Finance Bill - continued        House of Lords
SCHEDULE 15, THE CORPORATE VENTURING SCHEME - continued

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  PART VII
  RELIEF FOR LOSSES ON DISPOSALS OF SHARES
 
Eligibility for relief against income
     67. - (1) The investing company is eligible for relief under this Part ("loss relief") if-
 
 
    (a) it incurs an allowable loss on the disposal of shares to which investment relief is attributable (and not withdrawn in full as a result of the disposal), and
 
    (b) the requirements of sub-paragraphs (2) and (3) are met.
      (2) The first requirement is that the shares must have been held continuously by the investing company from the time they were issued until the disposal.
 
      (3) The second requirement is that the disposal on which the loss is incurred must be a disposal of the kind described in paragraph (a), (b), (c) or (d) of paragraph 46(2).
 
 
Entitlement to claim
     68. - (1) Where the investing company is eligible for loss relief it may make a claim requiring that the loss be set off for the purposes of corporation tax against income-
 
 
    (a) of the accounting period in which the loss is incurred, and
 
    (b) if the claim so requires, of accounting periods ending within the preceding 12 month period.
      (2) A claim under sub-paragraph (1) must be made within two years after the end of the accounting period in which the loss is incurred.
 
      (3) In this paragraph "the preceding 12 month period" means the 12 months ending immediately before the accounting period in which the loss is incurred.
 
 
Form of loss relief
     69. - (1) Where a claim is made under sub-paragraph (1) of paragraph 68, the income of any of the accounting periods mentioned in that sub-paragraph shall then be treated as reduced by the amount of the loss or by so much of it as cannot be relieved under this sub-paragraph against income of a later accounting period.
 
  This is subject to loss relief first being obtained for any earlier loss.
 
      (2) The amount of the reduction which may be made under this paragraph in the income of an accounting period beginning before the preceding 12 month period (within the meaning of paragraph 68(3)) shall not exceed a part of that income proportionate to the part of the accounting period falling within that period.
 
 
Priority of loss relief
     70. - (1) Where loss relief is claimed by the investing company it must be claimed-
 
 
    (a) in priority to any relief claimed by that company under section 573 of the Taxes Act 1988 (relief for loss on disposal of shares in certain trading companies by investment companies), and
 
    (b) before any deduction is made for charges on income or other amounts which can be deducted from or set against or treated as reducing profits of any description.
      (2) Where loss relief is obtained for an amount of a loss no deduction shall be made in respect of that amount-
 
 
    (a) by virtue of section 573(2) of the Taxes Act 1988 (relief for loss on disposal of shares in certain trading companies by investment companies), or
 
    (b) for the purposes of corporation tax on chargeable gains.
 
Tax avoidance
     71. - (1) Sub-paragraph (2) applies where shares would, in the absence of paragraph 82 (which disapplies sections 135 and 136 of the 1992 Act in respect of shares to which investment relief is attributable), be the subject of an exchange or arrangement which-
 
 
    (a) is of the kind mentioned in section 135 or 136 of the 1992 Act (company reconstructions etc.), and
 
    (b) would involve a disposal of shares, by reason of-
 
      (i) section 137(1) of that Act (schemes with tax avoidance purpose), or
 
      (ii) paragraph 96(2)(b) (company treated as disposing of shares in the case of certain reconstructions and amalgamations involving tax avoidance).
      (2) Where this sub-paragraph applies no loss relief may be obtained in respect of any allowable loss incurred on the disposal.
 
      (3) Where a claim is made under this Part in respect of a loss accruing on the disposal of shares, section 30 of the 1992 Act (value-shifting) shall have effect in relation to the disposal as if for the references in subsections (1)(b) and (5) of that section to a tax-free benefit there were substituted references to any benefit whether tax-free or not.
 
 
Adjustment of corporation tax
     72. The Inland Revenue shall make any adjustment of corporation tax required as a result of-
 
 
    (a) loss relief being obtained in respect of an allowable loss, or
 
    (b) loss relief not being obtained for the whole or part of a loss in respect of which a claim is made under this Part,
       whether by way of assessment, discharge or repayment of tax.
 
  PART VIII
  DEFERRAL RELIEF
 
Introduction
     73. - (1) This Part applies where-
 
 
    (a) a chargeable gain ("the original gain") accrues to the investing company at any time ("the accrual time"),
 
    (b) the gain is one accruing either-
 
      (i) on a disposal of shares to which investment relief was attributable immediately before the disposal, or
 
      (ii) by virtue of paragraph 79 on the occurrence of a chargeable event in relation to shares to which deferral relief is attributable immediately before the event,
 
    and
 
    (c) the investing company makes a qualifying investment.
      (2) In determining for the purposes of sub-paragraph (1)(a) whether or not a chargeable gain accrues at any time paragraph 76 (postponement of original gain) shall be disregarded.
 
      (3) Sub-paragraph (1)(b)(i) does not apply to a disposal of shares unless the shares were held by the investing company continuously from the time they were issued until the disposal.
 
 
Meaning of "qualifying investment"
     74. - (1) For the purposes of this Part the investing company makes a qualifying investment if-
 
 
    (a) it subscribes for any shares to which investment relief is attributable,
 
    (b) the shares are not issued by a prohibited company,
 
    (c) the shares are issued to the investing company at a qualifying time, and
 
    (d) where the shares were issued before the accrual time-
 
      (i) they have been held continuously by the investment company from the time they were issued until that time, and
 
      (ii) investment relief is attributable to the shares at that time.
      (2) For the purposes of sub-paragraph (1)-
 
 
    "a prohibited company" means-
 
      (a) the company whose shares comprised the original holding, or
 
      (b) a company that was, at the accrual time or the time of the issue of the qualifying shares (or both), a member of the same group as that company; and
 
    "a qualifying time" means any time in the period of four years beginning one year before the accrual time.
      (3) For the purposes of the definition of "a prohibited company" in sub-paragraph (2), "the original holding" means-
 
 
    (a) where the original gain accrued as mentioned in sub-paragraph (i) of paragraph 73(1)(b), the shares disposed of, and
 
    (b) where the original gain accrued as mentioned in sub-paragraph (ii) of paragraph 73(1)(b), the shares in relation to which the chargeable event occurred.
 
Meaning of "the qualifying shares"
     75. - (1) For the purposes of this Part "the qualifying shares", in relation to a case where this Part applies, means the shares which are acquired by the investing company in making the qualifying investment.
 
  This is subject to sub-paragraphs (2) and (4).
 
      (2) If any corresponding bonus shares are issued to the investing company, this Part shall apply as if references to the qualifying shares were to all the shares comprising the qualifying shares and the bonus shares so issued.
 
      (3) In sub-paragraph (2) "corresponding bonus shares" means bonus shares which-
 
 
    (a) are issued in respect of the qualifying shares, and
 
    (b) are in the same company, of the same class and carry the same rights as those shares.
      (4) If in circumstances where paragraph 83 (certain exchanges resulting in acquisition of share capital by new company) applies new shares are issued in exchange for old shares, references in this Part to the qualifying shares, so far as they relate to the old shares, shall be construed as references to the new shares.
 
  For this purpose "old shares" and "new shares" have the same meaning as in that paragraph.
 
 
Postponement of original gain
     76. - (1) On the making of a claim by the investing company for the purposes of this Part, so much of the investing company's unused qualifying expenditure on the qualifying shares as-
 
 
    (a) is specified in the claim, and
 
    (b) does not exceed so much of the original gain as is unmatched,
       shall be set against a corresponding amount of the original gain.
 
      (2) Where an amount of qualifying expenditure on the qualifying shares is set under this paragraph against the whole or part of the original gain, then for the purposes of corporation tax on chargeable gains-
 
 
    (a) so much of that gain as is equal to that amount shall be treated as not having accrued at the accrual time, but
 
    (b) paragraph 79 applies for determining the gain that is to be treated as accruing on the occurrence of any chargeable event in relation to any of the qualifying shares.
      (3) For the purposes of this Part-
 
 
    (a) the investing company's qualifying expenditure on the qualifying shares is the amount subscribed by it for the shares, and
 
    (b) that expenditure is unused to the extent that it has not already been set under this paragraph against the whole or any part of a chargeable gain.
      (4) For the purposes of this paragraph the original gain is unmatched in relation to any qualifying expenditure on the qualifying shares to the extent that it has not had any other expenditure set against it under this paragraph.
 
 
Meaning of "deferral relief"
     77. For the purposes of this Schedule "deferral relief" is attributable to any shares if-
 
 
    (a) expenditure on the shares has been set under paragraph 76 against the whole or part of any gain, and
 
    (b) there has been no chargeable event for the purposes of this Part in relation to the shares.
 
Chargeable events
     78. - (1) There is, for the purposes of this Part, a chargeable event in relation to any of the qualifying shares if-
 
 
    (a) the investing company disposes of those shares, or
 
    (b) any other event occurs by reason of which the investment relief attributable to those shares is reduced or withdrawn otherwise than by virtue of paragraph 46(2) or (3) (withdrawal of investment relief on disposal of shares).
      (2) For the purposes of sub-paragraph (1)(b), where the qualifying investment is made before the time at which the original gain accrues, any reduction of the investment relief attributable to the qualifying shares that is made by reason of an event that occurs before the accrual time shall be disregarded.
 
 
Gain accruing on chargeable event
     79. - (1) This paragraph applies where a chargeable event occurs in relation to any of the qualifying shares in relation to which there has not been a previous chargeable event.
 
      (2) Where this paragraph applies, then for the purposes of corporation tax on chargeable gains-
 
 
    (a) a chargeable gain shall be treated as accruing to the investing company at the time of the event, and
 
    (b) the amount of the gain shall be equal to so much of the deferred gain as is attributable to the shares in relation to which the chargeable event occurs.
      (3) In order to determine, for this purpose, the amount of the deferred gain attributable to any shares, a proportionate part of the amount of the gain shall be attributed to each of the qualifying shares held immediately before the occurrence of the chargeable event in question by the investing company.
 
      (4) In this paragraph "the deferred gain" means-
 
 
    (a) the amount of the original gain against which expenditure has been set under paragraph 76, less
 
    (b) the amount of any gain treated as accruing under this paragraph previously in consequence of a chargeable event in relation to any of the qualifying shares.
      (5) For the purposes of section 10 of the 1992 Act (taxation of chargeable gains accruing to non-resident with UK branch or agency) a chargeable gain treated as accruing by virtue of this paragraph shall be treated as a chargeable gain accruing on the disposal of an asset to which subsection (3) of that section applies.
 
  PART IX
  COMPANY RESTRUCTURING
 
Share reorganisations
     80. - (1) Where a company ("the company") holds shares which-
 
 
    (a) form part of the ordinary share capital of another company,
 
    (b) are of the same class and held in the same capacity, and
 
    (c) include shares falling within two or more of the categories in sub-paragraph (2),
       then, where there is a reorganisation affecting those shares to which section 116 or section 127 of the 1992 Act applies, section 116 or (as the case may be) section 127 shall apply separately to shares falling within each of those categories.
 
      (2) The categories referred to in sub-paragraph (1)(c) are-
 
 
    (a) shares to which deferral relief is attributable;
 
    (b) shares-
 
      (i) to which investment relief but not deferral relief is attributable, and
 
      (ii) which have been held continuously by the company since the time they were issued until the reorganisation; and
 
    (c) shares not within paragraph (a) or (b) above.
      (3) In this paragraph "reorganisation" has the meaning given in section 126 of the 1992 Act.
 
 
Rights issues etc.
     81. - (1) Where-
 
 
    (a) a company ("the company") holds shares ("the existing holding") which-
 
      (i) form part of the ordinary share capital of another company, and
 
      (ii) are of the same class and held in the same capacity,
 
    (b) there is by virtue of such an allotment as is mentioned in section 126(2)(a) of the 1992 Act (an allotment of shares or debentures in respect of and in proportion to an original holding), other than an allotment of corresponding bonus shares, a reorganisation affecting the existing holding,
 
    (c) immediately following the reorganisation, investment relief is attributable to the shares comprised in the existing holding or the shares allotted in respect of those shares, and
 
    (d) if investment relief is attributable to the shares comprised in the existing holding at that time, those shares have been held by the company continuously from the time they were issued until the reorganisation,
       sections 127 to 130 of that Act (treatment of share capital following a reorganisation) shall not apply in relation to the existing holding.
 
      (2) Subsection (10) of section 116 of that Act (reorganisations, conversions and reconstructions) shall not apply in any case where the old asset consists of shares held (in the same capacity) by a company-
 
 
    (a) that have been held by it continuously from the time they were issued until the relevant transaction, and
 
    (b) to which investment relief is attributable immediately before that transaction.
  In this sub-paragraph "old asset" and "the relevant transaction" have the meanings given in section 116 of that Act.
 
      (3) For the purposes of sub-paragraph (1)-
 
 
    "corresponding bonus shares" means bonus shares that-
 
      (a) are issued in respect of shares comprised in the existing holding, and
 
      (b) are of the same class, and carry the same rights, as those shares;
 
    "reorganisation" has the meaning given in section 126 of that Act.
 
Company reconstructions and amalgamations
     82. - (1) Where-
 
 
    (a) a company ("the company") holds shares ("the existing holding") in a company ("company A"),
 
    (b) there is a reconstruction or amalgamation affecting the existing holding,
 
    (c) immediately before the reconstruction or amalgamation, investment relief is attributable to the shares comprised in the existing holding, and
 
    (d) the shares comprised in the existing holding have been held by the company continuously from the time they were issued until the reconstruction or amalgamation,
       sections 135 and 136 of the 1992 Act (company reconstructions and amalgamations) shall not apply in respect of the existing holding.
 
  This is subject to paragraph 84 (no disposal on certain exchanges of shares).
 
      (2) Sub-paragraph (1)(a) applies only where the shares are held by the company in the same capacity.
 
      (3) For the purposes of sub-paragraph (1) a "reconstruction or amalgamation" means an issue by a company ("company B") of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A.
 
 
Certain exchanges resulting in acquisition of share capital by new company
     83. - (1) Paragraphs 84 and 85 apply where-
 
 
    (a) arrangements are made in accordance with which a company ("the new company") acquires all the shares ("old shares") in another company ("the old company");
 
    (b) the acquisition provided for by the arrangements falls within sub-paragraph (2); and
 
    (c) the Inland Revenue have, before any exchange of shares takes place under the arrangements, given an approval notification.
      (2) An acquisition of shares falls within this sub-paragraph if-
 
 
    (a) the consideration for the old shares consists wholly of the issue of shares ("new shares") in the new company;
 
    (b) new shares are issued in consideration of old shares only at times when there are no issued shares in the new company other than-
 
      (i) subscriber shares, and
 
      (ii) new shares previously issued in consideration of old shares;
 
    (c) the consideration for new shares of each description consists wholly of old shares of the corresponding description; and
 
    (d) new shares of each description are issued to the holders of old shares of the corresponding description in respect of, and in proportion to, their holdings.
      (3) For the purposes of sub-paragraph (1)(c) an approval notification is one which, on an application by either the old company or the new company, is given to the applicant company and states that the Inland Revenue are satisfied that the exchange of shares under the arrangements-
 
 
    (a) will be effected for commercial reasons, and
 
    (b) will not form part of any such scheme or arrangements as are mentioned in section 137(1) of the 1992 Act (schemes with tax avoidance purpose).
      (4) For the purposes of this paragraph old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
 
      (5) In this paragraph references to "shares", except in the expression "subscriber shares", include securities.
 
      (6) References in paragraphs 84 to 87 to "shares", "old shares", "new shares", "the old company" and "the new company" shall be construed in accordance with this paragraph.
 
 
No disposal on certain exchanges of shares
     84. - (1) Where this paragraph applies (see paragraph 83), nothing in paragraph 82 has effect to disapply section 135 of the 1992 Act (exchange of shares etc. for those in another company).
 
  Accordingly, by virtue of section 127 of that Act (as applied by section 135(3)), the exchange of shares is not treated as involving a disposal of the old shares or an acquisition of the new shares.
 
      (2) In its application by virtue of sub-paragraph (1), section 127 of the 1992 Act shall have effect subject to paragraph 80 (shares to which investment relief or investment and deferral relief is attributable treated as separate holdings).
 
 
Attribution of relief to new shares
     85. - (1) Where this paragraph applies (see paragraph 83), any investment relief or deferral relief which is attributable to any old shares shall be attributable instead to the new shares for which they are exchanged.
 
      (2) Where investment relief becomes so attributable to any new shares-
 
 
    (a) this Schedule shall have effect as if anything which under paragraph 41, 42, 60 or 65 has been done, or is required to be done, by or in relation to the old company had been done, or were required to be done, by or in relation to the new company; and
 
    (b) any appeal brought by the old company against-
 
      (i) the refusal of the Inland Revenue to authorise the issue of a compliance certificate, or
 
      (ii) a notice under paragraph 60(3)(b),
 
    may be prosecuted by the new company as if it had been brought by that company.
 
Substitution of new shares for old shares
     86. - (1) This paragraph applies where-
 
 
    (a) relief becomes attributable, by virtue of paragraph 85, to any new shares held by a company ("the company"), and
 
    (b) the old shares for which those shares were exchanged ("the relevant old shares") were-
 
      (i) subscribed for by and issued to the company, and
 
      (ii) held by it continuously from the time they were issued until the exchange.
      (2) Where this paragraph applies this Schedule shall have effect as if-
 
 
    (a) the matching new shares had been subscribed for by the company at the time when, and for the amount for which, the relevant old shares were subscribed for,
 
    (b) the matching new shares had-
 
      (i) been issued at the time when the relevant old shares were issued, and
 
      (ii) been held continuously by the company from that time until the exchange,
 
    (c) any claim for relief under Part V (investment relief), or Part VIII (deferral relief), of this Schedule made in respect of the relevant old shares had been made in respect of the matching new shares, and
 
    (d) the company's liability to corporation tax had been reduced under Part V of this Schedule in respect of the matching new shares for the same accounting period as that for which its liability was so reduced in respect of the relevant old shares.
      (3) For the purposes of this paragraph old shares and new shares are matching shares in relation to each other if the old shares are the shares for which those new shares are exchanged under the arrangements.
 
 
Operation of requirements of Parts II and III in relation to new shares
     87. - (1) This paragraph applies where paragraph 86 (substitution of new shares for old shares) applies in relation to any new shares held by a company.
 
      (2) If, immediately before the exchange, any of the requirements of paragraphs 5, 8 and 13 (requirements to be met by a qualifying investing company in relation to the relevant shares) was (or was deemed to be) met to any extent by the company in relation to the matching old shares, the requirement shall be deemed to be met by the company to the same extent in relation to the new shares.
 
      (3) If, immediately before the exchange, any of the requirements of paragraphs 16 to 22 (requirements to be met by a qualifying issuing company) was (or was deemed to be) met to any extent by the old company in relation to the matching old shares, it shall be deemed to be met to the same extent by the new company in relation to the new shares.
 
      (4) In determining whether the requirements of paragraphs 17 (the independence requirement) and 20 (the qualifying subsidiaries requirement) are met in relation to the old company or the new company at a time in the period for giving effect to the arrangements, both-
 
 
    (a) the arrangements themselves, and
 
    (b) any exchange of new shares for old shares that has already taken place under the arrangements,
       shall be disregarded.
 
      (5) If, immediately before the period for giving effect to the arrangements, the requirement of paragraph 23(1) (the trading activities requirement) was (or was deemed to be) met to any extent by the old company in relation to the matching old shares-
 
 
    (a) it shall be deemed to be met to the same extent by the new company in relation to the new shares, and
 
    (b) to the extent that it would not otherwise be the case, it shall also be deemed to be met by that company in relation to those shares at all times which-
 
      (i) fall in the period for giving effect to the arrangements, and
 
      (ii) do not fall after a time when (apart from the arrangements) the requirement would have ceased to have been met by the old company in relation to the matching old shares.
      (6) For the purposes of this paragraph-
 
 
    (a) "the period for giving effect to the arrangements" means the period which-
 
      (i) begins when those arrangements first come into existence; and
 
      (ii) ends when the new company completes its acquisition under the arrangements of all the old shares;
 
    and
 
    (b) references to matching shares shall be construed in accordance with paragraph 86(3).
 
Relationship between this Part and the 1992 Act
     88. The following provisions of the 1992 Act have effect subject to paragraphs 80, 81, 82 and 84 (which make special provision in respect of company reorganisations etc. involving shares to which investment relief is attributable)-
 
 
    section 116 (reorganisations, conversions and reconstructions); and
 
    Chapter II of Part IV (reorganisation of share capital, conversion of securities etc.).
  PART X
  ADVANCE CLEARANCE
 
Application for advance clearance notice
     89. - (1) A company ("the applicant") may, before issuing any shares, make an application to the Board for an advance clearance notice in respect of that issue.
 
      (2) An advance clearance notice is a notice issued by the Board in respect of an issue of shares which states that, on the basis of the particulars, declarations and undertakings provided by the applicant, the Board are satisfied that, at the time the shares are issued, the requirements of Parts III and IV of this Schedule will be met (or, in the case of any requirement that cannot be met until a future date, will be met for the time being) in relation to the shares.
 
      (3) For the purposes of determining whether they are satisfied as mentioned in sub-paragraph (2) the Inland Revenue shall assume that the shares included in the issue of shares are "the relevant shares".
 
      (4) An application under this paragraph must-
 
 
    (a) contain the particulars, declarations and undertakings required by the Board, and
 
    (b) disclose all facts and circumstances material for the decision of the Board.
      (5) In this Part references to an "application" are to an application under this paragraph.
 
 
Provision of further information
     90. - (1) On receiving an application for an advance clearance notice, the Board may by notice ("an information notice") require the applicant to provide them, within such time as the Board may direct (not being less than 30 days), with such further particulars as the Board deem necessary to enable them to decide whether or not to issue an advance clearance notice.
 
      (2) An information notice must be given-
 
 
    (a) within 30 days after the receipt of the application, or
 
    (b) if further particulars have already been provided in response to an earlier information notice, within 30 days after the receipt of those particulars.
      (3) If the applicant does not comply with an information notice within the period specified in the notice, the Board need not proceed further on the application.
 
 
Decision on application and review procedure
     91. - (1) The Board must within 30 days after receiving an application or, where an information notice is given in relation to the application, within 30 days after that notice being complied with-
 
 
    (a) issue an advance clearance notice in respect of the shares to which the application relates, or
 
    (b) notify the applicant that the Board are not satisfied as mentioned in paragraph 89(2) in respect of those shares.
  This is subject to sub-paragraph (3) and to paragraph 90(3) (circumstances in which Board need not proceed on application).
 
      (2) In a case where two or more information notices are given in relation to the application, the time limit in sub-paragraph (1) is calculated by reference to the time when the later (or last) of the notices is complied with.
 
      (3) If before the Board issue an advance clearance notice in respect of the issue of shares to which the application relates, or notify the applicant under sub-paragraph (1), the applicant issues the shares in question, the Board need not proceed further on the application.
 
      (4) If the Board-
 
 
    (a) notify the applicant that they are not satisfied as mentioned in paragraph 89(2), or
 
    (b) in a case to which sub-paragraph (3) does not apply, fail to notify their decision to the applicant in accordance with sub-paragraph (1),
       the applicant may, within 30 days after the notification or failure, require the Board to transmit the application, together with any information notices given and further particulars provided under paragraph 90, to the Special Commissioners.
 
      (5) Where sub-paragraph (4) applies any notification by the Special Commissioners that they are satisfied as mentioned in paragraph 89(2) shall have effect as if it were an advance clearance notice issued by the Board in respect of the issue of shares in question.
 
 
Effect of advance clearance notice
     92. - (1) For the purposes of this Schedule, where an advance clearance notice is issued in respect of an issue of shares before the shares are issued, the requirements of Parts III and IV of this Schedule shall be treated as met (or, in the case of any requirement that cannot be met until a future date, as met for the time being) in relation to those shares at the time they are issued.
 
      (2) If-
 
 
    (a) any particulars provided in the application for the notice, or in response to any information notice relating to the application, do not fully and accurately disclose all facts and circumstances material for the decision of the Board or the Special Commissioners, or
 
    (b) the applicant or any of its subsidiaries fails to act in accordance with any declaration or undertaking which was given in, or in connection with, the application,
       any resulting advance clearance notice shall be void.
 
      (3) Sub-paragraph (2)(b) applies in relation to a subsidiary of the applicant whether or not it was such a subsidiary at the time the declaration or undertaking in question was given.
 
  PART XI
  SUPPLEMENTARY AND GENERAL
 
Identification of shares on a disposal
     93. - (1) In any case where-
 
 
    (a) a company ("the company") disposes of part of a holding of shares ("the holding"), and
 
    (b) the holding includes shares to which investment relief is attributable that have been held continuously by the company from the time they were issued until the disposal,
       this paragraph applies for the purpose of identifying the shares disposed of.
 
      (2) For the purposes of this paragraph "holding" means any number of shares of the same class in another company held by the company in the same capacity, growing or diminishing as shares of that class are acquired or disposed of.
 
      (3) Where shares included in the holding have been acquired by the company on different days, then, for the purposes of corporation tax on chargeable gains and of this Schedule, any disposal by the company of any of those shares shall be treated as relating to those acquired on an earlier day rather than to those acquired on a later day.
 
      (4) Where shares included in the holding have been acquired by the company on the same day, then, for the purposes of corporation tax on chargeable gains and of this Schedule, if there is a disposal by the company of any of those shares, any shares-
 
 
    (a) to which investment relief is attributable, and
 
    (b) which have been held by the company continuously from the time they were issued until the time of disposal,
       shall be treated as disposed of after any other shares included in the holding which were acquired by the company on that day.
 
      (5) Chapter I of Part IV of the 1992 Act (share pooling, etc.) shall have effect subject to this paragraph.
 
      (6) Sections 104 to 106 and 107 of that Act (which make provision for the purposes of corporation tax on chargeable gains for the identification of shares on a disposal) shall not apply to shares to which investment relief is attributable.
 
      (7) In a case to which section 127 of that Act (equation of original shares and new holding) applies (whether or not by virtue of section 135(3) of that Act), 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.
 
  In this sub-paragraph "new holding" and "original shares" shall be construed in accordance with sections 126, 127, 135 and 136 of that Act.
 
 
Determination of loss where investment relief is attributable to shares
     94. - (1) This paragraph applies for the purposes of corporation tax on chargeable gains where-
 
 
    (a) a company disposes of shares which were held by it continuously from the time they were issued until the disposal,
 
    (b) investment relief is attributable to the shares (and not withdrawn in full as a result of the disposal), and
 
    (c) apart from sub-paragraph (2), there would be a loss on the disposal.
      (2) For the purpose of determining the gain or loss on the disposal the consideration given by the company for the shares is treated as reduced by the amount of the investment relief attributable to the shares immediately after the disposal.
 
      (3) Any gain which accrues by virtue of sub-paragraph (2) is not a chargeable gain.
 
      (4) Notwithstanding the definition of "allowable loss" in section 834(1) of the Taxes Act 1988 (interpretation of the Corporation Tax Acts), nothing in sub-paragraph (3) has effect in relation to any loss determined in accordance with sub-paragraph (2) to prevent it being an allowable loss.
 
 
Nominees
     95. Shares subscribed for by, issued to, acquired or held by or disposed of by a nominee for any person shall be treated for the purposes of this Schedule as subscribed for by, issued to, acquired or held by or disposed of by that person.
 
 
Meaning of "disposal"
     96. - (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) A company shall be treated for the purposes of this Schedule, and for the purposes of corporation tax on chargeable gains, as disposing of any shares which but for paragraph 82 (company reconstructions and amalgamations) it-
 
 
    (a) would be treated as exchanging for other shares by virtue of section 136(1) of the 1992 Act, or
 
    (b) would be so treated but for section 137(1) of the 1992 Act (which restricts sections 135 and 136 of that Act to bona fide reconstructions and amalgamations).
 
Construction of references to shares being "held continuously"
     97. - (1) This paragraph applies where for the purposes of this Schedule it falls to be determined whether a company has held shares continuously throughout any period.
 
      (2) The company shall not be treated as having held shares continuously throughout a period if-
 
 
    (a) it is deemed, under any provision of the 1992 Act, to have disposed of and immediately reacquired the shares at any time during the period, or
 
    (b) it is treated as having disposed of the shares at any such time, by virtue of paragraph 96(2) (on reconstruction or amalgamation company treated as disposing of shares continuously held by it to which investment relief is attributable).
 
Meaning of "issue of shares"
     98. In this Schedule-
 
 
    (a) references (however expressed) to an issue of shares in any company are to such of the shares in the company as are of the same class and issued on the same day; and
 
    (b) references (however expressed) to an issue of shares in a company to a person are references to such of the shares in an issue of shares in that company as are issued to that person in one capacity.
 
Meaning of "associate"
     99. - (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 IA of Part XV of the Taxes Act 1988 (see section 660G(1) and (2)).
 
 
"The Board" and "the Inland Revenue"
     100. In this Schedule-
 
 
    (a) "the Board" means the Commissioners of Inland Revenue; and
 
    (b) references to "the Inland Revenue" are to any officer of the Board.
 
Power to amend by Treasury order
     101. The Treasury may by order amend this Schedule-
 
 
    (a) to make such amendments of-
 
      (i) paragraphs 10 to 12 (the non-financial activities requirement), or
 
      (ii) paragraphs 23 to 33 (the trading activities requirement),
 
    as they consider expedient;
 
    (b) to substitute different sums of money for those for the time being specified in paragraph 22 (gross assets requirement).
 
Minor definitions etc.
     102. - (1) In this Schedule-
 
 
    "allowable loss" means an allowable loss for the purposes of corporation tax on chargeable gains;
 
    "arrangements" includes any scheme, agreement or understanding, whether or not legally enforceable;
 
    "chargeable gain" means a chargeable gain for the purposes of corporation tax on chargeable gains;
 
    "class", in relation to shares or securities, means a class of shares in or securities of any one company (see sub-paragraph (2));
 
    "director" shall be construed in accordance with section 417(5) of the Taxes Act 1988;
 
    "group" means a parent company and its 51% subsidiaries;
 
    "group company", in relation to a group, means the parent company and any of its 51% subsidiaries;
 
    "ordinary share capital", except in paragraph 7 (meaning of "material interest"), has the meaning given in section 832(1) of the Taxes Act 1988;
 
    "ordinary shares" means shares forming part of a company's ordinary share capital;
 
    "parent company" means a company that-
 
      (a) has one or more 51% subsidiaries, but
 
      (b) is not itself a 51% subsidiary of another company;
 
    "research and development" has the meaning given by section 837A of the Taxes Act 1988;
 
    "single company" means a company that is not a parent company or a 51% subsidiary of a parent company;
 
    "the 1992 Act" means the Taxation of Chargeable Gains Act 1992.
      (2) For the purposes of this Schedule shares in or securities of 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) References in this Schedule to a company being in administration or receivership shall be construed as follows-
 
 
    (a) references to a company being "in administration" are to there being in force in relation to it-
 
      (i) an administration order under Part II of the Insolvency Act 1986 or Part III of the Insolvency (Northern Ireland) Order 1989, or
 
      (ii) any corresponding order under the law of a country or territory outside the United Kingdom;
 
    (b) references to a company being "in receivership" are to there being in force in relation to it-
 
      (i) an order for the appointment of an administrative receiver, a receiver and manager or a receiver under Chapter I or II of Part III of the Insolvency Act 1986 or Part IV of the Insolvency (Northern Ireland) Order 1989, or
 
      (ii) any corresponding order under the law of a country or territory outside the United Kingdom.
      (5) 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.
 
      (6) In this Schedule-
 
 
    (a) references to investment relief obtained by a company in respect of any shares include references to investment relief obtained by it in respect of those shares at any time after it has disposed of them, and
 
    (b) references to the withdrawal or reduction of investment relief obtained by a company in respect of any shares include references to the withdrawal or reduction of investment relief obtained in respect of those shares at any such time.
      (7) In the case of a requirement that cannot be met until a future date-
 
 
    (a) references in this Schedule to a requirement being met for the time being are to nothing having occurred to prevent its being met, and
 
    (b) references to its continuing to be met are to nothing occurring to prevent its being met.
 
Index of defined expressions
     103. In this Schedule the following expressions are defined or otherwise explained by the provisions indicated:
 
 
 
in administration
 
paragraph 102(4)(a)
 
allowable loss
 
paragraph 102(1)
 
application (in Part X)
 
paragraph 89(5)
 
arrangements
 
paragraph 102(1)
 
associate
 
paragraph 99
 
the Board
 
paragraph 100
 
chargeable gain
 
paragraph 102(1)
 
class (of shares)
 
paragraph 102(1) and (2)
 
compliance certificate
 
paragraph 41
 
compliance statement
 
paragraph 42
 
connected person
 
paragraph 102(3)
 
deferral relief
 
paragraph 77
 
director
 
paragraph 102(1)
 
disposal
 
paragraph 96
 
excluded activities
 
paragraph 26
 
group
 
paragraph 102(1)
 
group company
 
paragraph 102(1)
 
held continuously (in relation to shares)
 
paragraph 97
 
the Inland Revenue
 
paragraph 100
 
the investing company
 
paragraph 2
 
investment relief
 
paragraph 1
 
issue of shares
 
paragraph 98
 
the issuing company
 
paragraph 2
 
loss relief
 
paragraph 67(1)
 
market value
 
paragraph 102(5)
 
material interest
 
paragraph 7
 
new company (in paragraphs 83 to 87)
 
paragraph 83
 
new shares (in paragraphs 83 to 87)
 
paragraph 83
 
non-financial trade
 
paragraph 11
 
non-financial trading group
 
paragraph 12
 
old company (in paragraphs 83 to 87)
 
paragraph 83
 
old shares (in paragraphs 83 to 87)
 
paragraph 83
 
ordinary share capital
 
paragraphs 7 and 102(1)
 
ordinary shares
 
paragraph 102(1)
 
parent company
 
paragraph 102(1)
 
the period of restriction
 
paragraph 48
 
the qualification period
 
paragraph 3
 
the qualifying shares (in Part VIII)
 
paragraph 75
 
qualifying subsidiary
 
paragraph 21
 
qualifying trade
 
paragraph 25
 
in receivership
 
paragraph 102(4)(b)
 
relevant preference shares
 
paragraph 9
 
the relevant shares
 
paragraph 2
 
relief attributable to shares
 
 
investment relief
 
paragraph 45
 
deferral relief
 
paragraph 77
 
research and development
 
paragraph 102(1)
 
single company
 
paragraph 102(1)
 
the 1992 Act
 
paragraph 102(1)
 
trading activities requirement
 
paragraph 23(2) and (3)
 
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