Finance Act 2000 (c. 17)

(The document as of February, 2008)

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(b) which are specified in regulations made by the Board.

(3) Regulations under subsection (2) above--

(a) may make different provision for different cases or with respect to different territories; and

(b) may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.

(4) The first regulations under subsection (2) above may make provision having effect in relation to accounting periods beginning not more than fifteen months before the date on which the regulations are made. "

"Control" and the two "40 per cent" tests

4 (1) After section 755C insert--

" 755D "Control" and the two "40 per cent" tests

(1) For the purposes of this Chapter "control", in relation to a company, means the power of a person to secure--

(a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or

(b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,

that the affairs of the company are conducted in accordance with his wishes.

(2) Where two or more persons, taken together, have the power mentioned in subsection (1) above, they shall be taken for the purposes of this Chapter to control the company.

(3) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing at least 40 per cent of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.

(4) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing--

(a) at least 40 per cent, but

(b) not more than 55 per cent,

of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.

(5) For the purposes of this Chapter any question--

(a) whether a company is controlled by a person, or by two or more persons taken together, or

(b) whether, in the case of any company, the applicable 40 per cent test is satisfied in the case of each of two persons who, taken together, control the company,

shall be determined after attributing to each of the persons all the rights and powers mentioned in subsection (6) below that are not already attributed to that person for the purposes of subsections (1) to (4) above.

(6) The rights and powers referred to in subsection (5) above are--

(a) rights and powers which the person is entitled to acquire at a future date or which he will, at a future date, become entitled to acquire;

(b) rights and powers of other persons, to the extent that they are rights or powers falling within subsection (7) below;

(c) if the person is resident in the United Kingdom, rights and powers of any person who is resident in the United Kingdom and connected with the person; and

(d) if the person is resident in the United Kingdom, rights and powers which for the purposes of subsection (5) above would be attributed to a person who is resident in the United Kingdom and connected with the person (a "UK connected person") if the UK connected person were himself the person.

(7) Rights and powers fall within this subsection to the extent that they--

(a) are required, or may be required, to be exercised in any one or more of the following ways, that is to say--

(i) on behalf of the person;

(ii) under the direction of the person; or

(iii) for the benefit of the person; and

(b) are not confined, in a case where a loan has been made by one person to another, to rights and powers conferred in relation to property of the borrower by the terms of any security relating to the loan.

(8) In subsections (6)(b) to (d) and (7) above, the references to a person's rights and powers include references to any rights or powers which he either--

(a) is entitled to acquire at a future date, or

(b) will, at a future date, become entitled to acquire.

(9) In paragraph (d) of subsection (6) above, the reference to rights and powers which would be attributed to a UK connected person if he were the person includes a reference to rights and powers which, by applying that paragraph wherever one person resident in the United Kingdom is connected with another person, would be so attributed to him through a number of persons each of whom is resident in the United Kingdom and connected with at least one of the others.

(10) In determining for the purposes of this section whether one person is connected with another in relation to a company, subsection (7) of section 839 shall be disregarded.

(11) References in this section--

(a) to rights and powers of a person, or

(b) to rights and powers which a person is or will become entitled to acquire,

include references to rights or powers which are exercisable by that person, or (when acquired by that person) will be exercisable, only jointly with one or more other persons. "

(2) In consequence of sub-paragraph (1), in section 756(3) (application of provisions of Part XI)--

(a) omit paragraph (a); and

(b) omit the words following paragraph (b).

Exempt activities: wholesale, distributive, financial or service business

5 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 6 as follows.

(2) In sub-paragraph (2)(b) (company mainly engaged in wholesale, distributive or financial business: percentage of gross trading receipts from connected persons etc)--

(a) for "or financial" substitute "financial or service"; and

(b) for the words from "connected" to the end substitute "persons falling within sub-paragraph (2A) below."

(3) After sub-paragraph (2) insert--

" (2A) Those persons are--

(a) persons who are connected or associated with the company;

(b) persons who have a 25 per cent assessable interest in the company in the case of the accounting period in question; and

(c) if the company is a controlled foreign company in that accounting period by virtue of subsection (1A) of section 747, persons who are connected or associated with either or both of the two persons mentioned in that subsection. "

Local holding companies

6 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 6 as follows.

(2) In sub-paragraph (3) (local holding companies) after "90 per cent of its gross income during the accounting period in question" insert "is received by it in the territory in which it is resident and".

Other holding companies

7 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 6 as follows.

(2) In sub-paragraph (4) (holding companies other than local holding companies) after "90 per cent of its gross income during the accounting period in question" insert "falls within sub-paragraph (4ZA) below and".

(3) After sub-paragraph (4) insert--

" (4ZA) For the purposes of sub-paragraph (4) above, income of the holding company falls within this sub-paragraph if--

(a) the company from which the holding company directly derives the income is, throughout the accounting period in question, resident in the territory in which the holding company is resident and the income is received by the holding company in that territory; or

(b) the income consists of qualifying dividends. "

(4) In sub-paragraph (4A) (superior holding companies) at the end of paragraph (b) add " ; and

(5) After sub-paragraph (4A) insert--

" (4AA) For the purposes of sub-paragraph (4A) above, income of the superior holding company falls within this sub-paragraph if--

(a) the company from which the superior holding company directly derives the income is, throughout the accounting period in question, resident in the territory in which the superior holding company is resident and the income is received by the superior holding company in that territory; or

(b) the income consists of qualifying dividends. "

(6) In sub-paragraph (4B) (companies from which income of superior holding company is derived) in paragraph (b), at the end of sub-paragraph (ii) add " , and

(iii) falls within sub-paragraph (4BB) below " .

(7) After sub-paragraph (4B) insert--

" (4BB) For the purposes of sub-paragraph (4B)(b) above, income of the superior holding company there mentioned falls within this sub-paragraph if--

(a) the company from which that superior holding company directly derives the income is, throughout the accounting period in question, resident in the territory in which that superior holding company is resident and the income is received by that superior holding company in that territory; or

(b) the income consists of qualifying dividends. "

(8) In sub-paragraph (5) (interpretation of sub-paragraphs (3) to (4B)) after "a reference to a trading company" insert " to which sub-paragraph (5ZA) or (5ZB) below applies.

(5ZA) This sub-paragraph applies to a trading company " .

(9) After sub-paragraph (5ZA) insert--

" (5ZB) This sub-paragraph applies to a trading company if--

(a) it is a controlled foreign company by virtue of subsection (1A) of section 747; and

(b) the person who satisfies the requirement in paragraph (b) of that subsection in relation to the company also controls the holding company or superior holding company. "

(10) After sub-paragraph (5A) insert--

" (5B) In this paragraph "qualifying dividend" means any dividend other than one for which the company paying the dividend is entitled to a deduction against its profits for tax purposes under the law of the territory in which it is resident. "

(11) In sub-paragraph (6) (application of following provisions of Part II of Schedule 25) for "(4)" substitute "(4BB)".

Businesses to which requirement as to derivation of receipts applies

8 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 11 as follows.

(2) In sub-paragraph (1) (meaning of "wholesale, distributive or financial business" for purposes of paragraph 6(2)(b))--

(a) in the opening words, for "or financial" substitute "financial or service";

(b) omit the word "and" immediately preceding paragraph (g); and

(h) the provision of services not falling within any of the preceding paragraphs. "

Commencement

9 (1) Paragraph 2 has effect on and after 21st March 2000.

(2) Paragraph 3 has effect in relation to any accounting period of a company resident outside the United Kingdom which begins on or after 6th October 1999.

(3) Paragraph 4 has effect--

(a) for the purpose of determining whether at any time on or after 21st March 2000 a company resident outside the United Kingdom is to be regarded for the purposes of Chapter IV of Part XVII of the Taxes Act 1988 as controlled by persons resident in the United Kingdom; and

(b) for any accounting period of a company resident outside the United Kingdom which begins on or after 21st March 2000.

(4) Paragraphs 5 to 8 have effect in relation to any accounting period of a controlled foreign company which begins on or after 21st March 2000.

(5) In this paragraph "accounting period" and "controlled foreign company" have the same meaning as they have in Chapter IV of Part XVII of the Taxes Act 1988.

Section 116(2).

SCHEDULE 32 Stamp duty on seven year leases: transitional provisions

Introductory

1 In this Schedule--

"additional duty", in relation to an instrument, means additional stamp duty chargeable on the instrument as a result of section 116;
"the appropriate amount of duty", in relation to an instrument, means the stamp duty that would have been chargeable on the instrument if section 116 had been in force when it was executed; and
"the commencement date" means 28th March 2000.

Instruments to which this Schedule applies

2 The instruments to which this Schedule applies are--

(a) leases of land for a term of seven years, and

(b) agreements for leases of land for a term of seven years,

executed on or after 1st October 1999 and before the commencement date.

Instruments which remain duly stamped

3 An instrument to which this Schedule applies which is stamped with the appropriate amount of duty is duly stamped, whenever it was executed.

Instruments which cease to be duly stamped

4 (1) An instrument to which this Schedule applies which--

(a) immediately before the commencement date was duly stamped, but

(b) was stamped with less than the appropriate amount of duty,

ceases to be duly stamped on the commencement date.

(2) Sub-paragraph (1) applies even if the instrument has been stamped in accordance with section 12(5) of the [1891 c. 39.] Stamp Act 1891 with a stamp denoting that it is duly stamped.

(3) If an instrument ceases to be duly stamped on the commencement date as a result of sub-paragraph (1)--

(a) section 12(6) of the [1891 c. 39.] Stamp Act 1891 (adjudicated instruments admissible in evidence) does not apply to it at any time when it is not duly stamped, and

(b) section 14(1) of that Act (receipt in evidence of insufficiently stamped instruments if unpaid duty paid to court) does not apply to it at any time when it is not duly stamped, unless the unpaid duty and any interest or penalty is paid in accordance with that subsection.

Stamping following earlier adjudication

5 Section 12A(1) of the Stamp Act 1891 (adjudicated instruments not to be stamped other than in accordance with adjudication decision) does not prevent an instrument to which this Schedule applies which is stamped with less than the appropriate amount of duty from being stamped with additional duty.

Use of instruments in evidence, etc.

6 Section 14(4) of the Stamp Act 1891 (instruments not to be used unless duly stamped in accordance with law in force when executed) applies in relation to an instrument to which this Schedule applies as if, as respects any time on or after the commencement date, the reference to the law in force at the time when it was executed were to the law in force on the commencement date.

Adjudication, interest and penalties

7 (1) This paragraph applies for the purpose of applying sections 12 to 13B and 15 to 15B of the Stamp Act 1891 (adjudication by Commissioners and interest and penalties on late stamping) in relation to any additional duty chargeable on an instrument to which this Schedule applies.

(2) Those sections continue to apply without modification as respects any other stamp duty chargeable on the instrument.

(3) Those sections have effect as respects the additional duty as if--

(a) the additional duty were the only stamp duty chargeable on the instrument;

(b) the instrument had been executed on the commencement date; and

(c) in the case of an instrument executed outside the United Kingdom and first received in the United Kingdom before the commencement date, the instrument had been first received in the United Kingdom on the commencement date.

(4) Accordingly, those sections apply as respects additional duty as if--

(a) references to duty were to additional duty;

(b) references to stamping were to stamping with additional duty;

(d) references to an instrument's being duly stamped were to its being stamped with all the additional duty chargeable on it;

(e) references to an instrument's being unstamped were to its not being stamped with any additional duty;

(f) references to an instrument's being insufficiently stamped were to its being stamped with insufficient additional duty;

(g) references to adjudication, or an appeal, under any of those sections were to adjudication or an appeal under the section in question as it has effect as respects additional duty; and

(h) references to the maximum penalty were to the maximum penalty as respects additional duty.

Section 117.

SCHEDULE 33 Power to vary stamp duties

Power of Treasury to make provision by regulations

1 (1) The Treasury may if they consider it expedient in the public interest make provision by regulations for the variation of an existing stamp duty.

(2) The power conferred by this paragraph includes, in particular, power to alter the descriptions of document in respect of which an existing stamp duty, or an existing rate or amount of duty, is chargeable.

(3) The power to make regulations under this paragraph is exercisable by statutory instrument.

Power only to be used for cases involving land or shares etc.

2 (1) The power conferred by paragraph 1 does not include power--

(a) to vary the amount chargeable by way of stamp duty on an excepted instrument, or

(b) to cause stamp duty to become chargeable on an excepted instrument.

(2) For the purposes of this paragraph--

(a) an "excepted instrument" is any document that is not a relevant property instrument, and

(b) a "relevant property instrument" is a document that (whether or not it also relates to any other transaction) relates to a transaction that to any extent involves--

(i) land, stock or marketable securities, or

(ii) any estate or interest in land, stock or marketable securities.

Power not to be used to vary rates or thresholds

3 The power conferred by paragraph 1 does not, except as mentioned in paragraph 1(2), include power to vary--

(a) the rate, or rates, of an existing ad valorem stamp duty,

(b) the amount of an existing fixed stamp duty,

(c) any threshold specified in paragraph 4 of Schedule 13 to the [1999 c. 16.] Finance Act 1999 (rate bands for conveyance or transfer on sale), or

(d) any threshold specified in paragraph 11 or 12 of that Schedule (duty on leases) in respect of rent or the term of a lease.

Approval of regulations by House of Commons

4 (1) An instrument containing regulations under paragraph 1 shall be laid before the House of Commons after being made.

(2) If the regulations are not approved by the House of Commons before the end of the period of 28 days beginning with the day on which they are made, they shall cease to have effect at the end of that period if they have not already ceased to have effect under sub-paragraph (3).

(3) If on any day during that period of 28 days the House of Commons, in proceedings on a motion that (or to the effect that) the regulations be approved, comes to a decision rejecting the regulations, they shall cease to have effect at the end of that day.

(4) Where regulations cease to have effect under sub-paragraph (2) or (3), their ceasing to have effect is without prejudice to anything done in reliance on them.

(5) In reckoning any such period of 28 days take no account of any time during which--

(a) Parliament is prorogued or dissolved, or

(b) the House of Commons is adjourned for more than four days.

Claim for repayment if regulations not approved

5 (1) Where regulations cease to have effect under paragraph 4(2) or (3), any amount paid by way of stamp duty, or interest or penalty on late stamping, that would not have been payable but for the regulations shall, on a claim, be repaid by the Commissioners.

(2) Section 110 of the [1999 c. 16.] Finance Act 1999 (interest on repayment of duty overpaid etc.) applies to a repayment under this paragraph of any amount paid by way of stamp duty or penalty on late stamping.

In the case of a repayment under this paragraph, the relevant time for the purposes of that section is 30 days after the day on which the instrument in question was executed or, if later, the date on which the payment of duty or penalty was made.

(3) A claim for repayment must be made within two years after the date of the instrument in question or, if it is not dated, within two years after its execution.

(4) No repayment shall be made on a claim until the instrument in question has been produced to the Commissioners for such cancelling of stamps, and such stamping to denote the making of the repayment or the producing of the instrument under this paragraph, as the Commissioners consider appropriate.

(5) Any repayment shall, subject to any regulations under sub-paragraph (6)(d), be made to such person as the Commissioners consider appropriate.

(6) The Commissioners may make provision by regulations--

(a) for varying the time limit having effect under sub-paragraph (3);

(b) for varying or repealing the condition having effect under sub-paragraph (4);

(d) as to the person to whom repayment is to be made.

(7) Regulations under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

Use in evidence, etc. of instruments affected by regulations ceasing to have effect

6 (1) Where regulations cease to have effect under paragraph 4(2) or (3), the following provisions apply to an instrument that--

(a) was executed at a time when the regulations were in force, and

(b) was at that time chargeable with any amount of stamp duty with which it would not have been chargeable apart from the regulations.

(2) If the instrument was stamped while the regulations were in force, nothing done in pursuance of paragraph 5 (repayment of duty etc.) prevents it being treated for any purpose as duly stamped in accordance with the law in force at the time when it was executed.

(3) If the instrument was not stamped while the regulations were in force, the law in force at the time when it was executed shall be deemed to have been what the law would have been apart from the regulations.

Temporary effect of regulations

7 (1) Regulations under paragraph 1 shall not apply in relation to instruments executed after the end of--

(a) the period of 18 months beginning with the day on which the regulations were made, or

(b) such shorter period as may be specified in the regulations.

(2) This does not affect the power to make further provision by regulations under paragraph 1 to the same or similar effect.

Power to make transitional etc. provision

8 Any power to make regulations under this Schedule includes power to make such transitional, supplementary and incidental provision as appears to the authority making the regulations to be necessary or expedient.

Interpretation

9 (1) In relation to a bearer instrument (as defined in paragraph 3 of Schedule 15 to the [1999 c. 16.] Finance Act 1999), references in this Schedule to the execution of the instrument shall be read as references to its issue.

(2) This Schedule shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

Section 129.

SCHEDULE 34 Abolition of stamp duty on instruments relating to intellectual property: supplementary provisions

Introduction

1 In this Schedule "intellectual property" has the same meaning as in section 129(1).

Stamp duty reduced in certain other cases

2 (1) This paragraph applies where--

(a) stamp duty under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) is chargeable on an instrument, and

(b) part of the property concerned consists of intellectual property.

(2) In such a case--

(a) the consideration in respect of which duty would otherwise be charged shall be apportioned, on such basis as is just and reasonable, as between the part of the property which consists of intellectual property and the part which does not, and

(b) the instrument shall be charged only in respect of the consideration attributed to such of the property as is not intellectual property.

(3) This paragraph applies to instruments executed on or after 28th March 2000.

Apportionment of consideration for stamp duty purposes

3 (1) Where part of the property referred to in section 58(1) of the [1891 c. 39.] Stamp Act 1891 (consideration to be apportioned between different instruments as parties think fit) consists of intellectual property, that provision shall have effect as if "the parties think fit" read "is just and reasonable".

(2) Where--

(a) part of the property referred to in section 58(2) of the Stamp Act 1891 (property contracted to be purchased by two or more persons etc.) consists of intellectual property, and

(b) both or (as the case may be) all the relevant persons are connected with one another,

that provision shall have effect as if the words from "for distinct parts of the consideration" to the end of the subsection read ", the consideration is to be apportioned in such manner as is just and reasonable, so that a distinct consideration for each separate part or parcel is set forth in the conveyance relating thereto, and such conveyance is to be charged with ad valorem duty in respect of such distinct consideration.".

(3) In a case where sub-paragraph (1) or (2) applies and the consideration is apportioned in a manner that is not just and reasonable, the enactments relating to stamp duty shall have effect as if--

(a) the consideration had been apportioned in a manner that is just and reasonable, and

(b) the amount of any distinct consideration set forth in any conveyance relating to a separate part or parcel of property were such amount as is found by a just and reasonable apportionment (and not the amount actually set forth).

(4) For the purposes of sub-paragraph (2)--

(a) a person is a relevant person if he is a person by or for whom the property is contracted to be purchased;

(b) the question whether persons are connected with one another shall be determined in accordance with section 839 of the Taxes Act 1988.

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