time of the transfer concerned;]

(e) any security which fulfils the following conditions, namely, it is redeemable, the amount payable on its redemption exceeds its issue price, and no return other than the amount of that excess is payable on it;

[F11 [F12 (f) any security that is a deeply discounted security for the purposes of Chapter 8 of Part 4 of ITTOIA 2005 (see section 430 of that Act).]]

[F13 (3A) Paragraph (f) of subsection (3) does not apply to a security on the transfer of which Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) would apply subject to the rules in sections 454 to 456 of that Act (see section 453(2) and (3) of that Act).]

(4) Securities are to be taken to be of the same kind if they are treated as being of the same kind by the practice of a recognised stock exchange or would be so treated if dealt with on such a stock exchange.

(5) M2 “Transfer”, in relation to securities, means transfer by way of sale, exchange, gift or otherwise [F14 , but—

(a) does not include the vesting of securities in a person’s personal representatives on his death; F15 . . . ]

[F16 (b) except as otherwise provided by subsections (1) and (3) of section 722A, does not include any transaction forming part of any such exchange as is mentioned in either of those subsections;][F17 and

(c) does not include any transfer of a security to which Chapter 8 of Part 4 of ITTOIA 2005 applies subject to the rules in sections 454 to 456 of that Act.]

(6) M3 Where an agreement for the transfer of securities is made, they are transferred, and the person to whom they are agreed to be transferred becomes entitled to them, when the agreement is made and not on a later transfer made pursuant to the agreement; and “entitled”, “transfer” and cognate expressions shall be construed accordingly.

(7) M4 A person holds securities—

(a) at a particular time if he is entitled to them at the time;

(b) on a day if he is entitled to them throughout the day or he becomes and does not cease to be entitled to them on the day.

(8) M5 A person acquires securities when he becomes entitled to them.

(9) M6 Where—

(a) one individual holds securities at a particular time, and

(b) any interest on them would, if it became payable at that time, be treated for the purposes of the Tax Acts as part of another individual’s income,

then, for the purposes of section 715(1)(b) and section 715(2)(b) so far as relating to section 715(1)(b), each of them shall be treated as holding at that time the securities which the other holds as well as those which he actually holds.

(10) M7 Where in Scotland two or more persons carry on a trade or business in partnership, any partnership dealings shall be treated as dealings by the partners and not by the firm as such and the partners as being entitled to securities held by the firm.

(11) M8 The nominal value of securities is—

(a) where the interest on them is expressed to be payable by reference to a given value, that value; and

(b) in any other case, the price of the securities when they were issued.

(12) M9 Where apart from this subsection the nominal value of securities would be a value (“the foreign value”) expressed in a currency other than sterling, then, for the purposes of section 715, their nominal value on a particular day is the sterling equivalent on that day of the foreign value.

For the purposes of this subsection the sterling equivalent of a value on a particular day is the sterling equivalent calculated by reference to the London closing rate of exchange for that day.

(13) M10 Where there is a conversion of securities then,—

(a) the person who was entitled to them immediately before the conversion shall be treated as transferring them on the day of the conversion (if there is no actual transfer); and

(b) the interest period in which the conversion is made shall be treated as ending on the day on which it would have ended had the conversion not been made.

• In this subsection “conversion” means a conversion within the meaning of section [F4 132 of the 1992] Act.

[F18 (13A) Where a security is deemed to have been transferred by virtue of section 722A(1), the interest period in which the exchange in question takes place shall be treated as ending on the day on which it would have ended had the exchange not taken place.

(13B) Where a security is deemed to have been transferred by virtue of section 722A(3), the interest period in which the exchange in question takes place shall be treated as having begun on such day as shall for that purpose be specified in the security.]

F19 (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 S. 710(1A) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 36 (with Sch. 15)

F2 Words in s. 710(2) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 51, Sch. 10 para. 2(2)(4)

F3 S. 710(2A) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 51, Sch. 10 para. 2(3)(4)

F4 Words in s. 710(2A)(13) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(36)(a)(b) (with ss. 60, 101(1), 171, 201(3)).

F5 S. 710(3)(a) repealed (with effect in accordance with s. 37 of the repealing Act) by Finance Act 2004 (c. 12), Sch. 42 Pt. 2(2), Note

F6 Words in s. 710(3)(b) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(2)(a) (with Sch. 2)

F7 S. 710(3)(ca) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(2)(b) (with Sch. 2)

F8 Words in s. 710(3)(d) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(2)(c) (with Sch. 2)

F9 S. 710(3)(da) inserted (16.7.1992 with effect as mentioned in Sch. 8 para. 6 of the amending Act) by Finance (No.2) Act 1992 (c. 48), s. 34, Sch. 8 paras. 5, 6.

F10 Words in s. 710(3)(da) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(2)(d) (with Sch. 2)

F11 S. 710(3)(f) inserted (with effect in accordance with Sch. 39 para. 6(1)(b)(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 39 para. 5(4)

F12 S. 710(3)(f) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(2)(e) (with Sch. 2)

F13 S. 710(3A) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(3) (with Sch. 2)

F14 S. 710(5)(a) and preceding word inserted (with effect in accordance with s. 158(5) of the amending Act) by Finance Act 1996 (c. 8), s. 158(1)

F15 Word at the end of s. 710(5)(a) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(4)(a), Sch. 3 (with Sch. 2)

F16 S. 710(5)(b) inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 40 para. 3(1)

F17 S. 710(5)(c) and preceding word inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 294(4)(b) (with Sch. 2)

F18 S. 710(13A)(13B) inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 40 para. 3(2)

F19 S. 710(14) repealed (27.7.1993 with effect for the year 1994 and subsequent underwriting years) by 1993 c. 34, s. 213, Sch. 23 Pt. III(12) Note 2

Modifications etc. (not altering text)

C1 Ss. 710-728 modified (27.7.1993) by 1993 c. 34, s. 63(1)(2)

Ss. 710-728 modified (27.7.1993) by 1993 c. 34, s. 63(3)(4)

Ss. 710-728 modified (27.7.1993) by 1993 c. 34, s. 63(8)(10)

Ss. 710-728 modified (27.7.1993 with effect for the year 1992-93 and subsequent years of assessment) by 1993 c. 34, ss. 176(4), 184(3)

C2 Ss. 710-728 modified (with effect in accordance with s. 105(1) of the modifying Act) by Finance Act 1996 (c. 8), Sch. 13 para. 11 (with Sch. 13 para. 16, Sch. 15)

Marginal Citations

M1 Source—1985 Sch.23 1

M2 Source—1985 Sch.23 2(2)

M3 Source—1985 Sch.23 2(3), (4)

M4 Source—1985 Sch.23 2(5), (6)

M5 Source—1985 Sch.23 2(7)

M6 Source—1985 Sch.23 2(8), (9)

M7 Source—1985 Sch.23 2(10)

M8 Source—1985 Sch.23 5

M9 Source—1985 Sch.23 10(6), (7)

M10 Source—1985 Sch.23 14(1), (3), (4)