Finance Act 1954

29 Amendments restricting Finance Act, 1940, s. 55, where deceased did not have voting control of company

(1) In section fifty-five of the Finance Act, 1940 (under which snares in or debentures of a company are in certain cases to be valued for estate duty by reference to the value of the company's assets), the following provisions shall be omitted, that is to say—

(a) in subsection (1), paragraphs (b) and (c), with the word " or " at the end of paragraph (a); and

(b) in subsection (3), paragraph (b), with the word " or " at the end of paragraph (a) and the words " or capacity ";

but in the cases dealt with by subsections (2) to (4) of this section, the said section fifty-five shall apply as if the deceased had, within five years of his death, had control of the company otherwise than in a fiduciary capacity, but shall apply only to the valuation of shares in or debentures of the company as respects which the conditions of subsection (5) of this section are satisfied.

(2) The said section fifty-five shall apply as aforesaid if, during a continuous period of two years falling wholly within the five years ending with his death, the deceased had powers equivalent to control of the company.

(3) The said section fifty-five shall apply as aforesaid, if during any such period as aforesaid the dividends declared by the company and the interest accruing due on debentures of the company are, as to amounts forming in the aggregate more than one-half of the total amount of the dividends and interest, to be treated by virtue of any of the provisions of sections forty-seven and forty-eight of the Finance Act, 1940, as benefits accruing to the deceased from the company, or would have fallen to be so treated if the deceased had made a transfer of property to the company.

For this purpose the expression " debenture " shall have the same meaning as in subsection (4) of this section.

(4) The said section fifty-five shall apply as aforesaid, if at any time during the five years ending with the death of the deceased (not being a time when some other person had control or powers equivalent to control of the company) the deceased had a beneficial interest in possession in shares in or debentures of the company, or in both, of an aggregate nominal amount representing one-half or more of the aggregate nominal amount of the shares in and debentures of the company then outstanding; but for this purpose—

(a) at any time when both the deceased and another person had such an interest in the same share or debenture, the deceased's interest in it shall be treated as extending only to the same fraction of it as that interest would have been deemed for purposes of estate duty to extend to if the share or debenture had passed on his death at that time; and

(b) the expression " debenture " shall not include an obligation of the company in respect of a debt incurred by it for money borrowed by way of temporary loan, if the loan was not one of a series of temporary loans by the same person and either was repaid within two years of being made or was made less than two years before the deceased's death.

(5) The said section fifty-five shall apply by virtue of the foregoing subsections only to the valuation of shares in or debentures of the company as respects which one or other of the following conditions is satisfied:—

(a) that immediately after the deceased's death a person having control or powers equivalent to control of the company, either alone or in conjunction with his relatives, has a beneficial interest in possession in the shares or debentures;

(b) that immediately before and after the death the shares or debentures are held by the trustees of some trust who then have control of the company by virtue of shares in or debentures of the company held by them as such trustees:

Provided that, in the case of shares or debentures falling to be valued on the death by virtue of a gift inter vivos made by the deceased, or by virtue of a disposition or determination (in relation to which section forty-three of the Finance Act, 1940, has effect) of an interest limited to cease on the death, the above conditions shall not apply, and the condition shall be that immediately after the death or at any previous time since the gift or since the disposition or determination, as the case may be, the donee or person becoming entitled by virtue of or upon the disposition or determination has or had control or powers equivalent to control of the company, either alone or in conjunction with his relatives.

(6) Notwithstanding anything in this section, the reference in subsection (4) of section fifty-eight of the Finance Act, 1940, to a person having control of a company within the meaning of subsection (3) of section fifty-five of that Act shall continue to include a reference to a person having powers equivalent to control.