97A Value of benefit conferred by capital payment made by way of loan
(1) For the purposes of section 97(4), the value of the benefit conferred on a person (P) by a capital payment made by way of loan to P is, for each tax year in which the loan is outstanding, the amount (if any) by which—
(a) the amount of interest that would have been payable in that year on the loan if interest had been payable on the loan at the official rate, exceeds
(b) the amount of interest (if any) actually paid by P in that year on the loan.
(2) In this section and section 97B the “official rate”, in relation to interest, means the rate applicable from time to time under section 178 of the Finance Act 1989 for the purposes of Chapter 7 of Part 3 of ITEPA 2003.
97B Value of benefit conferred by capital payment made by way of making movable property available
(1) For the purposes of section 97(4), the value of the benefit conferred by a capital payment consisting of making movable property available, without any transfer of the property in it, to a person (P) is, for each tax year in which the benefit is conferred on P—
( CC × R × D Y ) − T
where—
CC is the capital cost of the movable property on the date when the property is first made available to P in the tax year,
D is the number of days in the tax year on which the property is made available to P (the relevant period),
R is the official rate of interest for the relevant period (but see subsection (3)),
T is the total of the amounts (if any) paid in the tax year by P—
to the person conferring the benefit, in respect of the availability of the movable property, or
so far as not within paragraph (a), in respect of the repair, insurance, maintenance or storage of the movable property, and
Y is the number of days in the tax year.
(2) In subsection (1), in the meaning of CC, the “capital cost” of movable property means an amount equal to the total of—
(a) the amount which is the greater of—
(i) the amount or value of the consideration given for the acquisition of the movable property by, or on behalf of, the person (A) conferring the benefit, and
(ii) its market value at the time of that acquisition, and
(b) the amount of any expenditure wholly and exclusively incurred by, or on behalf of, A for the purpose of enhancing the value of the movable property.
(3) If the official rate of interest changes during the relevant period, then in subsection (1) R is the average official rate of interest for the period calculated as follows.
Step 1 Multiply each official rate of interest in force during the relevant period by the number of days when it is in force.
Step 2 Add together the products found in Step 1.
Step 3 Divide the total found in Step 2 by the number of days in the relevant period.
(4) In subsections (1) and (2), “movable property” means any tangible movable property other than money.
97C Value of benefit conferred by capital payment made by way of making land available
(1) For the purposes of section 97(4), the value of the benefit conferred by a capital payment consisting of making land available for the use of a person (P) is, for each tax year in which the benefit is conferred on P, the amount by which—
(a) the rental value of the land for the period of the tax year during which the land is made available to P, exceeds
(b) the total of the amounts (if any) paid in the tax year by P—
(i) to the person conferring the benefit, in respect of the availability of the land, or
(ii) so far as not within sub-paragraph (i), in respect of costs of repair, insurance or maintenance relating to the land.
(2) Subsection (1) does not apply in the case where the person conferring the benefit transfers the whole of the person's interest in the land to P.
(3) In subsection (1) “the rental value” of the land for a period means the rent which would have been payable for the period if the land had been let to P at an annual rent equal to the annual value.
(4) For the purposes of subsection (3) “the annual value” of land is the rent that might reasonably be expected to be obtained on a letting from year to year if—
(a) the tenant undertook to pay all taxes, rates and charges usually paid by a tenant, and
(b) the landlord undertook to bear the costs of the repairs and insurance and the other expenses (if any) necessary for maintaining the property in a state to command that rent.
(5) For the purposes of subsection (4) that rent—
(a) is to be taken to be the amount that might reasonably be expected to be so obtained in respect of a letting of the land, and
(b) is to be calculated on the basis that the only amounts that may be deducted in respect of services provided by the landlord are amounts in respect of the costs to the landlord of providing any relevant services.
(6) In subsection (5) “relevant service” means a service other than the repair, insurance or maintenance of the property.
98 Power to obtain information for purposes of sections 87 to 90.
(1) The Board may by notice require any person to furnish them within such time as they may direct, not being less than 28 days, with such particulars as they think necessary for the purposes of sections 87 to 90.
(2) Sections 748(3) to (5), 749 and 750 of ITA 2007 shall have effect in relation to subsection (1) above as they have effect in relation to section 748(1) and (2) of that Act, but in their application by virtue of this subsection—
(a) references to Chapter 2 of Part 13 of that Act shall be construed as references to sections 87 to 90; ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) The provisions of subsections (1) and (2) above have effect as if the references to sections 87 to 90 included references to Schedule 4C.
(1) This Act shall apply in relation to any unit trust scheme as if—
(a) the scheme were a company,
(b) the rights of the unit holders were shares in the company, and
(c) in the case of an authorised unit trust, the company were resident ... in the United Kingdom,
except that nothing in this section shall be taken to bring a unit trust scheme within the charge to corporation tax on chargeable gains.
(1A) Subsection (1) does not apply to an offshore fund that is a transparent fund within the meaning given by regulation 11 of the Offshore Funds (Tax) Regulations 2009 (see instead section 103D).
(2) Subject to subsection (3) and sections 99A and 151W(a) below, in this Act—
(a) “unit trust scheme” has the meaning given by section 237(1) of the Financial Services and Markets Act 2000,
(aa) “unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme;
(b) “authorised unit trust” means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that period.
(3) The Treasury may by regulations provide that any scheme of a description specified in the regulations shall be treated as not being a unit trust scheme for the purposes of this Act; and regulations under this section may contain such supplementary and transitional provisions as appear to the Treasury to be necessary or expedient.
(1) In this section an “umbrella scheme” means a relevant collective investment scheme—
(a) which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them, and
(b) under which the participants are entitled to exchange rights in one pool for rights in another,
and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.
(2) For the purposes of this Act (except subsection (1) and section 103C)—
(a) each of the parts of an umbrella scheme shall itself be regarded as a collective investment scheme of the same form as the umbrella scheme as a whole, and
(b) the umbrella scheme as a whole shall not be regarded as a collective investment scheme of that form or as any other form of collective investment scheme,
and the participants in the umbrella scheme are to be treated accordingly.
(2A) Subsection (2)—
(a) does not prevent gains or losses accruing to an umbrella scheme which is a unit trust scheme (other than an authorised unit trust) being regarded as gains or losses accruing to the umbrella scheme as a whole, and
(b) does not apply for the purposes of section 100(2).
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Nothing in subsection (2) shall prevent—
(a) gains accruing to an umbrella scheme being regarded as gains accruing to an authorised unit trust for the purposes of section 100(1) (exemption for authorised unit trusts etc);
(b) a transfer of business to an umbrella scheme being regarded as a transfer to a unit trust scheme for the purposes of section 139(4) (exclusion of transfers to authorised unit trusts etc);
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) For the purposes of subsection (1), “arrangements” includes arrangements provided in a company’s instrument of incorporation.
(6) In this section, “relevant collective investment scheme” means a collective investment scheme which is—
(a) an authorised contractual scheme which is a co-ownership scheme,
(aa) a Reserved Investor Fund (Contractual Scheme),
(b) a unit trust scheme, or
(c) an offshore fund.
99B Calculation of the disposal cost of accumulation units
(1) For the purposes of computing the gain accruing on a disposal by a unit holder of units in a unit trust scheme and for the purposes of all other provisions of this Act, an amount shall be treated as expenditure falling within section 38(1)(b) if—
(a) it represents income from the investments subject to the unit trust scheme,
(b) it has been reinvested in respect of the units on behalf of the unit holder (without an issue of new units), and
(c) it is either—
(i) charged to income tax as income of the unit holder (or would be charged to income tax as his income but for a relief which has effect in respect of it) for the purposes of the Income Tax Acts, or
(ii) taken into account as a receipt in calculating profits, gains or losses of the unit holder for the purposes of the Income Tax Acts.
(2) Where an amount is treated as expenditure by virtue of subsection (1), the expenditure shall be treated for the purposes of this Act as having been incurred—
(a) in relation to an authorised unit trust, on the distribution date for the distribution period in respect of which the amount is reinvested, and
(b) in relation to any other unit trust scheme, on the date on which the amount is reinvested.
(3) In subsection (2)(a) “distribution date” and “distribution period” shall have the meaning given by regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 15 of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964)).
(4) Subsection (1) does not apply to disposals in units of an offshore fund that is a transparent fund within the meaning given by regulation 11 of the Offshore Funds (Tax) Regulations 2009 (see instead section 103D).
101 Transfer of company’s assets to investment trust.
(1) Where section 139 has applied on the transfer of a company’s business (in whole or in part) to a company which at the time of the transfer was not an investment trust, then if—
(a) at any time after the transfer the company becomes for an accounting period an investment trust, and
(b) at the beginning of that accounting period the company still owns any of the assets of the business transferred,
the company shall be treated for all the purposes of this Act as if immediately after the transfer it had sold, and immediately reacquired, the assets referred to in paragraph (b) above at their market value at that time.
(1A) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the end of the last accounting period to end before the beginning of the accounting period mentioned in that subsection.
(1B) This section does not apply if at the time at which the company becomes an investment trust there has been an event by virtue of which it falls by virtue of section 101B(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above.
(2) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of subsection (1) above may be made at any time within 6 years after the end of the accounting period referred to in subsection (1) above, and where under this section a company is to be treated as having disposed of, and reacquired, an asset of a business, all such recomputations of liability in respect of other disposals and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.
(1) This section applies where—
(a) an asset has been disposed of to a company (the “acquiring company") and the disposal has been treated by virtue of section 171(1) as giving rise to neither a gain nor a loss,
(b) at the time of the disposal the acquiring company was not an investment trust, and
(c) the conditions set out in subsection (2) below are satisfied by the acquiring company.
(2) Those conditions are satisfied by the acquiring company if—
(a) it becomes an investment trust for an accounting period beginning not more than 6 years after the time of the disposal,
(b) at the beginning of that accounting period, it owns, otherwise than as trading stock—
(i) the asset, or
(ii) property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,
(c) it has not been an investment trust for any earlier accounting period beginning after the time of the disposal, and
(d) at the time at which it becomes an investment trust, there has not been an event by virtue of which it falls by virtue of section 179(3) or 101C(3) to be treated as having sold, and immediately reacquired, the asset at the time specified in subsection (3) below.
(3) The acquiring company shall be treated for all the purposes of this Act as if immediately after the disposal it had sold, and immediately reacquired, the asset at its market value at that time.
(4) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the acquiring company on the sale referred to in subsection (3) above shall be treated as accruing to it immediately before the end of the last accounting period to end before the beginning of the accounting period for which the acquiring company becomes an investment trust.
(5) For the purposes of this section a chargeable gain is carried forward from an asset to other property on a replacement of business assets if—
(a) by one or more claims under sections 152 to 158, the chargeable gain accruing on a disposal of the asset is reduced, and
(b) as a result an amount falls to be deducted from the expenditure allowable in computing a gain accruing on the disposal of the other property.
(6) For the purposes of this section an asset acquired by the acquiring company shall be treated as the same as an asset owned by it at a later time if the value of the second asset is derived in whole or in part from the first asset; and, in particular, assets shall be so treated where—
(a) the second asset is a freehold and the first asset was a leasehold; and
(b) the lessee has acquired the reversion.
(7) Where under this section a company is to be treated as having disposed of and reacquired an asset—
(a) all such recomputations of liability in respect of other disposals, and
(b) all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax,
as may be required in consequence of the provisions of this section shall be carried out.
(8) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may be made at any time within 6 years after the end of the accounting period referred to in subsection (2)(a) above.
101B Transfer of company’s assets to venture capital trust.
(1) Where section 139 has applied on the transfer of a company’s business (in whole or in part) to a company which at the time of the transfer was not a venture capital trust, then if—
(a) at any time after the transfer the company becomes a venture capital trust by virtue of an approval for the purposes of Part 6 of ITA 2007; and
(b) at the time as from which the approval has effect the company still owns any of the assets of the business transferred,
the company shall be treated for all the purposes of this Act as if immediately after the transfer it had sold, and immediately reacquired, the assets referred to in paragraph (b) above at their market value at that time.
(2) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the time mentioned in subsection (1)(b) above.
(3) This section does not apply if at the time mentioned in subsection (1)(b) above there has been an event by virtue of which the company falls by virtue of section 101(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above.
(4) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the approval mentioned in subsection (1)(a) above has effect as from the beginning of an accounting period, be made at any time within 6 years after the end of that accounting period.
(5) Where under this section a company is to be treated as having disposed of, and reacquired, an asset of a business, all such recomputations of liability in respect of other disposals and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.
101C Transfer within group to venture capital trust.
(1) This section applies where—
(a) an asset has been disposed of to a company (the “acquiring company") and the disposal has been treated by virtue of section 171(1) as giving rise to neither a gain nor a loss,
(b) at the time of the disposal the acquiring company was not a venture capital trust, and
(c) the conditions set out in subsection (2) below are satisfied by the acquiring company.
(2) Those conditions are satisfied by the acquiring company if—
(a) it becomes a venture capital trust by virtue of an approval having effect as from a time (the “time of approval") not more than 6 years after the time of the disposal,
(b) at the time of approval the company owns, otherwise than as trading stock—
(i) the asset, or
(ii) property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,
(c) it has not been a venture capital trust at any earlier time since the time of the disposal, and
(d) at the time of approval, there has not been an event by virtue of which it falls by virtue of section 179(3) or 101A(3) to be treated as having sold, and immediately reacquired, the asset at the time specified in subsection (3) below.
(3) The acquiring company shall be treated for all the purposes of this Act as if immediately after the disposal it had sold, and immediately reacquired, the asset at its market value at that time.
(4) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the acquiring company on the sale referred to in subsection (3) above shall be treated as accruing to it immediately before the time of approval.
(5) Subsections (5) to (7) of section 101A apply for the purposes of this section as they apply for the purposes of that section.
(6) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the time of approval is the time at which an accounting period of the company begins, be made at any time within 6 years after the end of that accounting period.
(7) Any reference in this section to an approval is a reference to an approval for the purposes of Part 6 of ITA 2007.
103C Power to make regulations about collective investment schemes
(1) The Treasury may by regulations make provision about the treatment of participants in collective investment schemes for the purposes of this Act.
(2) The regulations may, in particular, specify descriptions of collective investment scheme in relation to which they are to apply.
(3) Regulations under this section may make different provision for different cases or different purposes.
(4) Regulations under this section—
(a) may modify this Act or any other enactment or instrument (whenever passed or made), and
(b) may include incidental, consequential, supplementary or transitional provision.
(5) A statutory instrument containing regulations under this section must be laid before the House of Commons after being made.
(6) The regulations cease to have effect at the end of the period of 40 days beginning with the day on which the instrument is made unless before the end of that period the instrument is approved by a resolution of the House of Commons.
(7) After an instrument containing regulations under this section has been approved under subsection (6), subsections (5) and (6) do not apply to any subsequent such instrument (and accordingly section 287(3) applies to any such instrument).
(8) If regulations cease to have effect as a result of subsection (6), that does not—
(a) affect anything previously done under the regulations, or
(b) prevent the making of new regulations to the same or similar effect.
(9) In calculating the period of 40 days for the purposes of subsection (6), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than 4 days.
(10) In this section—
“modify” includes amend, repeal or revoke, and
“participant”, in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000.
(1) For the purposes of this section—
“tax transparent fund” means—
an authorised contractual scheme which is a co-ownership scheme, ...
a Reserved Investor Fund (Contractual Scheme), or
an offshore fund that is a transparent fund within the meaning given by regulation 11 of the Offshore Funds (Tax) Regulations 2009, and
“fund property”, in relation to a tax transparent fund, means the property subject to the fund.
(2) For the purposes of this Act—
“authorised contractual scheme” has the meaning given by section 237(3) of the Financial Services and Markets Act 2000, ...
“co-ownership scheme” has the meaning given by section 235A of that Act , and
“Reserved Investor Fund (Contractual Scheme)” has the meaning given by section 20 of the Finance (No.2) Act 2024.
(3) A unit in a tax transparent fund is treated as an asset for the purposes of this Act, and, accordingly, a participant’s interest in the fund property is disregarded for those purposes.
(3A) But if a participant is entitled to an allowance under Part 2A of CAA 2001 (structures and buildings allowances) by reference to expenditure in relation to any fund property, the participant’s interest in the fund property is not to be disregarded under subsection (3) for the purposes of the application of section 37B (exclusion of certain expenditure: structures and buildings allowances) in relation to the disposal by the participant of units in the fund.
(4) In computing the gain accruing on a disposal by a participant of units in a tax transparent fund, an amount which—
(a) represents income from the fund property, and
(b) is taken into account as a receipt or other credit of the participant in calculating an amount chargeable to income tax,
is treated as expenditure falling within section 38(1)(b).
(5) In computing the gain accruing on a disposal by a participant of units in a tax transparent fund—
(a) the sums that would otherwise be allowable under section 38(1) as a deduction from the consideration in the computation of the gain are reduced (but not below nil) by the amounts within subsection (7), and
(b) if those amounts exceed the sums that would otherwise be so allowable, the consideration is treated as increased by the amount of the excess.
(6) So far as an amount within subsection (7) is dealt with under subsection (5)(a), it is not also dealt with under section 39.
(7) An amount is within this subsection if it is—
(a) any amount arising to the participant from the fund property which is taken into account as an expense or other debit of the participant in calculating an amount chargeable to income tax, or
(b) anything paid or transferred to the participant, or anything else of value received by the participant, which is referable to the holding of the units (whenever paid, transferred or received) unless section 22 applies to whatever is paid, transferred or received.
(8) In the case of any asset transferred as mentioned in subsection (7)(b), the value of the asset on the date of the transfer is taken to be its market value on that date.
(9) If a participant has incurred expenditure in relation to any fund property in respect of which a capital allowance or renewals allowance (as defined by section 41(4) or (5)) has been or may be made, that expenditure is excluded from the sums allowable as a deduction in computing the amount of a loss accruing to the participant on a disposal of the units in the fund.
(10) In this section—
“participant”—
in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000, and
in relation to an offshore fund (which is not a collective investment scheme), has the meaning given in section 362(1) of TIOPA 2010, and
“units”, in relation to a tax transparent fund, means the rights or interests (however described) of the participants in the fund.
A unit in a transparent fund is to be regarded as a security for the purposes of sections 104, 105, 107, 110 and 114 (share pooling, identification of securities and indexation).
103DB UK property rich collective investment vehicles etc
Schedule 5AAA makes provision in relation to collective investment vehicles where the property which is the subject of or held by the vehicles consists of or includes direct or indirect interests in land in the United Kingdom.
103DC Co-ownership schemes which are to be treated as partnerships
(1) The assets of a co-ownership scheme, which is not a tax transparent fund or an offshore collective investment vehicle, are treated for the purposes of tax in respect of chargeable gains as held by the participants in the scheme as partners.
(2) Any dealings by the operator of a such a scheme are treated for those purposes as dealings by the participants in the scheme in partnership.
(3) If a participant is entitled to an allowance under Part 2A of CAA 2001 (structures and buildings allowances) by reference to expenditure in relation to their interest in such a scheme, that allowance is not to be disregarded for the purposes of the application of section 37B (exclusion of certain expenditure: structures and buildings allowances) in relation to a disposal of their interest.
(4) Where—
(a) expenditure has been made in respect of the assets of such a scheme, and
(b) a capital allowance or renewals allowance (within the meaning of section 41(4) or (5)) has been given to a participant in the scheme in relation to that expenditure,
the capital allowance or renewals allowance that was given to the investor is to be excluded from the sums allowable as a deduction in computing the amount of a loss accruing to the participant in relation to a disposal of their interest in the assets of the scheme.
(5) Subsections (6) and (7) apply for the purposes of this Act at any time that a co-ownership scheme, which is not a tax transparent fund or an offshore collective investment vehicle, becomes an authorised contractual scheme or a Reserved Investor Fund (Contractual Scheme) (a “relevant scheme”).
(6) Each participant in the co-ownership scheme is deemed to, immediately before the time that the scheme becomes a relevant scheme, have sold their interest in the assets held by the participants in the scheme as partners at its market value at that time.
(7) Each participant is treated as having acquired their units in the relevant scheme—
(a) at the time the co-ownership scheme becomes a relevant scheme, and
(b) at their market value at that time.
(8) For the purposes of this section, a participant’s interest in the assets held by the participants of a co-ownership scheme as partners is a just and reasonable proportion of the assets having regard to the participant’s units in the scheme.
(9) In this section—
“offshore collective investment vehicle” has the meaning it has in Schedule 5AAA (see paragraph 2 of that Schedule);
“tax transparent fund” has the meaning it has in section 103D.
(10) In subsection (1), the reference to the assets of a co-ownership scheme is a reference to assets which are subject to the scheme.
(1) In this Chapter (except this section) references to a collective investment scheme are to a collective investment scheme falling within any of the following paragraphs—
(a) an authorised contractual scheme which is a co-ownership scheme,
(aa) a Reserved Investor Fund (Contractual Scheme),
(b) a unit trust scheme, or
(c) an offshore fund.
(2) Sections 126 to 138A (reorganisation of share capital, conversion of securities etc) do not apply for the purposes of the treatment of participants in collective investment schemes falling within subsection (1)(a) to (c) except as applied by this Chapter.
(3) But sections 135 to 138A (company reconstructions) may apply for those purposes where either company A or company B is not a collective investment scheme falling within subsection (1)(a) to (c).
(4) In subsection (3), “company A” and “company B” have the meaning given by section 135 or 136 as the case may be.
(5) In this Chapter, “units” includes shares in a company.
103F Exchanges of units for units in the same scheme
(1) This section applies in the following cases.
Case 1
Where—
a participant in a collective investment scheme exchanges units in the scheme for other units in the scheme (“new units”) of substantially the same value, and
the property subject to the scheme and the rights of participants to share in the capital and income in relation to that property are the same immediately before and immediately after the event (ignoring any changes as a result of a variation in management charges).
Case 2
Where there is a reorganisation of the units in a collective investment scheme in which all the participants holding units in the scheme or, where there are different classes of unit in the scheme, all the participants holding units in the same class, exchange all their units for other units (“new units”) in the scheme.
(2) Where this section applies—
(a) sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if the collective investment scheme were a company and the event mentioned in subsection (1) were a reorganisation of its share capital, and
(b) any distribution in relation to any new units is to be treated for the purposes of capital gains tax, corporation tax or income tax on the basis set out in section 127 (as adapted).
(3) In subsection (1), “management charges” mean the costs charged to the property subject to the scheme in respect of remunerating the parties operating the scheme, administrating the scheme or investing or safeguarding the property subject to the scheme.
103G Exchange of units for those in another collective investment scheme
(1) This section applies in the following cases where units in a collective investment scheme (“collective investment scheme B”) are issued to a person in exchange for units in another collective investment scheme (“collective investment scheme A”).
(2) The cases are—
Case 1
Where units in collective investment scheme B are issued in exchange for units as the result of a general offer—
made to participants in collective investment scheme A or any class of them, and
made in the first instance on a condition such that if it were satisfied the property subject to collective investment scheme B would include units in collective investment scheme A giving rights to more than 50% of the capital, and more than 50% of the income, of collective investment scheme A.
Case 2
Where—
under an arrangement, participants in collective investment scheme A exchange units in that scheme for units of substantially the same value in collective investment scheme B, and
in consequence of the exchanges under the arrangement, 85% or more of the property subject to collective investment scheme B is constituted by units in collective investment scheme A.
(3) Where this section applies, sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if collective investment scheme A and collective investment scheme B were the same company and the exchange were a reorganisation of its share capital.
(4) This section has effect subject to section 103K (anti-avoidance).
103H Scheme of reconstruction involving issue of units
(1) This section applies where—
(a) for the purposes of, or in connection with, a scheme of reconstruction an arrangement is entered into by all the participants holding units in an original collective investment scheme (“scheme A”), or where there are different classes of units in the scheme, all the participants holding any class of those units, and
(b) under the arrangement—
(i) units in a successor collective investment scheme or feeder fund (“scheme B”) are issued to those participants in respect of and in proportion to (or as nearly as may be in proportion to) their relevant holdings in scheme A, and
(ii) the units in scheme A comprised in relevant holdings are retained by those participants or are cancelled or otherwise extinguished.
(2) Where this section applies—
(a) those participants are treated as exchanging their relevant holdings in scheme A for the units held by them in consequence of the arrangement, and
(b) sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if scheme A and scheme B were the same company and the exchange were a reorganisation of its share capital.
For this purpose units in scheme A comprised in relevant holdings that are retained are treated as if they had been cancelled and replaced by a new issue.
(3) Where a reorganisation within case 2 of section 103F(1) of the units in scheme A is carried out for the purposes of the scheme of reconstruction, the provisions of subsections (1) and (2) apply in relation to the position after the reorganisation.
(4) In this section, references to “relevant holdings” of units are—
(a) where there is only one class of units in scheme A, to holdings of units in the scheme, and
(b) where there are different classes of units in scheme A, to holdings of a class of units that is involved in the scheme of reconstruction (within the meaning of paragraph 3 of Schedule 5AZA).
(5) This section has effect subject to section 103K (anti-avoidance).
103I Scheme of reconstruction involving conversion scheme
(1) This section applies where—
(a) a scheme of reconstruction is entered into and given effect to, and
(b) for the purposes of, or in connection with, the scheme of reconstruction, units in a collective investment scheme (“the conversion scheme”) are issued to participants in another collective investment scheme (“scheme C”) in exchange for and in proportion to (or as nearly as may be in proportion to) their conversion holdings in accordance with regulation 12(1)(b) of the Undertakings for Collective Investment in Transferable Securities Regulations 2011 (S.I. 2011/1613).
(2) Where this section applies sections 127 to 131 apply with the necessary adaptations as if scheme C and the conversion scheme were the same company and the exchange were a reorganisation of its share capital.
(3) In this section “conversion holdings” means the units in scheme C to be converted in accordance with regulation 12(1)(b) of the Undertakings for Collective Investment in Transferable Securities Regulations 2011 into units in the conversion scheme for the purposes of, or in connection with, the scheme of reconstruction.
(4) This section has effect subject to section 103K (anti-avoidance).
In sections 103H and 103I—
(a) “feeder fund” has the meaning given by paragraph 3(2) of Schedule 5AZA to this Act;
(b) “scheme of reconstruction” has the meaning given by paragraph 1 of Schedule 5AZA;
(c) “original collective investment scheme” and “successor collective investment scheme” must be construed in accordance with paragraph 2(2) of Schedule 5AZA; and
(d) references to units being retained include their being retained with altered rights or in an altered form, whether as the result of reduction, consolidation, division or otherwise .
103K Restriction on application of sections 103G, 103H and 103I : anti-avoidance
(1) This section applies in respect of arrangements relating to an exchange or scheme of reconstruction as regards which section 103G, 103H or 103I applies if the main purpose, or one of the main purposes, of the arrangements is to reduce or avoid liability to capital gains tax, corporation tax or income tax.
(1A) Any such reduction or avoidance that would (in the absence of this section) arise from such arrangements is to be counteracted by the making of such adjustments as are just and reasonable (in light of the reduction or avoidance).
(1B) This includes, in an appropriate case, disapplying section 103G, 103H or 103I insofar as is required to counteract the reduction or avoidance.
(1C) Any adjustments required to be made under this section (whether or not by an officer of Revenue and Customs) may be made by way of—
(a) an assessment, or
(b) the modification of an assessment.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) If any tax assessed on a participant (“the chargeable participant”) by virtue of this section is not paid within 6 months from the date determined under subsection (5) below, any other participant who—
(a) holds all or any part of the units that were issued to the chargeable participant as part of the exchange or scheme of reconstruction, and
(b) has acquired them without there having been, since their acquisition by the chargeable participant, any disposal of them not falling within section 58(1) or 171,
may, at any time within 2 years from that date, be assessed and charged (in the name of the chargeable participant) to all or, as the case may be, a corresponding part of the unpaid tax; and a participant paying any amount of tax under this subsection shall be entitled to recover from the chargeable participant a sum equal to that amount together with any interest paid by him under section 87A of the Management Act on that amount.
(5) The date referred to in subsection (4) above is whichever is the later of—
(a) the date when the tax becomes due and payable by the chargeable participant; and
(b) the date when the assessment was made on the chargeable participant.
(6) Section 138 (procedure for clearance in advance) applies to this section as it applies to section 137 (with any necessary modifications).
(7) In this section, “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
(1) This section applies where—
(a) an individual performs investment management services directly or indirectly in respect of an investment scheme under any arrangements, and
(b) the individual is entitled to carried interest under the arrangements.
(2) Any gain or loss accruing to the individual by virtue of the individual’s entitlement to carried interest is treated as not accruing.
(3) In this section “arrangements”, “carried interest”, “investment scheme” and “investment management services” have the same meaning as in section 23I of ITTOIA 2005 (see section 23R of and Part 1 of Schedule A1 to that Act).
103KF Relief for external investors on disposal of partnership asset
(1) If—
(a) a chargeable gain accrues to an external investor in an investment scheme on the disposal of one or more partnership assets, and
(b) the external investor makes a claim for relief under this section,
then subsection (2) applies in relation to the disposal.
(2) The amount of the chargeable gain is to be reduced by an amount equal to—
I − C
where—
I is an amount equal to such part of the sum invested in the fund by the external investor which on a just and reasonable basis is referable to the asset or assets disposed of, and
C is the amount deducted under section 38(1)(a) in respect of consideration given wholly and exclusively for the acquisition of the asset or assets.
(3) In this section, “external investor” and “investment scheme” have the same meaning as in section 23I of ITTOIA 2005 (see section 23R of that Act).