(1) The Treasury may by order provide that an NHS foundation trust (see the table in section 986) is liable to corporation tax in relation to a specified activity or class of activity.
(2) The Treasury may make an order under subsection (1) only—
(a) in relation to an activity or class of activity that appears to the Treasury to be of a commercial nature, and
(b) if the condition in subsection (3) is met.
(3) The condition is that the making of an order appears to the Treasury to be expedient for the purpose of avoiding, removing or reducing differences between—
(a) the tax treatment of the body undertaking the activity, and
(b) the tax treatment of another body or class of body which is of a commercial nature and which undertakes or might undertake the same or a similar activity.
(4) For the purposes of subsection (2)(a) an activity authorised under section 43(1) of the National Health Service Act 2006 is not to be treated as an activity of a commercial nature.
(5) An order under subsection (1) must make provision for determining the amount of the profits relating to an activity that are to be charged to corporation tax as a result of the order.
(6) An order under subsection (1) may in particular—
(a) make provision for disregarding profits of less than a specified amount in respect of a relevant period,
(b) make provision for disregarding a specified part of profits in respect of a relevant period, or
(c) make provision for disregarding all or part of profits relating to activity for which receipts or turnover (as defined by the order) are less than a specified amount in respect of a relevant period.
(7) “Relevant period” means—
(a) a financial year or accounting period, or
(b) a specified part of a financial year or accounting period.
(8) An order under subsection (1)—
(a) may apply, with or without modification, a provision of the Tax Acts,
(b) may disapply a provision of the Tax Acts,
(c) may make provision similar to a provision of the Tax Acts, and
(d) may make provision generally or in relation to a specified body or class of bodies.
(9) No order may be made under subsection (1) unless a draft of the statutory instrument containing it has been laid before and approved by a resolution of the House of Commons.
The following are not liable to corporation tax—
(a) a chief constable of a police force maintained under section 2 of the Police Act 1996;
(b) the Commissioner of Police of the Metropolis.
988 Issue departments of the Reserve Bank of India and the State Bank of Pakistan
No liability to corporation tax arises in respect of income of the issue department of—
(a) the Reserve Bank of India constituted under an Act of the Indian legislature called the Reserve Bank of India Act 1934, or
(b) the State Bank of Pakistan constituted under certain orders made under section 9 of the Indian Independence Act 1947.
(1) No liability to corporation tax arises in respect of profits of an agricultural society which—
(a) arise from an exhibition or show held for the purposes of the society, and
(b) are applied solely for the purposes of the society.
(2) In this section “agricultural society” means any society or institution established for the purpose of promoting the interests of—
(a) agriculture,
(b) horticulture,
(c) forestry, or
(d) the breeding of any kind of animal.
990 UK Economic Interest Groupings and European Economic Interest Groupings
(1) The following rules about UK Economic Interest Groupings and European Economic Interest Groupings apply for the purposes of charging corporation tax in respect of income—
Rule 1
A grouping is treated as acting as the agent of its members.
Rule 2
The activities of a grouping are treated as those of its members acting jointly.
Rule 3
Each member of a grouping is treated as having a share of the grouping's property, rights and liabilities.
Rule 4
Any trade carried on by the grouping is treated as carried on in partnership by the members of the grouping.
(2) For the purposes of Rule 3, a member's share of any property, rights or liabilities of a grouping is determined in accordance with the contract under which the grouping is established.
(3) If the contract does not provide for this, the member's share is determined by reference to the share of the profits of the grouping to which the member is entitled under the contract.
(4) If the contract does not provide for this either, the members are treated as having equal shares of the property, rights and liabilities of the grouping.
(5) Part 5 of CTA 2009 (loan relationships) applies in relation to a grouping as it applies in relation to a firm.
(6) For the purposes of subsection (5) see in particular the following provisions of Part 5 of CTA 2009—
Chapter 9 (partnerships involving companies),
section 467 (connections where partnerships involved),
section 472 (meaning of “control”), and
sections 473 and 474 (meaning of “major interest” etc).
(7) “European Economic Interest Grouping” means a grouping registered in a member State and formed in pursuance of Council Regulation (EEC) No. 2137/85 of 25 July 1985 on the European Economic Interest Grouping as it has effect in EU law.
996 Use of different accounting practices within a group of companies
(1) Subsection (2) applies if—
(a) a company (“company A”) prepares accounts in accordance with international accounting standards,
(b) another company (“company B”) in the same group of companies prepares accounts in accordance with UK generally accepted accounting practice,
(c) there is a transaction between, or a series of transactions involving, company A and company B, and
(d) a tax advantage would (apart from this section) be obtained by either or both of those companies in relation to the transaction or series of transactions as a result of the use of different accounting practices.
(2) The Tax Acts apply in relation to the transaction or series of transactions as if both company A and company B prepared accounts in accordance with UK generally accepted accounting practice.
(3) Section 170(3) to (6) of TCGA 1992 apply to determine for the purposes of this section whether companies are in the same group of companies.
(4) None of the following circumstances (individually or in combination) prevents a series of transactions from being a series of transactions involving company A and company B—
(a) there is no transaction in the series to which both those companies are parties,
(b) the parties to any arrangements in pursuance of which the transactions in the series are entered into do not include one or both of those companies,
(c) there are one or more transactions in the series to which neither of those companies is a party.
(5) In this section “tax advantage” has the meaning given by section 1139.
996A Deductions from total profits for sporting testimonial payments and associated payments
(1) This section applies where a company, in any accounting period—
(a) is the controller of a relevant event or activity that constitutes or is part of a sporting testimonial, and
(b) makes a relevant sporting testimonial payment out of money raised by the sporting testimonial.
(2) In this section “relevant sporting testimonial payment” means a sporting testimonial payment that is (or so much of it as is) made out of proceeds of a relevant event or activity which are brought into account in determining the company's total profits or any component of its total profits.
(3) In calculating the amount of corporation tax chargeable for the accounting period, an amount equal to the aggregate of the following amounts is allowed as a deduction from the company's total profits—
(a) so much of the relevant sporting testimonial payment as is paid to or for the benefit of the sportsperson to whom the sporting testimonial relates,
(b) any income tax or employee's national insurance contributions deducted at source from that payment, and
(c) any employer's national insurance contributions relating to that payment.
(4) The amount is deducted—
(a) from the company's total profits for the accounting period in which the relevant sporting testimonial payment is made, and
(b) if a claim by the company for relief so requires, previous accounting periods.
(5) A claim under subsection (4)(b) must be made within 2 years after the end of the accounting period in which the relevant sporting testimonial payment is made.
(6) If for an accounting period deductions under subsection (4) are to be made for relevant sporting testimonial payments made in more than one accounting period, the deductions are to be made in the order in which the payments were made (starting with the earliest of them).
(7) The amount of the deduction to be made under subsection (4) for an accounting period is the amount that cannot be deducted under that subsection for a subsequent accounting period.
(8) The amount of the deduction to be made for any accounting period is limited to the amount that reduces the company's taxable total profits for that period to nil.
(9) The deduction is only available if and to the extent that the amount mentioned in subsection (3) is not otherwise deductible in calculating the company's total profits or any component of its total profits.
(10) Terms used in this section and in section 226E of ITEPA 2003 have the same meaning as in that section.
(1) Chapters 2 to 5 contain provision about what is, and what is not, a distribution.
(2) Chapter 5 (demergers) includes provision that charges income tax, or applies the charge to corporation tax on income, in relation to certain payments.
(3) Chapters 2 to 5 also include—
(a) provision about the persons to whom certain distributions are treated as made (see sections 1020(2) and 1064(2)),
(b) provision about how the amount of certain distributions is determined (see sections 1003, 1004, 1020(2) and 1064(2)),
(c) other special rules about distributions made by certain companies (see Chapter 4), and
(d) provision about returns and information (see sections 1046, 1052, 1053 and 1095 to 1097).
(4) Chapter 6 contains provision of more general application about returns and information relating to distributions.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) Chapter 8 contains definitions and other provision about the interpretation of this Part.
(7) Section 152(3)(b) of FA 1995 enables regulations under that section to include provision which modifies the following in relation to open-ended investment companies, or payments falling to be treated as the distributions of such companies—
(a) Chapter 2 (except section 1000(2)),
(b) sections 1030 to 1048 and section 1049(1) and (3),
(c) sections 1059 to 1063,
(d) Chapter 5.
(1) Sections 1000 to 1023 are about the meaning of “distribution” in the Corporation Tax Acts.
(2) In particular, section 1000(1) lists the matters which are distributions.
(3) Sections 1003 to 1023 contain provisions supplementing the paragraphs of that list.
(4) The table in section 1001 mentions some of the main provisions which explain, supplement or limit particular paragraphs of the list in section 1000(1).
(5) Sections 1024 to 1028 are about the meaning of “repayment of share capital”.
(1) The provisions of this Chapter are subject to any express exceptions.
(2) See, in particular—
(a) Chapter 3 (matters which are not distributions),
(b) section 1075 (exempt distributions), and
(c) paragraph 6 of Schedule 12 to FA 1988 (transfer of building society's business to a company: qualifying benefits),
and see also the table in section 1001.
(1) In the Corporation Tax Acts “distribution”, in relation to any company, means anything falling within any of the following paragraphs.
A. Any dividend paid by the company, including a capital dividend.
B. Any other distribution out of assets of the company in respect of shares in the company, except however much (if any) of the distribution—
represents repayment of capital on the shares, or
is (when it is made) equal in amount or value to any new consideration received by the company for the distribution.
For the purposes of this paragraph it does not matter whether the distribution is in cash or not.
C. Any redeemable share capital issued by the company—
in respect of shares in, or securities of, the company, and
otherwise than for new consideration (see sections 1003 and 1115).
D. Any security issued by the company—
in respect of shares in, or securities of, the company, and
otherwise than for new consideration (see sections 1004 and 1115).
E. Any interest or other distribution out of assets of the company in respect of securities of the company which are non-commercial securities (as defined in section 1005), except—
however much (if any) of the distribution represents the principal secured by the securities, and
however much (if any) of the distribution represents a reasonable commercial return for the use of the principal.
F. Any interest or other distribution out of assets of the company in respect of securities of the company which are special securities (as defined in section 1015), except—
however much (if any) of the distribution represents the principal secured by the securities, and
however much (if any) of the distribution falls within paragraph E.
G. Any amount treated as a distribution by section 1020 (transfers of assets or liabilities).
H. Any amount treated as a distribution by section 1022 (bonus issues following repayment of share capital).
(2) In the Corporation Tax Acts “distribution”, in relation to a close company, also includes anything treated as a distribution by section 1064 (certain expenses of close companies treated as distributions).
(3) See also section 1072 (which extends the meaning of “distribution” in relation to members of a 90% group).
1001 Provisions related to paragraphs A to H in section 1000(1)
The following table mentions, for each paragraph in section 1000(1)—
(a) some of the main provisions that explain or supplement it, and
(b) some of the main provisions that limit it.
Paragraph in section 1000(1) | Explained or supplemented by | Limited by
A (dividends). | Section 1054 (building society payments).
Sections 1055(2) and 1057(2) (dividend paid by registered society or UK agricultural or fishing co-operative).
B (other distributions in respect of shares). | Sections 1024 to 1028 (meaning of “repayment of share capital”). | . . .
Section 1113(1) (extends meaning of “in respect of shares in the company”).
C (redeemable share capital). | Section 1003 (redeemable share capital). | Section 1049(3)(a) (stock dividends).
Section 1113(1).
Section 1114(1) (extends meaning of “in respect of securities of the company”).
D (securities issued otherwise than for new consideration). | Section 1004 (securities issued otherwise than for new consideration).
Section 1113(1).
Section 1114(1).
E (distributions in respect of non-commercial securities). | Sections 1005 to 1014 (meaning of “non-commercial securities” etc).
Section 1114(1).
F (distributions in respect of special securities). | Sections 1015 to 1018 (meaning of “special securities” etc). | Section 1019 (relevant alternative finance return).
Section 1114(1). | Section 1032 (interest etc paid in respect of certain securities).
G (transfers of assets or liabilities). | Section 1020 (transfers of assets or liabilities treated as distributions).
H (bonus issues following repayment of share capital). | Sections 1022 and 1023 (bonus issues following repayment of share capital treated as distributions). | Section 1049(3)(b)(i) (stock dividends).
(1) Subsection (2) applies if—
(a) a company issues redeemable share capital, and
(b) the issue is partly (but not wholly) for new consideration.
(2) The part (if any) of the share capital that is properly referable to the new consideration does not fall within paragraph C in section 1000(1).
(3) In determining, for the purposes of paragraph C in section 1000(1), the amount of the distribution constituted by the issue of any redeemable share capital, the value of the share capital is taken to be the sum of—
(a) the amount of the share capital, and
(b) the amount of any premium payable on redemption, in a winding up, or in any other circumstances.
1004 Securities issued otherwise than for new consideration
(1) Subsection (2) applies if—
(a) a company issues a security, and
(b) the issue is partly (but not wholly) for new consideration.
(2) The part (if any) of the security that is properly referable to the new consideration does not fall within paragraph D in section 1000(1).
(3) In determining, for the purposes of paragraph D in section 1000(1), the amount of the distribution constituted by the issue of any security, the value of the security is taken to be the amount of the principal secured, including any premium payable—
(a) at maturity,
(b) in a winding up, or
(c) in any other circumstances.
For the purposes of paragraph E in section 1000(1) securities of a company are non-commercial securities if the consideration given by the company under the securities for the use of the principal secured by them represents more than a reasonable commercial return for the use of that principal.
1006 Distributions exceeding consideration received for issue of security
No amount is to be regarded for the purposes of paragraph E in section 1000(1) as representing the principal secured by a security so far as it exceeds any new consideration which has been received by the company for the issue of the security.
1007 Securities issued at premium representing new consideration
(1) This section applies if any security of a company is issued at a premium representing new consideration (but see also section 1008).
(2) In relation to a distribution in respect of the security, the reference in paragraph E in section 1000(1) to however much of the distribution represents the principal secured by the security is to be read as a reference to the sum of—
(a) however much of the distribution represents the principal, and
(b) however much of it represents the premium.
(3) In relation to a distribution in respect of the security, the reference in paragraph E in section 1000(1) to however much of the distribution represents a reasonable commercial return for the use of the principal secured by the security is to be read as a reference to the sum of—
(a) however much of the distribution represents a reasonable commercial return for the use of the principal, and
(b) however much of it represents (when regard is had to the extent to which distributions represent the premium) a reasonable commercial return for the use of the premium.
1008 Consideration for issue of security exceeding amount of principal
(1) This section applies if—
(a) a company issues a security, and
(b) the amount of new consideration received by the company for the issue of the security exceeds the amount of the principal secured by the security.
(2) The amount of the principal is treated for the purposes of paragraph E in section 1000(1) as increased to the amount of that new consideration.
(3) Section 1007 does not have effect in relation to the security.
(4) This section is subject to sections 1009 and 1012.
1009 Securities reflecting dividends on certain shares etc: exclusion of section 1008
(1) Section 1008 does not apply in relation to a security issued by a company (“the issuing company”) if—
(a) the security reflects to a significant extent dividends or other distributions in respect of, or fluctuations in the value of, shares, and
(b) those shares are in one or more companies each of which is the issuing company or an associated company of the issuing company.
(2) Subsection (1) does not prevent section 1008 from applying in relation to a security if—
(a) the issuing company is a bank or securities house,
(b) the issuing company issues the security in the ordinary course of its business, and
(c) the security reflects dividends or other distributions in respect of the shares mentioned in subsection (1), or fluctuations in the value of those shares, only because it reflects fluctuations in a qualifying index.
(3) In this section—
“bank” has the meaning given by section 1120, and
“securities house” means a person—
who is authorised for the purposes of FISMA 2000, and
whose business consists wholly or mainly of dealing as principal in financial instruments within the meaning of section 984 of ITA 2007.
1010 Meaning of “qualifying index” in section 1009
(1) In section 1009 “qualifying index” means an index which meets the conditions in subsections (2) and (3).
(2) The underlying subject matter of the index must include both—
(a) shares that meet the description in section 1009(1)(b), and
(b) shares that do not meet that description.
(3) Shares that do not meet the description in section 1009(1)(b) must represent a significant proportion of the market value of the underlying subject matter of the index.
1011 Meaning of “associated company” in section 1009
(1) For the purposes of section 1009 a company is an “associated company” of another at any time when—
(a) one has control of the other, or
(b) both are under the control of the same person or persons.
(2) For the purposes of subsection (1) a person controls a company if the person has power to secure that the affairs of the company are conducted in accordance with the person's wishes, and has that power—
(a) by holding shares in the company or any other company,
(b) by possessing voting power in relation to the company or any other company, or
(c) by virtue of any powers conferred by—
(i) the articles of association of the company or any other company, or
(ii) any other document regulating the company or any other company.
(3) Shares held by a company, and any voting power or other powers arising from the shares, must be ignored for the purposes of subsection (2) if—
(a) a profit on a sale of the shares would be treated as a trading receipt of a trade carried on by the company, and
(b) the shares are not assets of an insurance company's long-term insurance fund.
(1) Section 1008 does not at a given time apply in relation to a security issued by a company (“the issuing company”) if—
(a) at that time, or
(b) at any earlier time after 16 April 2002,
there are or have been any hedging arrangements that relate to some or all of the company's liabilities under the security.
This is subject to section 1013.
(2) If, as a result of this section, section 1008 stops applying at any time in relation to a security, paragraph E in paragraph 1000(1) has effect in relation to the security from that time as it would have had effect if section 1008 had never applied in relation to the security.
(1) Section 1012 does not prevent section 1008 from applying in relation to a security at a given time if—
(a) each of conditions A to D is met in relation to any hedging arrangements existing at that time that relate to some or all of the company's liabilities under the security, and
(b) at all earlier times after 16 April 2002 when there have been hedging arrangements that relate to some or all of the company's liabilities under the security, each of conditions A to D was met in relation to those arrangements.
(2) Condition A is that the hedging arrangements do not constitute, include or form part of any scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax.
(3) In subsection (2) “tax” includes stamp duty and stamp duty land tax.
(4) Condition B is that the hedging arrangements are such that any amounts intended under the arrangements to offset some or all of a corporation tax deduction in respect of the security—
(a) arise at the time when the deduction falls to be made, or within a reasonable time before or after that time, and
(b) arise—
(i) to the issuing company, or
(ii) to a company which is a member of the same group of companies as the issuing company.
(5) In subsection (4) “corporation tax deduction” means a deduction that falls to be made for corporation tax purposes by the issuing company at any time.
(6) Condition C is that the whole of every amount arising as mentioned in subsection (4) is brought into charge to corporation tax—
(a) by a company falling within subsection (4)(b)(i) or (ii), or
(b) by two or more companies (taken together) each of which falls within subsection (4)(b)(i) or (ii).
(7) Condition D is that for corporation tax purposes any deductions in respect of expenses of establishing or administering the hedging arrangements are reasonable in proportion to the amounts required to be brought into charge to corporation tax by subsection (6).
(8) For the purposes of this section two companies are members of the same group of companies if they are members of the same group of companies for the purposes of Part 5 (see section 152).
(1) This section explains what “hedging arrangements” means, in relation to a security, in sections 1012 and 1013.
(2) “Hedging arrangements” means any scheme or arrangement for the purpose of securing that an offsetting amount of income or gain—
(a) accrues, or
(b) is received or receivable.
(3) In subsection (2) “offsetting amount” means an amount which is intended to offset some or all of the amounts that fall to be brought into account in respect of amounts accruing or falling to be paid in accordance with the terms of the security.
(4) It does not matter whether the purpose mentioned in subsection (2) is the only purpose, or just one of the purposes, of the scheme or arrangement.
(5) It does not matter whether the purpose mentioned in subsection (2) is to secure that the offsetting amount accrues, or is received or receivable, directly or indirectly.
(6) In this section “brought into account” means brought into account in accordance with generally accepted accounting practice.
(1) Securities of a company are special securities for the purposes of paragraph F in section 1000(1) if they meet any of conditions A to E.
(1A) But hybrid capital instruments (within the meaning of section 475C of CTA 2009) are not special securities by reason of meeting condition E.
(2) Condition A is that the securities are issued as described in paragraph D in section 1000(1) (securities issued otherwise than for new consideration).
(3) Condition B is that—
(a) the securities—
(i) are convertible (directly or indirectly) into shares in the company, or
(ii) carry a right to receive shares in or securities of the company, and
(b) the securities are neither listed on a recognised stock exchange nor issued on terms which are reasonably comparable with the terms of issue of securities listed on a recognised stock exchange.
(4) Condition C is that under the securities the consideration given by the company for the use of the principal secured depends (to any extent) on the results of—
(a) the company's business, or
(b) any part of the company's business.
(5) Condition D is that the securities are connected with shares in the company (see section 1017(2)).
(6) Condition E is that the securities are equity notes—
(a) issued by the company (“the issuing company”), and
(b) held by a company which—
(i) is associated with the issuing company, or
(ii) is a funded company (see section 1017(3)).
(1) For the purposes of section 1015(6) a security is an equity note if any of the tests in subsection (2) is satisfied either—
(a) as regards the whole of the principal, or
(b) as regards any part of it.
(2) These are the tests.
Test 1 The security's terms contain no particular date by which it is to be redeemed.
Test 2 Under the security's terms the date for redemption, or the latest date for redemption, falls after the end of the permitted period.
Test 3 Under the security's terms redemption is to occur after the end of the permitted period if a particular event occurs, and the event is one which (judged at the time of the security's issue) is certain or likely to occur.
Test 4 The issuing company can secure—
that there is no particular date by which the security is to be redeemed, or
that the date for redemption falls after the end of the permitted period.
(3) In subsection (2) “the permitted period” means the period of 50 years beginning with the date of the security's issue.
(1) For the purposes of section 1015(4) the consideration given by the company for the use of the principal secured is not treated as depending on the results of the company's business (or any part of it) merely because the terms of the security provide—
(a) for the consideration to be reduced if the results improve, or
(b) for the consideration to be increased if the results deteriorate.
(2) For the purposes of section 1015(5) securities are connected with shares in the company if—
(a) it is necessary or advantageous for a person who has, or disposes of or acquires, any of the securities also to have, or to dispose of or acquire, a proportionate holding of the shares, and
(b) that is a consequence of the nature of the rights attaching to the securities or shares and, in particular, any terms or conditions attaching to the right to transfer the securities or shares.
(3) For the purposes of section 1015(6) a company is a funded company if there are arrangements involving the company being put in funds (directly or indirectly) by—
(a) the issuing company, or
(b) a company associated with the issuing company.
(4) For the purposes of subsection (3) above and section 1015(6), a company is associated with the issuing company if—
(a) the issuing company is a 75% subsidiary of the other company,
(b) the other company is a 75% subsidiary of the issuing company, or
(c) both are 75% subsidiaries of a third company.
(1) No amount is to be regarded for the purposes of paragraph F in section 1000(1) as representing the principal secured by a security so far as it exceeds any new consideration which has been received by the company for the issue of the security.
This is without prejudice to section 1117(6).
(2) Subsection (3) applies if—
(a) a security of a company is issued at a premium representing new consideration, and
(b) there is a distribution in respect of the security.
(3) The reference in paragraph F in section 1000(1) to however much of the distribution represents the principal secured by the security is to be read as a reference to the sum of—
(a) however much of the distribution represents the principal, and
(b) however much of it represents the premium.
(1) Relevant alternative finance return is not treated by virtue of section 1015(4) as being a distribution for the purposes of the Corporation Tax Acts.
(2) For corporation tax purposes “relevant alternative finance return” in subsection (1) means—
(a) anything that is alternative finance return for the purposes of Part 6 of CTA 2009 as a result of section 513 of that Act, or
(b) any part of the redemption payment under arrangements to which section 507 of CTA 2009 (investment bond arrangements) applies.
(3) For income tax purposes “relevant alternative finance return” in subsection (1) means—
(a) anything that is alternative finance return for the purposes of Part 10A of ITA 2007 as a result of section 564L of that Act, or
(b) any part of the redemption payment under arrangements to which section 564G of ITA 2007 (investment bond arrangements) applies.
1020 Transfers of assets or liabilities treated as distributions
(1) This section applies if on a transfer of assets or liabilities—
(a) by a company to its members, or
(b) to a company by its members,
the amount or value of the benefit received by a member exceeds the amount or value of any new consideration given by the member.
(2) The company is treated for the purposes of the Corporation Tax Acts as making a distribution to the member of an amount equal to the excess.
...
(2A) But the company is not treated as making a distribution under subsection (2) if the transfer of assets or liabilities—
(a) is a distribution by virtue of paragraph B in section 1000(1), or
(b) would be such a distribution in the absence of sub-paragraph (a) of that paragraph (distribution representing repayment of capital on the shares).
(3) For the purposes of subsection (1) the amount or value of a benefit, or of any consideration, is determined in accordance with the market value.
1022 Bonus issue following repayment of share capital treated as distribution
(1) Subsection (3) applies if a company—
(a) repays or has repaid any share capital, and
(b) at or after the time of the repayment issues any share capital as paid up otherwise than by the receipt of new consideration.
(2) But subsection (3) does not apply so far as any provision of the Corporation Tax Acts makes contrary provision.
(3) The amount paid up as mentioned in subsection (1)(b) is treated for the purposes of the Corporation Tax Acts as a distribution made in respect of the shares on which it is paid up, except so far as that amount exceeds the adjusted amount of the repaid share capital.
(4) The reference in subsection (3) to the adjusted amount of the repaid share capital is to—
(a) the amount, or total amount, of share capital repaid as mentioned in subsection (1)(a), minus
(b) any amounts previously paid up as mentioned in subsection (1)(b) and treated as distributions by virtue of subsection (3).