Law

Finance Act 1989

United Kingdom · statute

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Open at the publisher →

In force since 2026-03-18, as the publisher states.

Copy read on 2026-11-08. The page it was read from

Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.

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Contents: 215 provisions
  1. Title and introductory text
  2. 1 Rates.
  3. 2 Reliefs.
  4. 3 Original gravity of beer.
  5. 4 Blending made-wines etc.
  6. 5 Description as beer.
  7. 6 Rates.
  8. 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  9. 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  10. 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  11. 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  12. 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  13. 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  14. 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15. 14 Dishonoured cheques.
  16. 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  17. 16 Time limits for proceedings.
  18. 17 Disbursements in Port of London.
  19. 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  20. 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  21. 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  22. 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  23. 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  24. 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  25. 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  26. 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  27. 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  28. 27 Relief from car tax where vehicle leased to the handicapped.
  29. 28 Reliefs from duties and taxes for persons enjoying certain immunities and privileges.
  30. 29 Recovery of overpaid excise duty and car tax.
  31. 33 Married couples.
  32. 34 Charge and rate of corporation tax for financial year 1989.
  33. 35 Corporation tax: small companies.
  34. 36 Schedule E: revised Cases.
  35. 37 Schedule E: assessment on receipts basis.
  36. 38 Schedule E: unpaid emoluments.
  37. 39 Schedule E: unremitted emoluments.
  38. 40 Schedule E: emoluments already paid.
  39. 41 Schedule E: pensions etc.
  40. 42 Schedule E: supplementary.
  41. 43 Schedule D: computation
  42. 44 Companies with investment business and insurance companies: computation
  43. 45 PAYE: meaning of payment.
  44. 46 Relief for interest.
  45. 47 Close company loans: business expansion scheme.
  46. 48 Close company loans: material interest.
  47. 49 Car benefits.
  48. 50 Security assets and services.
  49. 51 Assets used partly for security.
  50. 52 Security: supplementary.
  51. 53 Employees earning £8,500 or more and directors.
  52. 54 Relief.
  53. 55 Eligible contracts.
  54. 56 Certification of contracts.
  55. 57 Medical insurance: supplementary.
  56. 58 Payroll deduction scheme.
  57. 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  58. 60 British Museum and Natural History Museum.
  59. 61 Profit-related pay.
  60. 62 Savings-related share option schemes.
  61. 63 Profit sharing schemes.
  62. 64 Share option and profit sharing schemes: shares of consortium member.
  63. 65 Employee share schemes: material interest.
  64. 66 Priority share allocations for employees etc.
  65. 67 Tax relief.
  66. 68 Principal charges to tax.
  67. 69 Chargeable events.
  68. 70 Chargeable amounts.
  69. 71 Further charges to tax: borrowing.
  70. 72 Limit on chargeable amount.
  71. 73 Information.
  72. 74 Interpretation.
  73. 78 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  74. 80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  75. 81 Offshore funds operating equalisation arrangements.
  76. 82 Calculation of profits: bonuses etc
  77. 82A Calculation of profits: policy holders' tax
  78. 82B Unappropriated surplus on valuation
  79. 82C Relevant financial reinsurance contracts
  80. 82D Treatment of profits: life assurance — adjustment consequent on change in Insurance Prudential Sourcebook
  81. 82E Section 82D: treatment of transferors under insurance business transfer schemes
  82. 82F Section 82D: treatment of transferees under insurance business transfer schemes
  83. 83 Receipts to be taken into account.
  84. 83XA Structural assets
  85. 83YA Changes in value of assets brought into account: non-profit companies
  86. 83YB Meaning of “appropriate line 51 amount” for purposes of s.83YA
  87. 83YC FAFTS: charge in relevant period of account
  88. 83YD FAFTS: deduction in subsequent periods of account
  89. 83YE Regulations: apportionment and redefining “financial reinsurance arrangement”
  90. 83YF Financial reinsurance arrangements: further provision
  91. 83ZA Contingent loans
  92. 83A Meaning of “brought into account”.
  93. 83B Changes in recognised accounts: attribution of amounts carried forward under s.432F of Taxes Act 1988
  94. 83AA Amounts added to long term insurance fund of a company in excess of that company’s loss.
  95. 83AB Treatment of surplus where there is a subsequent transfer of business from the company etc.
  96. 84 Interpretation of sections 85 to 89 and further provisions about insurance companies.
  97. 85 Charge of certain receipts of basic life assurance business.
  98. 85A Excess adjusted life assurance trade profits
  99. 86 Spreading of relief for acquisition expenses.
  100. 87 Management expenses.
  101. 88 Corporation tax: policy holders’ share of profits.
  102. 88A Lower corporation tax rate on certain insurance company profits.
  103. 89 Policy holders’ share of profits.
  104. 89A Modification of sections 82 to 83A, 88 and 89 in relation to overseas life insurance companies.
  105. 90 Life policies etc. held by companies.
  106. 90A Interpretation
  107. 91 Premiums trust funds: stock lending.
  108. 92 Regulations about underwriters etc.
  109. 93 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  110. 94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  111. 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  112. 96 Securities: miscellaneous.
  113. 97 Set-off of ACT where companies remain in the same group.
  114. 98 Restriction on set-off of ACT.
  115. 99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  116. 100 Change in ownership of company.
  117. 101 Treatment of convertible shares or securities for purposes relating togroup relief etc.
  118. 102 Surrender of company tax refund etc. within group.
  119. 103 Repeal of apportionment provisions.
  120. 104 Meaning of “close company”.
  121. 105 Small companies’ rate not available to certain close companies.
  122. 106 Restriction on payment of tax credits.
  123. 107 Close companies: consequential amendments.
  124. 108 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  125. 109 Settlements where settlor retains interest in settled property.
  126. 110 Residence of trustees.
  127. 111 Residence of personal representatives.
  128. 112 Security: trades etc.
  129. 113 Security: trades etc. (supplementary).
  130. 114 Relief for pre-trading expenditure.
  131. 115 Double taxation: tax credits.
  132. 116 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  133. 117–120 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  134. 121 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  135. 122 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  136. 123 Increase of chattel exemption.
  137. 124 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  138. 125 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  139. 126 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  140. 127 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  141. 128 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  142. 129 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  143. 130 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  144. 131 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  145. 132 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  146. 133 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  147. 134 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  148. 135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  149. 136 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  150. 137 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  151. 138 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  152. 139 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  153. 140 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  154. 141 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  155. 142 Power to call for documents and information.
  156. 143 Power to call for papers of tax accountant.
  157. 144 Restrictions on powers under TMA ss.20 and 20A.
  158. 145 Falsification etc. of documents.
  159. 146 Entry with warrant to obtain documents.
  160. 147 Procedure where documents etc. are removed.
  161. 148 Interpretation.
  162. 149 Assessments founded on fraudulent or negligent conduct.
  163. 150 Further assessments: claims etc.
  164. 151 Assessment of trustees etc.
  165. 152 Distress for non-payment of tax.
  166. 153 Priority in cases of distraint by others.
  167. 154 Recovery of tax from debtor in Scotland.
  168. 155 Priority in cases of poinding etc. by others in Scotland.
  169. 156 Interest on overdue tax.
  170. 157 Effect of certain claims on interest.
  171. 158 Small amounts of interest.
  172. 159 Interest on tax in case of failure or error.
  173. 160 Determinations under TMA s. 88.
  174. 161 Tax carrying interest under TMA ss. 86 and 88.
  175. 162 Failure to make return.
  176. 163 Incorrect return, accounts etc.
  177. 164 Special returns, information etc.
  178. 165 Special penalties in the case of certain returns.
  179. 166 Assisting in preparation of incorrect return etc.
  180. 167 Determination of penalties.
  181. 168 Amendments consequential on section 167.
  182. 169 Time limits.
  183. 170 Up-rating of certain penalties.
  184. 171 Gifts to housing associations.
  185. 172 Abatement of exemption where claim settled out of beneficiary’s ownresources.
  186. 173 Insurance: abolition of certain duties.
  187. 174 Unit trusts.
  188. 175 Stamp duty: stock exchange nominees
  189. 176 Stamp duty reserve tax: stock exchange nominees
  190. 177 Stamp duty reserve tax: information.
  191. 178 Setting of rates of interest.
  192. 179 Provisions consequential on section 178.
  193. 180 Repayment interest: period of accrual.
  194. 181 Broadcasting: additional payments by programme contractors.
  195. 182 Disclosure of information.
  196. 182A Double taxation: disclosure of information.
  197. 183 Government securities: redemption and transfer.
  198. 184 National savings accounts.
  199. 185 Winding up of Redemption Annuities Account.
  200. 186 Interpretation etc.
  201. 187 Repeals.
  202. 188 Short title.
  203. SCHEDULE 1 Vehicles Excise Duty: Rates
  204. SCHEDULE 2 Vehicles Excise Duty: Special Machines
  205. SCHEDULE 3
  206. SCHEDULE 4
  207. SCHEDULE 5 Employee Share Ownership Trusts
  208. SCHEDULE 10
  209. SCHEDULE 11
  210. SCHEDULE 12 Close Companies
  211. SCHEDULE 13 Capital Allowances: Miscellaneous Amendments
  212. SCHEDULE 14
  213. SCHEDULE 15
  214. SCHEDULE 16 Broadcasting: Additional Payments by Programme Contractors
  215. SCHEDULE 17 Repeals

Proposed changes to this act

No one has proposed a change to this act yet.

215 provisions

82E Section 82D: treatment of transferors under insurance business transfer schemes

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82F Section 82D: treatment of transferees under insurance business transfer schemes

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83 Receipts to be taken into account.

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83XA Structural assets

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83YA Changes in value of assets brought into account: non-profit companies

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83YB Meaning of “appropriate line 51 amount” for purposes of s.83YA

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83YC FAFTS: charge in relevant period of account

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83YD FAFTS: deduction in subsequent periods of account

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83YE Regulations: apportionment and redefining “financial reinsurance arrangement”

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83YF Financial reinsurance arrangements: further provision

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83ZA Contingent loans

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83A Meaning of “brought into account”.

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83B Changes in recognised accounts: attribution of amounts carried forward under s.432F of Taxes Act 1988

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83AA Amounts added to long term insurance fund of a company in excess of that company’s loss.

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83AB Treatment of surplus where there is a subsequent transfer of business from the company etc.

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84 Interpretation of sections 85 to 89 and further provisions about insurance companies.

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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85 Charge of certain receipts of basic life assurance business.

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85A Excess adjusted life assurance trade profits

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86 Spreading of relief for acquisition expenses.

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87 Management expenses.

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88 Corporation tax: policy holders’ share of profits.

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88A Lower corporation tax rate on certain insurance company profits.

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89 Policy holders’ share of profits.

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89A Modification of sections 82 to 83A, 88 and 89 in relation to overseas life insurance companies.

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90 Life policies etc. held by companies.

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90A Interpretation

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91 Premiums trust funds: stock lending.

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92 Regulations about underwriters etc.

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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93 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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96 Securities: miscellaneous.

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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97 Set-off of ACT where companies remain in the same group.

(1) In section 240 of the Taxes Act 1988 (set-off of company’s ACT against subsidiary’s liability to corporation tax) at the end of subsection (5)(set-off not to be made against subsidiary’s liability to corporation tax for any accounting period in which, or in any part of which, it was not a subsidiary of the surrendering company) there shall be added the words “unless throughout that period or part both companies were subsidiaries of a third company”. (2) This section shall have effect in relation to accounting periods ending on or after 14th March 1989.

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98 Restriction on set-off of ACT.

(1) After section 245 of the Taxes Act 1988 there shall be inserted— Restriction on application of section 240 in certain circumstances. 245A (1) This section applies if— (a) there is a change in the ownership of a company (“the relevant company”); (b) by virtue of section 240 the relevant company is treated as having paid an amount of advance corporation tax in respect of a distribution made by it at any time before the change; and (c) within the period of six years beginning three years before the change, there is a major change in the nature or conduct of a trade or business of the company which is for the purposes of section 240 the surrendering company in relation to that amount. (2) No advance corporation tax which the relevant company is treated by virtue of section 240 as having paid in respect of a distribution made by it in anaccounting period beginning before the change of ownership shall be treatedunder section 239(4) as paid by it in respect of distributions made in an accounting period ending after the change of ownership; and this subsection shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods. (3) Subsections (4) and (5) of section 245 shall apply also for the purposes of this section and as if the reference in subsection (4) of section 245 to the period of three years mentioned in subsection (1)(a) of that section were a reference to the period mentioned in subsection (1)(c) above. (4) Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax. Restriction on set-off where asset transferred after change in ownership of company. 245B (1) Subsection (4) below applies if— (a) there is a change in the ownership of a company (“the relevant company”); (b) any advance corporation tax paid by the relevant company in respect of distributions made by it in an accounting period beginning before the change is treated under section 239(4) as paid by it in respect of distributions made by it in an accounting period ending after the change; (c) after the change the relevant company acquires an asset from another company in such circumstances that section 273(1) of the Taxes Act 1970applies to the acquisition; and (d) a chargeable gain accrues to the relevant company on the disposal of the asset within the period of three years beginning with the change of ownership. (2) Subsection (1)(b) above shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods. (3) For the purposes of subsection (1)(d) above an asset acquired by the relevant company as mentioned in subsection (1)(c) above shall be treated as the same as an asset owned at a later time by that company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion. (4) In relation to the accounting period in which the chargeable gain accrues to the relevant company (“the relevant period”), section 239 shall have effect as if the limit imposed by subsection (2) of that section on the amount of advance corporation tax to be set against the relevant company’s liability to corporation tax were reduced by whichever is the lesser of— (a) the amount of advance corporation tax that would have been payable (apart from section 241) in respect of a distribution made at the end of the relevant period of an amount which, together with the advance corporation tax so payable in respect of it, is equal to the chargeable gain, and (b) the amount of surplus advance corporation tax in relation to the accounting period which by virtue of subsection (2) above is treated for the purposes of subsection (1)(b) above as ending with the change of ownership. (5) Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax. (2) This section shall have effect where the change in the ownership of the relevant company occurs on or after 14th March 1989.

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99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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100 Change in ownership of company.

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101 Treatment of convertible shares or securities for purposes relating togroup relief etc.

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102 Surrender of company tax refund etc. within group.

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103 Repeal of apportionment provisions.

(1) Except as provided by subsection (2) below, Chapter III of Part XI of theTaxes Act 1988 (apportionment of undistributed income etc. of close companies)shall not have effect in relation to accounting periods beginning after 31stMarch 1989. (2) Section 427(4) of the Taxes Act 1988 (which gives relief to an individualwhere income apportioned to him in an earlier accounting period of a closecompany is included in a distribution received by him in a later accountingperiod), and section 427(5) of, and Part I of Schedule 19 to, that Act so faras they relate to section 427(4), shall continue to have effect in any casewhere the subsequent distribution referred to in section 427(4) is made before1st April 1992.

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104 Meaning of “close company”.

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