Finance Act 2002 (c. 23)

(The document as of February, 2008)

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41 (1) Where--

(a) the investor holds shares in or debentures of a company ("company A"),

(b) there is a reconstruction or amalgamation affecting that holding ("the existing holding"),

(c) immediately before the reconstruction or amalgamation, relief is attributable to the shares or debentures comprised in the existing holding in respect of one or more tax years or accounting periods, and

(d) the shares or debentures comprised in the existing holding have been held by the investor continuously from the time they were issued until the reconstruction or amalgamation,

sections 135 and 136 of the 1992 Act (share exchanges and company reconstructions) shall not apply in respect of the existing holding.

(2) Sub-paragraph (1)(a) applies only where the shares or debentures are held by the investor in the same capacity.

(3) For the purposes of sub-paragraph (1) a "reconstruction or amalgamation" means an issue by a company of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A.

(4) The following provisions of the 1992 Act have effect subject to this paragraph--

section 116 (reorganisations, conversions and reconstructions);
Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc).

Part 8 Supplementary and general

Information to be provided by the investor

42 (1) Where--

(a) the investor has obtained relief in respect of the investment, and

(b) an event occurs by reason of which relief attributable to the investment for any tax year or accounting period falls to be withdrawn or reduced by virtue of paragraph 28, 29, 30 or 32,

the investor must give the Inland Revenue a notice containing particulars of the event.

(2) Where sub-paragraph (1) requires the giving of a notice, then, subject to sub-paragraph (3) the investor must give the notice not later than--

(a) if the investor is an individual, 31st January next following the tax year in which the event occurred, and

(b) if the investor is a company, the end of the period of 12 months beginning with the end of the accounting period in which the event occurred.

(3) Where--

(a) the investor is required to give a notice by virtue of the receipt of value by a person connected with the investor (see paragraph 39), and

(b) the end of the period of 60 days beginning when the investor comes to know of that event is later than the final notice date under sub-paragraph (2),

the notice must be given within that 60 day period.

(4) In this paragraph "the Inland Revenue" means any officer of the Board.

Disclosure

43 (1) No obligation as to secrecy or other restriction on the disclosure of information imposed by statute or otherwise prevents the disclosure of information--

(a) by the Secretary of State to the Inland Revenue for the purpose of assisting the Inland Revenue to discharge their functions under the Tax Acts so far as relating to matters arising under this Schedule, or

(b) by the Inland Revenue to the Secretary of State for the purpose of assisting the Secretary of State to discharge his functions under this Schedule.

(2) Information obtained by such disclosure shall not be further disclosed except for the purposes of legal proceedings arising out of the functions referred to.

(3) In this paragraph "the Inland Revenue" means any officer of the Board.

Nominees

44 (1) For the purposes of this Schedule--

(a) loans made by or to, or disposed of by, a nominee for a person shall be treated as made by or to, or disposed of by, that person;

(b) securities or shares subscribed for by, issued to, acquired or held by or disposed of by a nominee for a person shall be treated as subscribed for by, issued to, acquired or held by or disposed of by that person.

(2) For the purposes of sub-paragraph (1) references to things done by or to a nominee for a person include things done by or to a bare trustee for a person.

Application for postponement of tax pending appeal

45 No application shall be made under section 55(3) or (4) of the Taxes Management Act 1970 (c. 9) (application for postponement of payment of tax pending appeal) on the ground that a person is eligible for relief unless a claim for the relief has been duly made by the person under Part 5 of this Schedule.

Meaning of "issue of securities or shares"

46 (1) In this Schedule--

(a) references (however expressed) to an issue of securities of any body are to such securities of that body as carry the same rights and are issued under the same terms and on the same day, and

(b) references (however expressed) to an issue of shares in any body are to such shares in that body as are of the same class and issued on the same day.

(2) In this Schedule references (however expressed) to an issue of securities of or shares in a body to a person are references to such of the securities or shares in an issue of securities of or shares in that body as are issued to that person in one capacity.

Identification of securities or shares on a disposal

47 (1) In any case where--

(a) the investor disposes of part of a holding of securities or shares ("the holding"), and

(b) the holding includes securities or shares to which relief is attributable in respect of one or more tax years or accounting periods that have been held continuously by the investor from the time they were issued until the disposal,

this paragraph applies for the purpose of identifying the securities or shares disposed of.

(2) For the purposes of this paragraph "holding" means--

(a) any number of securities of a company carrying the same rights and issued under the same terms held by the investor in the same capacity, growing or diminishing as securities carrying those rights and issued under those terms are acquired or disposed of, or

(b) any number of shares in a company of the same class held by the investor in the same capacity, growing or diminishing as shares of that class are acquired or disposed of.

(3) Where securities or shares included in the holding have been acquired by the investor on different days, then, for the purposes of capital gains tax or corporation tax on chargeable gains and of this Schedule, any disposal by the investor of any of those securities or shares shall be treated as relating to those acquired on an earlier day rather than to those acquired on a later day.

(4) Where securities or shares included in the holding have been acquired by the investor on the same day, then, for the purposes of capital gains tax or corporation tax on chargeable gains and of this Schedule, if there is a disposal by the investor of any of those securities or shares, any securities or shares--

(a) to which relief is attributable, and

(b) which have been held by the investor continuously from the time they were issued until the time of disposal,

shall be treated as disposed of after any other securities or shares included in the holding which were acquired by the investor on that day.

(5) Chapter 1 of Part 4 of the 1992 Act (share pooling, etc) shall have effect subject to this paragraph.

(6) Sections 104 to 107 of that Act (which make provision for the purposes of capital gains tax and corporation tax on chargeable gains for the identification of securities and shares on a disposal) shall not apply to securities or shares to which relief is attributable.

(7) In a case to which section 127 of that Act (equation of original shares and new holding) applies, shares comprised in the new holding shall be treated for the purposes of sub-paragraphs (3) and (4) as acquired when the original shares were acquired.

(8) In sub-paragraph (7)--

(a) the reference to section 127 includes a reference to that section as it is applied by virtue of any enactment relating to chargeable gains, and

(b) "original shares" and "new holding" have the same meaning as in section 127 or (as the case may be) that section as applied by virtue of the enactment in question.

Meaning of "disposal"

48 (1) Subject to sub-paragraph (2), in this Schedule "disposal" shall be construed in accordance with the 1992 Act, and cognate expressions shall be construed accordingly.

(2) An investor shall be treated for the purposes of this Schedule, and for the purposes of capital gains tax or corporation tax on chargeable gains, as disposing of any securities or shares which but for paragraph 41 he--

(a) would be treated as exchanging for other securities or shares by virtue of section 136 of the 1992 Act, or

(b) would be so treated but for section 137(1) of the 1992 Act (which restricts section 136 of that Act to bona fide reconstructions).

Construction of references to investment being "held continuously"

49 (1) This paragraph applies where for the purposes of this Schedule it falls to be determined whether the investor has held the investment (or any part of it) continuously throughout any period.

(2) The investor shall not be treated as having held the investment (or any part of it) continuously throughout a period if--

(a) he is deemed, under any provision of the 1992 Act, to have disposed of and immediately reacquired the investment (or part) at any time during the period, or

(b) he is treated as having disposed of the investment (or part) at any such time, by virtue of paragraph 48(2).

Meaning of "associate"

50 (1) In this Schedule "associate", in relation to a person, means--

(a) any relative or partner of that person,

(b) the trustee or trustees of any settlement in relation to which that person, or any relative of his (living or dead), is or was a settlor, and

(c) where that person is interested in any shares or obligations of a company which are subject to any trust or are part of the estate of a deceased person--

(i) the trustee or trustees of the settlement concerned or, as the case may be, the personal representatives of the deceased, and

(ii) if that person is a company, any other company interested in those shares or obligations.

(2) In sub-paragraph (1)(a) and (b) "relative" means husband or wife, parent or remoter forebear or child or remoter issue.

(3) In sub-paragraph (1)(b) "settlor" and "settlement" have the same meaning as in Chapter 1A of Part 15 of the Taxes Act 1988 (see section 660G(1) and (2)).

Minor definitions etc

51 (1) In this Schedule--

"the Board" means the Commissioners of Inland Revenue;
"body" includes an unincorporated association;
"relief" means relief under Part 5 of this Schedule;
"tax year" means a year of assessment;
"the 1992 Act" means the Taxation of Chargeable Gains Act 1992 (c. 12).

(2) For the purposes of this Schedule shares in a company shall not be treated as being of the same class unless they would be so treated if dealt with on the Stock Exchange.

(3) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule.

(4) For the purposes of this Schedule the market value at any time of any asset is the price which it might reasonably be expected to fetch on a sale at that time in the open market free from any interest or right which exists by way of security in or over it.

(5) In this Schedule--

(a) references to relief obtained by the investor in respect of any investment (or part of an investment) include references to relief obtained by the investor in respect of that investment (or part) at any time after the investor has disposed of it, and

(b) references to the withdrawal or reduction of relief obtained by the investor in respect of the investment (or any part of it) include references to the withdrawal or reduction of relief obtained in respect of that investment (or part) at any such time.

(6) In the case of any condition that cannot be satisfied until a future date--

(a) references in this Schedule to a condition being satisfied for the time being are to nothing having occurred to prevent its being satisfied, and

(b) references to its continuing to be satisfied are to nothing occurring to prevent its being satisfied.

Index of defined expressions

52 In this Schedule the following expressions are defined or otherwise explained by the provisions indicated:

associate	paragraph 50
the Board	paragraph 51(1)
body	paragraph 51(1)
the CDFI	paragraph 1(2)
disposal	paragraph 48
the five year period	paragraph 3
held continuously (in relation to securities or shares)	paragraph 49
the invested amount	paragraph 21
the investment	paragraph 1
the investment date	paragraph 3
the investor	paragraph 1
issue of securities or shares	paragraph 46
owner (in relation to a loan)	paragraph 15(2)
the 1992 Act	paragraph 51(1)
period of restriction	paragraph 33
relief	paragraph 51(1)
tax relief certificate	paragraph 12

Section 57

SCHEDULE 17 Community investment tax relief: consequential amendments

1 In section 98 of the Taxes Management Act 1970 (c. 9), in the second column of the Table, after the final entry insert--

" paragraph 42 of Schedule 16 to the Finance Act 2002 " .

2 In section 289A of the Taxes Act 1988 (form of relief under enterprise investment scheme), after subsection (5)(c) insert--

" (ca) any income tax reduction under paragraph 19(2) of Schedule 16 to the Finance Act 2002 (community investment tax relief), " .

3 In Schedule 15B to that Act (venture capital trusts: relief from income tax), after paragraph 1(6)(d) insert--

" (da) any income tax reduction under paragraph 19(2) of Schedule 16 to the Finance Act 2002 (community investment tax relief), " .

4 In section 25 of the Finance Act 1990 (c. 29) (donations to charity by individuals), in subsection (7) omit "and" at the end of paragraph (b) and at the end of paragraph (c) insert " and

(d) paragraph 19(6)(d) of Schedule 16 to the Finance Act 2002. " .

5 In Schedule 18 to the Finance Act 1998 (c. 36) (company tax returns, assessments and related matters), in paragraph 8 (calculation of tax payable), after paragraph 1A of the second step of the calculation in sub-paragraph (1) insert--

" 1B Any relief under Part 5 of Schedule 16 to the Finance Act 2002 (community investment tax relief). " .

Section 58

SCHEDULE 18 Relief for community amateur sports clubs

Part 1 Clubs entitled to be registered

The requirements

1 A club is entitled to be registered as a community amateur sports club if it is, and is required by its constitution to be, a club that--

(a) is open to the whole community,

(b) is organised on an amateur basis, and

(c) has as its main purpose the provision of facilities for, and promotion of participation in, one or more eligible sports.

In this Schedule "registered club" means a club that is so registered.

Open to the whole community

2 (1) A club is open to the whole community if--

(a) membership of the club is open to all without discrimination,

(b) the facilities of the club are available to members without discrimination, and

(2) For the purposes of sub-paragraph (1) "discrimination" includes indirect discrimination and includes, in particular--

(a) discrimination on grounds of ethnicity, nationality, sexual orientation, religion or beliefs;

(b) discrimination on grounds of sex, age or disability, except as a necessary consequence of the requirements of a particular sport.

(3) This paragraph does not prevent a club from having different classes of membership depending on--

(a) the age of the member;

(b) whether the member is a student;

(d) whether the member is a playing or a non-playing member;

(e) how far from the club the member lives;

(f) any restriction on the days or times when the member has access to the club's facilities.

Organised on an amateur basis

3 (1) A club is organised on an amateur basis if--

(a) it is non-profit making,

(b) it provides for members and their guests only the ordinary benefits of an amateur sports club, and

(c) its constitution provides for any net assets on the dissolution of the club to be applied for approved sporting or charitable purposes.

(2) A club is "non-profit making" if its constitution requires any surplus income or gains to be reinvested in the club and does not permit any distribution of club assets, in cash or in kind, to members or third parties.

This does not prevent donations by the club to charities or to other clubs that are registered as community amateur sports clubs.

(3) The ordinary benefits of an amateur sports club are--

(a) provision of sporting facilities;

(b) reasonable provision and maintenance of club-owned sports equipment;

(d) provision, or reimbursement of the costs, of coaching courses;

(e) provision of insurance cover;

(f) provision of medical treatment;

(g) reimbursement of reasonable travel expenses incurred by players and officials travelling to away matches;

(h) reasonable provision of post-match refreshments for players and match officials;

(i) sale or supply of food or drink as a social adjunct to the sporting purposes of the club.

(4) Sub-paragraph (3) does not prevent a club from--

(a) entering into an agreement with a member for the supply to the club of goods or services, or

(b) employing and paying remuneration to staff who are also members of the club,

provided the terms are approved by the governing body of the club without the member concerned being present and are agreed with the member on an arm's length basis.

(5) In relation to the application of the net assets on the dissolution of the club, "approved sporting or charitable purposes" means such of the following as may be approved by the members of the club in general meeting or by the members of the governing body of the club--

(a) the purposes of the governing body of an eligible sport for the purposes of which the club existed, for use in related community sport;

(b) the purposes of another club that is registered as a community amateur sports club;

Part 2 Exemptions for registered clubs

Exemption for trading income

4 (1) Where--

(a) a club is a registered club throughout an accounting period,

(b) its trading income for that period (before deduction of any expenses) does not exceed £15,000,

(d) the club makes a claim under this paragraph to the Inland Revenue,

it shall be exempt from corporation tax on that income.

(2) In relation to an accounting period that is shorter than 12 months, sub-paragraph (1)(b) has effect as if the amount specified there were proportionately reduced.

(3) Where a club is a registered club for only part of an accounting period, sub-paragraph (1) has effect as if--

(a) that part were a separate accounting period;

(b) the club's trading income for that part were the proportionately reduced amount of its trading income for the actual accounting period.

(4) In this paragraph "trading income" means income that (apart from this paragraph) is chargeable under Case I of Schedule D.

Exemption for interest and gift aid income

5 (1) Where--

(a) a club is a registered club throughout an accounting period,

(b) the whole of its interest income and gift aid income for that period is applied for qualifying purposes, and

it shall be exempt from corporation tax on that income.

(2) Where a club is a registered club for only part of an accounting period, sub-paragraph (1) has effect as if--

(a) that part were a separate accounting period;

(b) the club's interest income for that part were the proportionately reduced amount of its interest income for the actual accounting period.

(3) In this paragraph--

(a) "interest income", in relation to a club, means interest on which (apart from this paragraph) the club is chargeable to tax under paragraph (a) of Case III of Schedule D (as set out in section 18(3A) of the Taxes Act 1988);

(b) "gift aid income", in relation to a club, means gifts to the club that are treated as annual payments by section 25(10) of the Finance Act 1990 (c. 29) (gift aid) as it applies by virtue of paragraph 9(1) below.

Exemption for property income

6 (1) Where--

(a) a club is a registered club throughout an accounting period,

(b) its property income for that period (before deduction of any expenses) does not exceed £10,000,

(d) the club makes a claim under this paragraph to the Inland Revenue,

it shall be exempt from corporation tax on that income.

(2) In relation to an accounting period that is shorter than 12 months, sub-paragraph (1)(b) has effect as if the amount specified there were proportionately reduced.

(3) Where a club is a registered club for only part of an accounting period, sub-paragraph (1) has effect as if--

(a) that part were a separate accounting period;

(b) the club's property income for that part were the proportionately reduced amount of its property income for the actual accounting period.

(4) In this paragraph "property income" means income that (apart from this paragraph) is chargeable to tax under Schedule A.

Exemption for chargeable gains

7 A gain accruing to a registered club shall not be a chargeable gain if--

(a) the whole of the gain is applied for qualifying purposes, and

(b) the club makes a claim under this paragraph to the Inland Revenue.

Exemption reduced where club incurs non-qualifying expenditure

8 (1) This paragraph applies where--

(a) any of a club's income or gains for an accounting period are exempted from tax under this Part (or would be so exempted but for this paragraph), and

(b) in that accounting period the club incurs expenditure for non-qualifying purposes.

(2) In this paragraph--

A is the total amount of income and gains mentioned in sub-paragraph (1)(a);
N is the amount of the expenditure mentioned in sub-paragraph (1)(b);
T is the aggregate of--
- (a) the club's income (whether taxable or not, and before deduction of any expenses) for the accounting period, and
- (b) the club's gains that are chargeable gains, together with those that would be chargeable but for paragraph 7, for that period.

(3) Where N is less than T, the total amount of income and gains for the accounting period exempted under this Part is reduced to--

A - A × NT

(4) Where N is equal to T, the total amount of income and gains for the accounting period exempted under this Part is reduced to nil.

(5) Where N is greater than T--

(a) the total amount of income and gains for the accounting period exempted under this Part is reduced to nil, and

(b) the surplus amount is carried back to previous accounting periods (taking later ones before earlier ones) and deducted from the amounts exempted under this Part for those periods, until it is exhausted.

In paragraph (b) "the surplus amount" means--

---

(6) The reference in paragraph (b) of sub-paragraph (5) to previous accounting periods is to accounting periods ending not more than six years before the end of the accounting period mentioned in paragraph (a) of that sub-paragraph.

(7) To the extent that an amount exempted under this Part has been reduced under sub-paragraph (3), (4) or (5) in respect of expenditure incurred for non-qualifying purposes in a particular accounting period, it may not be reduced again under sub-paragraph (5) in respect of expenditure so incurred in a later accounting period.

(8) All such adjustments shall be made, whether by way of assessment or otherwise, as may be required in consequence of sub-paragraph (5).

(9) Where by virtue of this paragraph there is an amount of a registered club's income and gains for which relief under this Part is not available, the club may, by notice to the Inland Revenue, specify which items of the income and gains are, in whole or in part, to be attributed to that amount.

If, within 30 days of being required to do so by the Inland Revenue, a registered club does not give notice under this sub-paragraph, the items of its income and gains that are to be attributed to the amount in question shall be such as the Inland Revenue may determine.

Part 3 Reliefs for donors

9 (1) Section 25 of the Finance Act 1990 (c. 29) (gift aid) has effect as if a registered club were a charity.

For the purposes of that section as so applied, membership fees are not gifts.

(2) Section 23 of the Inheritance Tax Act 1984 (c. 51) (gifts to charities) has effect as if--

(a) a registered club were a charity;

(b) in subsection (5) of that section (no exemption where property may become applicable for purposes that are not charitable etc), for the words from "other than charitable purposes" to the end there were substituted " other than--

(a) the purposes of the club in question;

(b) the purposes of another club that is registered as a community amateur sports club;

(c) the purposes of the governing body of an eligible sport (within the meaning of Schedule 18 to the Finance Act 2002) for the purposes of which the club in question exists; or

(d) the purposes of a charity. " .

(3) The following enactments also have effect as if a registered club were a charity--

(a) section 83A of the Taxes Act (gifts in kind to charities etc);

(b) section 257 of the Taxation of Chargeable Gains Act 1992 (c. 12) (gifts to charities etc);

Part 4 Chargeable gains: property ceasing to be held for qualifying purposes

10 (1) This paragraph applies where a club holds property and, without disposing of it--

(a) ceases to be a registered club, or

(b) ceases to hold the property for qualifying purposes.

(2) Where this paragraph applies--

(a) the club shall be treated for the purposes of the Taxation of Chargeable Gains Act 1992 as having disposed of, and immediately reacquired, the property at the time of the cessation for a consideration equal to its market value at that time;

(b) any gain accruing on the deemed disposal shall be treated for the purposes of paragraph 7 as not accruing to a registered club;

(c) if and so far as any of the property represents, directly or indirectly, the consideration for the disposal of assets by the club, any gain accruing on that disposal shall be treated for the purposes of paragraph 7 as not having accrued to a registered club.

(3) An assessment in respect of a chargeable gain accruing by virtue of sub-paragraph (2) may be made at any time not more than three years after the end of the accounting period in which the club ceases to be a registered club or (as the case may be) to hold the property for qualifying purposes.

Part 5 Registration

Registration and termination

11 (1) A club that applies to the Inland Revenue to be registered as a community amateur sports club shall be so registered if the Inland Revenue are satisfied that it is entitled to be.

(2) The Inland Revenue may register a club with effect from such date as they may specify (which may be before the date of the application).

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