Finance Act 2006
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Certain matters relating to investment undertakings in Chapter 1A of Part 27 of Principal Act. |
50.— (1) Chapter 1A (inserted by the Finance Act 2000 ) of Part 27 of the Principal Act is amended— | |
(a) in section 739B(1) in the definition of “chargeable event”— | ||
(i) by deleting “and” at the end of paragraph (cc), and | ||
(ii) by inserting the following after paragraph (cc): | ||
“(ccc) the ending of a relevant period, and for the purposes of this paragraph ‘relevant period’, in relation to a unit in an investment undertaking, means a period of 8 years beginning with the acquisition of that unit by a unit holder and each subsequent period of 8 years beginning immediately after the preceding relevant period, and”, | ||
(b) in section 739D— | ||
(i) in subsection (2)— | ||
(I) by inserting “and in accordance with subsection (2A)” after “subject to this section”, | ||
(II) by deleting “and” at the end of paragraph (dd), and | ||
(III) by inserting the following after paragraph (dd): | ||
“(ddd) where the chargeable event is the ending of a relevant period in relation to a unit of a unit holder, the excess (if any) of the value of the unit, without having regard to any amount of appropriate tax (within the meaning of section 739E) thereby arising, held by the unit holder on the day of that ending over the total amount invested in the investment undertaking by the unit holder for the acquisition of the unit, and where the unit was otherwise acquired by the unit holder, the amount so invested to acquire that unit shall be the value of the unit at the time of its acquisition by the unit holder, and”, | ||
and | ||
(ii) by inserting the following after subsection (2): | ||
“(2A) Where— | ||
(a) a chargeable event, not being a chargeable event within the meaning of paragraph (ccc) of the definition of ‘chargeable event’ in section 739B(1), occurs in relation to an investment undertaking in respect of a unit holder, and | ||
(b) a chargeable event within the meaning of paragraph (ccc) of the definition of chargeable event in section 739B(1) occurred previously in relation to an investment undertaking in respect of a unit holder, | ||
then the gain arising on the chargeable event referred to in paragraph (a) shall be determined as if section 739B(1)(ccc) had not been enacted.”, | ||
(c) in section 739E— | ||
(i) by inserting the following after subsection (1): | ||
“(1A) (a) In this subsection— | ||
‘first tax’, in relation to a unit of a unit holder, means the appropriate tax that was accounted for and paid in accordance with section 739F in respect of a chargeable event referred to in subsection 739D(2A)(b) in respect of that unit; | ||
‘new gain’, in relation to a unit of a unit holder, means the gain determined in accordance with section 739D in respect of a chargeable event referred to in subsection 739D(2A)(a) in respect of that unit; | ||
‘second tax’ means appropriate tax calculated in accordance with subsection (1) in respect of that new gain. | ||
(b) (i) Where at any time subsection 739D(2A) applies in respect of a unit of a unit holder in an investment undertaking a proportion (in this subsection referred to as the ‘relevant proportion’) of first tax shall be set off against any amount of second tax. | ||
(ii) Where such relevant proportion exceeds such second tax, an amount equal to the amount of the excess shall, subject to subparagraph (iii)— | ||
(I) be paid by the investment undertaking to the unit holder in respect of the unit, | ||
(II) be included in a return under section 739F(2), and | ||
(III) be treated as an amount which may be set off against appropriate tax payable by the investment undertaking in respect of any chargeable event in the period for which such a return is made, or any subsequent period. | ||
(iii) Subparagraph (ii) shall not apply unless— | ||
(I) the unit holder makes a declaration to the investment undertaking that the chargeable event referred to in subsection 739D(2A)(a) is effected for bona fide reasons and does not form part of any transaction of which the main purpose or one of the main purposes is the recovery of appropriate tax under the provisions of this subsection, and | ||
(II) the investment undertaking does not have reasonable grounds to believe that the declaration under clause (I) is false. | ||
(c) For the purposes of this subsection, ‘relevant proportion’ is determined by the formula— | ||
A x B | ||
C | ||
where— | ||
A is the first tax, | ||
B is the new gain, and | ||
C is a gain determined in accordance with section 739D if the unit to which the first tax applied was cancelled at that time.”, | ||
(ii) in subsection (1)(b), by substituting “(d), (dd) or (ddd)” for “(d) or (dd)”, and | ||
(iii) in subsection (3)(b)— | ||
(I) by substituting “unit,” for “unit, or” in subparagraph (ia), and | ||
(II) by inserting the following after subparagraph (ia): | ||
“(ib) the ending of a relevant period, or”, | ||
and | ||
(d) in section 739F— | ||
(i) in subsection (2)— | ||
(I) in paragraph (a) by inserting “, and amounts which may be credited under section 739E(1A),” after “appropriate tax”, and | ||
(II) in paragraph (b) by inserting “, and amounts which may be credited under section 739E(1A),” after “appropriate tax”, and | ||
(ii) in subsection (3) by inserting “(reduced by any amount which is to be credited in accordance with section 739E(1A))” after “in a return”. | ||
(2) This section applies and has effect as respects any chargeable event (within the definition of chargeable event in section 739B(1)(ccc) of the Principal Act) occurring on or after the passing of this Act. |