Finance Act 1998 (c. 36) (c. 36)

(The document as of February, 2008)

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the company shall be treated for all the purposes of this Act as if immediately after the transfer it had sold, and immediately reacquired, the assets referred to in paragraph (b) above at their market value at that time.

(2) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the time mentioned in subsection (1)(b) above.

(3) This section does not apply if at the time mentioned in subsection (1)(b) above there has been an event by virtue of which the company falls by virtue of section 101(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above.

(4) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the approval mentioned in subsection (1)(a) above has effect as from the beginning of an accounting period, be made at any time within 6 years after the end of that accounting period.

(5) Where under this section a company is to be treated as having disposed of, and reacquired, an asset of a business, all such recomputations of liability in respect of other disposals and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out. "

(3) After subsection (1A) of section 101 of that Act there shall be inserted the following subsection--

" (1B) This section does not apply if at the time at which the company becomes an investment trust there has been an event by virtue of which it falls by virtue of section 101B(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above. "

(4) Subsection (1) above applies to transfers made on or after 17th March 1998.

(5) Subsections (2) and (3) above apply to a company in respect of which an approval for the purposes of section 842AA of the Taxes Act 1988 (venture capital trusts) has effect as from a time falling on or after 17th March 1998.

135 Transfer within group to venture capital trust

(1) In section 171 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (transfers within a group), after the word "or" at the end of paragraph (c) of subsection (2) there shall be inserted the following paragraph--

" (cc) a disposal by or to a venture capital trust; or "

(2) After the section 101B of that Act inserted by section 134 above there shall be inserted the following section--

" 101C Transfer within group to venture capital trust

(1) This section applies where--

(a) an asset has been disposed of to a company (the "acquiring company") and the disposal has been treated by virtue of section 171(1) as giving rise to neither a gain nor a loss,

(b) at the time of the disposal the acquiring company was not a venture capital trust, and

(2) Those conditions are satisfied by the acquiring company if--

(a) it becomes a venture capital trust by virtue of an approval having effect as from a time (the "time of approval") not more than 6 years after the time of the disposal,

(b) at the time of approval the company owns, otherwise than as trading stock--

(i) the asset, or

(ii) property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,

(d) at the time of approval, there has not been an event by virtue of which it falls by virtue of section 179(3) or 101A(3) to be treated as having sold, and immediately reacquired, the asset at the time specified in subsection (3) below.

(3) The acquiring company shall be treated for all the purposes of this Act as if immediately after the disposal it had sold, and immediately reacquired, the asset at its market value at that time.

(4) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the acquiring company on the sale referred to in subsection (3) above shall be treated as accruing to it immediately before the time of approval.

(5) Subsections (5) to (7) of section 101A apply for the purposes of this section as they apply for the purposes of that section.

(6) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the time of approval is the time at which an accounting period of the company begins, be made at any time within 6 years after the end of that accounting period.

(7) Any reference in this section to an approval is a reference to an approval for the purposes of section 842AA of the Taxes Act. "

(3) In section 179 of that Act (company ceasing to be a member of a group), after the subsection (2C) inserted by section 133 above there shall be inserted the following subsection--

" (2D) This section shall not have effect as respects any asset if, before the time when the chargeable company ceases to be a member of the group or, as the case may be, the second group, an event has already occurred by virtue of which the company falls by virtue of section 101C(3) to be treated as having sold and immediately reacquired the asset at the time specified in subsection (3) below. "

(4) Subsection (1) above applies to disposals made on or after 17th March 1998.

136 Incorporated friendly societies

(1) In section 170(9) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (meaning of "company" in sections 170 to 181), after the word "and" at the end of paragraph (c) there shall be inserted the following paragraph--

" (cc) an incorporated friendly society within the meaning of the [1992 c. 40.] Friendly Societies Act 1992; and " .

(2) In subsection (2) of section 171 of that Act (transfers within a group), after the word "or" at the end of the paragraph (cc) inserted by section 135 above there shall be inserted the following paragraph--

" (cd) a disposal by or to a qualifying friendly society; or "

(3) After subsection (4) of that section there shall be inserted the following subsection--

" (5) In subsection (2)(cd) above "qualifying friendly society" means a company which is a qualifying society for the purposes of section 461B of the Taxes Act (incorporated friendly societies entitled to exemption from income tax and corporation tax on certain profits). "

(4) Subsection (1) above applies for the purpose of determining, in relation to times on and after 17th March 1998, whether a friendly society is a company within the meaning of the provisions of sections 170 to 181 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.

(5) Subsections (2) and (3) above apply in relation to disposals made on or after 17th March 1998.

137 Pre-entry gains

(1) In the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, after section 177A (pre-entry losses) there shall be inserted the following section--

" Pre-entry gains

177B Restrictions on setting losses against pre-entry gains

Schedule 7AA to this Act (which makes provision restricting the losses that may be set against the chargeable gains accruing to a company in the accounting period in which it joins a group of companies) shall have effect. "

(2) After Schedule 7A to that Act there shall be inserted, as Schedule 7AA to that Act, the Schedule set out in Schedule 24 to this Act.

(3) In subsection (3) of section 213 of that Act (carry back of losses in respect of deemed annual disposal by insurance companies)--

(a) at the beginning there shall be inserted "Subject to subsection (3A) below,"; and

(b) for the "and" at the end of paragraph (c) there shall be substituted--

" (ca) none of the intervening accounting periods is an accounting period in which the company joined a group of companies, and " .

(4) After that subsection there shall be inserted the following subsections--

" (3A) Subsection (3) above shall have effect where the company in question joins a group of companies in the later period as if a claim could not be made in respect of the net amount for that period except to the extent (if any) that the net amount is an amount which, assuming there to be gains accruing to the company immediately after the beginning of that period, would fall to be treated under paragraph 4 of Schedule 7AA as a qualifying loss in relation to those gains.

(3B) References in subsections (3) and (3A) above to a company joining a group of companies shall be construed in accordance with paragraph 1 of Schedule 7AA as if those references were contained in that Schedule. "

(5) Subsections (1) and (2) above and Schedule 24 to this Act have effect in relation to any accounting period ending on or after 17th March 1998.

(6) Subsection (3) above has effect in relation to any intervening period ending on or after 17th March 1998.

(7) Subsection (4) above has effect in any case where the earlier accounting period is one ending on or after 17th March 1998.

138 Pre-entry losses

(1) In paragraph 9(6) of Schedule 7A to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (separate application of provisions relating to pre-entry losses in relation to different groups), for "for the purposes of this paragraph as the same group if" there shall be substituted " in relation to any company that is or has become a member of the second group ("the relevant company") as the same group for the purposes of this paragraph if--

(a) the time at which the relevant company became a member of the first group is a time in the same accounting period as that in which the principal company of the first group became a member of the second group; or

(b) " .

(2) This section has effect in relation to any accounting period ending on or after 17th March 1998.

139 De-grouping charges

(1) In section 179(2B) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (cases where there is a connection between groups successively left by a company)--

(a) in paragraph (b), for the words from "company which" to "its" there shall be substituted "person or persons who control the company mentioned in paragraph (a) above or who have had it under their";

(b) in paragraph (c), for the words from "company which has" to "its" there shall be substituted "person or persons who have, at any time in that period, had under their"; and

(2) Subsection (1) above has effect in relation to a company in any case in which the time of the company's ceasing to be a member of the second group is on or after 17th March 1998.

Abolition of reliefs

140 Phasing out of retirement relief

(1) In Schedule 6 to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (retirement relief etc.), paragraph 13(1) (amount available for relief: basic rule) shall have effect, in relation to qualifying disposals in a year of assessment specified in the first column of the following Table, as if--

(a) for the references to £250,000 there were substituted references to the amount specified in the second column of that Table; and

(b) for the reference to £1 million there were substituted a reference to the amount specified in the third column of that Table.

Table

Year	£250,000	£1 million

1999-00	£200,000	£800,000
2000-01	£150,000	£600,000
2001-02	£100,000	£400,000
2002-03	£50,000	£200,000

(2) The following provisions, namely--

(a) section 163 of that Act (relief for disposals by individuals on retirement from family business),

(b) section 164 of that Act (other retirement relief), and

shall cease to have effect in relation to disposals in the year 2003-04 and subsequent years of assessment.

(3) In section 157 of that Act (trade carried on by family company), for the words "within the meaning of Schedule 6" there shall be substituted the words "that is to say, a company the voting rights in which are exercisable, as to not less than 5 per cent., by him".

(4) In subsection (8) of section 165 of that Act (relief for gifts of business assets), for paragraph (a) there shall be substituted the following paragraphs--

" (a) "personal company", in relation to an individual, means a company the voting rights in which are exercisable, as to not less than 5 per cent., by that individual;

(aa) "holding company", "trading company" and "trading group" have the meanings given by paragraph 22 of Schedule A1; and " .

(5) In the following provisions, namely--

(a) subsection (8) of section 228 of that Act (conditions for roll-over relief: supplementary), and

(b) subsection (14)(b) of section 253 of that Act (relief for loans to traders),

for the words "paragraph 1 of Schedule 6" there shall be substituted the words "paragraph 22 of Schedule A1".

(6) Subsections (3) to (5) above have effect in relation to the year 2003-04 and subsequent years of assessment.

141 Abolition of certain other CGT reliefs

(1) The following provisions of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall cease to have effect, namely--

(a) Chapter IA of Part V (roll-over relief on re-investment); and

(b) sections 254 and 255 (relief for debts on qualifying corporate bonds).

(2) In subsection (1) above--

(a) paragraph (a) has effect in relation to acquisitions made on or after 6th April 1998; and

(b) paragraph (b) has effect in relation to loans made on or after 17th March 1998.

Part IV Inheritance Tax etc.

142 Property of historic interest etc

Schedule 25 to this Act (which makes provision about the designation of property of historic interest, etc. and about undertakings in relation to such property) shall have effect.

143 Removal of exemption for gifts for public benefit

(1) Section 26 of the [1984 c. 51.] Inheritance Tax Act 1984 (gifts for public benefit) shall not apply to any transfer of value made on or after 17th March 1998.

(2) Accordingly, in that Act, in relation to any transfer of value made on or after 17th March 1998--

(a) in sections 23(5) and 29A(6) (gifts to charities and abatement of exemptions), for the words "25 or 26", in each place where they occur, there shall be substituted "or 25"; and

(b) in section 29(5) (exemptions in loan cases), for "to 26", "25 or 26" and "25(2) and 26(7)" there shall be substituted, respectively, "to 25", "or 25" and "and 25(2)".

(3) In relation to any property becoming the property of any person on or after 17th March 1998, in section 56(4) and (7) of that Act (exclusion of exemptions in relation to the acquisition of reversionary interests), for the words "to 26", in each place where they occur, there shall be substituted "to 25".

(4) In section 76 of that Act (tax not charged on property becoming property held for charitable purposes etc.)--

(a) paragraph (d) of subsection (1) and subsection (2) shall cease to have effect, and the word "or" shall be inserted at the end of paragraph (b) of subsection (1);

(b) in subsection (3), for "to (d)" there shall be substituted "to (c)"; and

(c) in subsections (6) and (8), for the words "(c) or (d)", in each place where they occur, there shall be substituted "or (c)".

(5) Subsection (4) above has effect in relation to property which ceases to be relevant property, or to be property to which any of sections 70 to 74 of the [1984 c. 51.] Inheritance Tax Act 1984 or paragraph 8 of Schedule 4 to that Act applies, on or after 17th March 1998.

(6) In relation to any property becoming the property of a body on a transfer of value made on or after 17th March 1998, in section 161(2)(b) of that Act (related property), for "25 or 26" there shall be substituted "or 25".

(7) In relation to any disposal on or after 17th March 1998, in section 258(2) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (gains on disposal of works of art etc.), in paragraph (a), for "1984 Act" there shall be substituted "Inheritance Tax Act 1984 ("the 1984 Act")".

144 Maintenance funds for historic buildings, etc

(1) In section 27 of the [1984 c. 51.] Inheritance Tax Act 1984 (exemption for transfers into maintenance funds for historic buildings etc.), at the beginning of subsection (1) there shall be inserted "Subject to subsection (1A) below," and after that subsection there shall be inserted the following subsection--

" (1A) Subsection (1) above does not apply in the case of a direction given after the time of the transfer unless the claim for the direction (if it is not made before that time) is made no more than two years after the date of that transfer, or within such longer period as the Board may allow. "

(2) This section has effect in relation to transfers of value made on or after 17th March 1998.

145 Accounting for property accepted in satisfaction of tax

(1) Section 10 of the [1866 c. 39.] Exchequer and Audit Departments Act 1866 shall have effect as if the accounts required to be rendered under that section to the Comptroller and Auditor General, in addition to containing information about payments to which that section applies, were required to contain such information about property accepted on or after 1st April 1998 in satisfaction of tax as may be specified in directions given by the Treasury.

(2) In subsection (1) above the reference to property accepted in satisfaction of tax is a reference to property accepted by the Commissioners of Inland Revenue under any of the following provisions, that is to say--

(a) section 230 of the [1984 c. 51.] Inheritance Tax Act 1984;

(b) paragraph 17 of Schedule 4 to the [1975 c. 7.] Finance Act 1975;

(d) section 30 of the [1953 c. 34.] Finance Act 1953 and section 1 of the [1954 c. 3 (N.I.).] Finance (Miscellaneous Provisions) Act Northern Ireland) 1954;

(e) section 34(1) of the [1956 c. 54.] Finance Act 1956, section 46 of the [1973 c. 51.] Finance Act 1973, Article 10 of the [S.I. 1972/1100 (N.I. 11).] Finance (Northern Ireland) Order 1972 and Article 5 of the [S.I. 1973/1323 (N.I. 18).] Finance (Miscellaneous Provisions) (Northern Ireland) Order 1973.

(3) The preceding provisions of this section have effect in relation to accounts rendered on or after such date as the Treasury may by order made by statutory instrument appoint.

Part V Other Taxes

Insurance premium tax

146 Travel insurance: higher rate tax

(1) Schedule 6A to the [1994 c. 9.] Finance Act 1994 (premiums liable to tax at the higher rate) shall be amended as follows.

(2) For paragraph 4 (travel insurance) there shall be substituted--

" Travel insurance

4 (1) A premium under a taxable insurance contract falls within this paragraph if it is in respect of the provision of cover against travel risks for a person travelling.

(2) Where--

(a) a contract of insurance provides cover against both travel risks and risks other than travel risks,

(b) the premium attributable to the cover against travel risks does not exceed 10 per cent. of the total premium payable under the contract, and

(c) the contract does not provide cover for a person travelling against travel risks falling within two or more of the paragraphs of sub-paragraph (3) below,

the premium, so far as attributable to the cover against travel risks, does not fall within this paragraph by virtue of sub-paragraph (1) above.

(3) The travel risks mentioned in sub-paragraph (2)(c) above are--

(a) liability in respect of cancellation of travel or of accommodation arranged in connection with travel;

(b) delayed or missed departure;

(d) loss or delayed arrival of baggage;

(e) personal injury or illness or expenses of repatriation.

(4) A premium does not fall within this paragraph by virtue of sub-paragraph (1) above if it is payable under a taxable insurance contract relating to a motor vehicle and is attributable to cover of the kind generally known as--

(a) fully comprehensive,

(b) third party, fire and theft,

(d) roadside assistance,

or if it is payable under a taxable insurance contract relating to a caravan, boat or aircraft and is attributable to cover of a description broadly corresponding to any of those set out in paragraphs (a) to (d) above (so far as applicable) provided in respect of the caravan, boat or aircraft for a period of at least one month for the person travelling.

(5) In this paragraph--

"person travelling" includes a person intending to travel;
"travel risks" means risks associated with, or related to, travel or intended travel--
(a)
outside the United Kingdom,
(b)
by air within the United Kingdom,
(c)
within the United Kingdom in connection with travel falling within paragraph (a) or (b) above, or
(d)
which involves absence from home for at least one night,

or risks to which a person travelling may be exposed during, or at any place at which he may be in the course of, any such travel. "

(3) Except as provided by subsection (4) below, subsections (1) and (2) above have effect in relation to a premium which falls to be regarded for the purposes of Part III of the Finance Act 1994 as received under a taxable insurance contract by an insurer on or after 1st August 1998.

(4) Subsections (1) and (2) above do not have effect in relation to a premium if the premium--

(a) is in respect of a contract made before 1st August 1998; and

(b) falls, by virtue of regulations under section 68 of the [1994 c. 9.] Finance Act 1994 (special accounting scheme), to be regarded for the purposes of Part III of that Act as received under the contract by the insurer on a date before 1st February 1999.

(5) In the application of sections 67A to 67C of the [1994 c. 9.] Finance Act 1994 in relation to the increase in insurance premium tax effected by this section and the exception from that increase--

(a) the announcement relating to that increase, as described in section 67A(1), and to that exception, as described in section 67B(1), shall be taken to have been made on 17th March 1998;

(b) "the date of the change" is 1st August 1998; and

147 Taxable intermediaries

(1) Section 52A of the [1994 c. 9.] Finance Act 1994 (certain fees to be treated as premiums under higher rate contracts) shall be amended as follows.

(2) In subsection (5) (which defines a "taxable intermediary" as a person falling within subsection (6) of that section etc) after "subsection (6)" there shall be inserted "or (6A)".

(3) For subsections (6) and (7) there shall be substituted--

" (6) A person falls within this subsection if the higher rate contract mentioned in subsection (1) above falls within paragraph 2 or 3 of Schedule 6A to this Act (motor cars or motor cycles, or relevant goods) and the person is--

(a) within the meaning of the paragraph in question, a supplier of motor cars or motor cycles or, as the case may be, of relevant goods; or

(b) a person connected with a person falling within paragraph (a) above; or

(i) the whole or any part of the premium received under that contract, or

(ii) a fee connected with the arranging of that contract,

to a person falling within paragraph (a) or (b) above.

(6A) A person falls within this subsection if the higher rate contract mentioned in subsection (1) above falls within paragraph 4 of Schedule 6A to this Act (travel insurance) and the person is--

(a) the insurer under that contract; or

(b) a person through whom that contract is arranged in the course of his business; or

(d) a person connected with a person falling within paragraph (b) above; or

(e) a person who in the course of his business pays--

(i) the whole or any part of the premium received under that contract, or

(ii) a fee connected with the arranging of that contract,

to a person falling within any of paragraphs (a) to (d) above. "

(4) In subsection (9) (definitions) the definition of "tour operator" and "travel agent" shall be omitted.

(5) The amendments made by this section have effect in relation to payments in respect of fees charged on or after 1st August 1998.

Landfill tax

148 Provisional collection of landfill tax

(1) In section 1(1) of the [1968 c. 2.] Provisional Collection of Taxes Act 1968 (taxes in relation to which resolutions may have temporary statutory effect), after "insurance premium tax," there shall be inserted "landfill tax,".

(2) Where--

(a) by virtue of a resolution having effect under the [1968 c. 2.] Provisional Collection of Taxes Act 1968 landfill tax has been paid at a rate specified in the resolution on a taxable disposal of material by reference to the weight of material disposed of, and

(b) by virtue of section 1(6) or (7) or 5(3) of that Act any of that tax is repayable in consequence of the restoration in relation to the taxable disposal of a lower rate,

the amount repayable shall be the difference between the landfill tax paid on the taxable disposal at the rate specified in the resolution and the landfill tax that would have been payable on a taxable disposal of the same weight of material at the lower rate.

(3) Where--

(a) by virtue of a resolution having effect under the [1968 c. 2.] Provisional Collection of Taxes Act 1968 landfill tax is chargeable at a rate specified in the resolution on a taxable disposal by reference to the weight of material disposed of, but

(b) before the tax is paid it ceases to be chargeable at that rate in consequence of the restoration in relation to the taxable disposal of a lower rate,

the landfill tax chargeable at the lower rate shall be charged by reference to the same weight of material as that by reference to which landfill tax would have been chargeable at the rate specified in the resolution.

(4) Expressions used in this section and Part III of the [1996 c. 8.] Finance Act 1996 have the same meanings in this section as in that Part.

Stamp duty

149 Stamp duty on conveyance or transfer on sale

(1) Section 55 of the [1963 c. 25.] Finance Act 1963 and section 4 of the [1963 c. 22 (N.I.).] Finance Act Northern Ireland) 1963 (both of which provide for rates of stamp duty on conveyance or transfer on sale) shall each be amended as follows.

(2) In subsection (1)(d) (rate of £1.50p for every £100 etc where consideration does not exceed £500,000 and the instrument is certified at that amount) for "£1.50p" there shall be substituted "£2".

(3) In subsection (1)(e) (rate of £2 for every £100 etc) for "£2" there shall be substituted "£3".

(4) This section shall apply to instruments executed on or after 24th March 1998, except where the instrument in question is executed in pursuance of a contract made on or before 17th March 1998.

(5) This section shall be deemed to have come into force on 24th March 1998.

150 Relief from double stamp duties etc

(1) Where an instrument which is chargeable with stamp duty in Great Britain and in Northern Ireland has been stamped in either of those parts of the United Kingdom--

(a) the instrument shall, to the extent of the duty it bears, be deemed to be stamped in the other part of the United Kingdom, but

(b) if the stamp duty chargeable on the instrument in that other part of the United Kingdom exceeds the stamp duty chargeable on the instrument in the part of the United Kingdom in which it has been stamped, the instrument shall not be deemed to have been duly stamped in that other part of the United Kingdom unless and until stamped in accordance with the law which has effect in that part of the United Kingdom with a stamp denoting an amount equal to the excess.

(2) An instrument which, by virtue of paragraph (b) of subsection (1) above, is not deemed to have been duly stamped in a part of the United Kingdom unless and until stamped with a stamp denoting an amount equal to the excess mentioned in that paragraph may, notwithstanding anything in section 15 of the [1891 c. 39.] Stamp Act 1891, be stamped with such a stamp without payment of any penalty at any time within 30 days after it has first been received in that part of the United Kingdom.

(3) In section 22 of the [1891 c. 38.] Stamp Duties Management Act 1891 (discontinuance of dies) for the words from "London" to "Gazettes" there shall be substituted "London, Edinburgh and Belfast Gazettes".

(4) Section 29 of the [1920 c. 67.] Government of Ireland Act 1920 (the provisions of which are either spent or re-enacted with modifications in subsection (1) above) shall cease to have effect.

(5) The saving in Part I of Schedule 6 to the [1973 c. 36.] Northern Ireland Constitution Act 1973 (repeals) for orders made under section 69 of the [1920 c. 67.] Government of Ireland Act 1920 shall cease to have effect in relation to Part IV of the Government of Ireland (Adaptation of the [S.R. & O. 1922/80.] Taxing Acts) Order 1922 (the provisions of which are either spent or re-enacted with modifications in subsections (2) and (3) above).

Stamp duty reserve tax

151 Depositary receipts and clearance services: exchanges of shares

(1) In section 95 of the Finance Act 1986 (depositary receipts; exceptions) in subsection (3) (exchanges) after paragraph (b) there shall be added-- " and the shares in company Y are held under a depositary receipt scheme. "

(2) At the end of that section there shall be added--

" (5) For the purposes of subsection (3) above, the cases where shares are held under a depositary receipt scheme are those cases where, in pursuance of an arrangement,--

(a) a depositary receipt for chargeable securities has been, or is to be, issued by a person falling within section 93(2) above in respect of the shares in question or shares of the same kind and amount; and

(b) the shares in question are held by that person, or by a person whose business is or includes holding chargeable securities as nominee or agent for that person, towards the eventual satisfaction of the entitlement of the receipt's holder to receive chargeable securities.

(6) Where an arrangement is entered into under which--

(a) shares in a company (company X) are issued to persons in respect of their holdings of shares in another company (company Y), and

(b) the shares in company Y are cancelled,

the issue shall be treated for the purposes of subsection (3) above as an issue by company X in exchange for the shares in company Y.

(7) In this section "depositary receipt for chargeable securities" has the same meaning as in section 93 above (see section 94 above). "

(3) In section 97 of the [1986 c. 41.] Finance Act 1986 (clearance services: exceptions) in subsection (4) (exchanges) after paragraph (b) there shall be added-- " and the shares in company Y are held under a clearance services scheme. "

(4) At the end of that section there shall be added--

" (6) For the purposes of subsection (4) above, the cases where shares are held under a clearance services scheme are those cases where--

(a) an arrangement falling within paragraph (a) of subsection (1) of section 96 above has been entered into; and

(b) in pursuance of that arrangement, the shares are held by the person referred to in that paragraph as A or by a person whose business is or includes holding chargeable securities as nominee for that person.

(7) Where an arrangement is entered into under which--

(a) shares in a company (company X) are issued to persons in respect of their holdings of shares in another company (company Y), and

(b) the shares in company Y are cancelled,

the issue shall be treated for the purposes of subsection (4) above as an issue by company X in exchange for the shares in company Y. "

(5) In section 99(10) of the [1986 c. 41.] Finance Act 1986 (which makes provision in relation to the interpretation of "chargeable securities" in sections 93, 94, 96 and 97A)--

(a) after "94," there shall be inserted "95,"; and

(b) after "96" there shall be inserted ", 97".

(6) This section applies where the issue by company X referred to in section 95(3) or (6) or 97(4) or (7) of the [1986 c. 41.] Finance Act 1986 is an issue on or after 1st May 1998.

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