(1) Section 1022(3) does not apply if the issue of share capital mentioned in section 1022(1)(b)—
(a) takes place more than 10 years after the repayment of share capital mentioned in subsection 1022(1)(a), and
(b) is not of redeemable share capital.
(2) But subsection (1) does not prevent section 1022(3) from applying in the case of a company which is a relevant company for the purposes mentioned in section 739 (certain companies not included in the official UK list etc).
(3) Section 1022(3) does not apply if the repaid share capital consists of fully paid preference shares and—
(a) those shares were issued as fully paid preference shares,
(b) they were issued wholly for new consideration not derived from ordinary shares, and
(c) throughout the period from their issue until the repayment those shares continued to be fully paid preference shares.
(4) For the purposes of subsection (3) consideration is derived from ordinary shares if (and only if)—
(a) it consists of the surrender, transfer or cancellation of ordinary shares,
(b) it consists of the variation of rights in ordinary shares, or
(c) it is derived from a repayment of share capital paid in respect of ordinary shares,
and for the purposes of this subsection it does not matter whether the ordinary shares are of the company or another company.
(5) In this section—
“ordinary shares” means shares other than preference shares, and
“preference shares” means shares which—
do not carry any right to dividends other than dividends at a fixed rate per cent of the nominal value of the shares, and
carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares included in the official UK list.
1025 Share capital issued at a premium representing new consideration
(1) This section applies if—
(a) share capital is issued at a premium representing new consideration, and
(b) a distribution is made in respect of shares representing the share capital.
(2) The amount of the premium is treated as forming part of the share capital for the purpose of determining under this Chapter whether the distribution is a repayment of share capital.
(3) Subsection (2) does not have effect in relation to any part of the premium after that part has been applied to paying up share capital.
(1) This section applies if—
(a) a company issues, or has issued, any share capital (“the bonus share capital”) as paid up otherwise than by the receipt of new consideration, and
(b) an amount paid up as mentioned in paragraph (a) does not fall to be treated as a ... distribution.
(2) Distributions made afterwards by the company in respect of shares representing the bonus share capital are not treated as repayments of share capital for the purposes of this Chapter.
But this is subject to section 1027 and any other contrary provision in the Corporation Tax Acts.
(3) Except where the company is a relevant company for the purposes mentioned in section 739 (certain companies not included in the official UK list etc), subsection (2) does not prevent a distribution being treated as a repayment of share capital if it is made—
(a) more than 10 years after the issue of the share capital mentioned in subsection (1)(a), and
(b) in respect of share capital other than redeemable share capital.
(4) For the purposes of this section and section 1027—
(a) all shares of the same class are treated as representing the same share capital, and
(b) if shares are issued in respect of other shares, or are (directly or indirectly) converted into or exchanged for other shares, all such shares are treated as representing the same share capital.
(5) This section is to be read with section 1049(3)(b) (stock dividends).
1027 Cap on amount of distributions affected by section 1026
(1) Section 1026(2) does not apply to the distributions in question so far as they, together with any affected distributions made previously but after the issue of the bonus share capital, exceed the cap.
(2) In subsection (1) “the cap” means the total of the amounts—
(a) paid up, otherwise than by the receipt of new consideration, on shares representing the bonus share capital, and
(b) not falling to be treated as ... distributions.
(3) In subsection (1) “affected distribution” means however much of a distribution made in respect of shares representing the bonus share capital—
(a) would, but for section 1026, be treated as a repayment of share capital, but
(b) cannot be so treated because of that section.
(4) In subsection (2)(a) the reference to amounts paid up is to amounts paid up at the time of the distributions in question or previously.
1027A Distributions following reduction of share capital
(1) This section applies for the purpose of determining whether a distribution is treated as a repayment of share capital for the purposes of this Chapter.
(2) A distribution made out of a reserve arising from a reduction of share capital is to be treated as if it were made out of profits available for distribution otherwise than by virtue of the reduction.
(3) The reference in subsection (2) to share capital includes, in the case of share capital issued at a premium representing new consideration, the amount of the premium.
(4) The reference in subsection (2) to a reduction of share capital is—
(a) in the case of a limited company incorporated in a territory outside the United Kingdom, to a reduction under any provision of the law of that territory corresponding to Chapter 10 of Part 17 of the Companies Act 2006, and
(b) in the case of an unlimited company incorporated in a territory outside the United Kingdom, to a reduction under any provision of the law of that territory corresponding to any rule of law of any part of the United Kingdom under which an unlimited company may reduce its share capital.
(5) This section does not apply for the purposes of any provision to the extent that the provision relates to income tax.
1028 Certain payments connected with exempt distributions
(1) A chargeable payment made within 5 years after an exempt distribution is not to be (if it otherwise would be) treated as a repayment of share capital for the purposes of sections 1022 and 1023 (bonus issue following repayment of share capital).
(2) The purpose of the provisions about demergers (which include this section) is set out in section 1074.
(3) In this section—
(a) “chargeable payment” has the meaning given by section 1088, and
(b) “exempt distribution” has the meaning given by section 1075(2).
(1) In this Chapter the following sections provide that a particular matter is not a distribution—
(a) section 1030 (distributions in respect of share capital on a winding up),
(aa) section 1030A (distributions in respect of share capital prior to dissolution of company),
(b) section 1031 (distribution as part of a cross-border merger),
(c) section 1032 (interest etc paid in respect of certain securities),
(ca) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) section 1033 (purchase by unquoted trading company of own shares),
(e) section 1049 (stock dividends),
(f) section 1054 (building society payments),
(g) section 1055 ( registered societies : interest and share dividends),
(h) section 1056 (dividend or bonus relating to transactions with registered society ), and
(i) section 1057 (UK agricultural or fishing co-operatives: interest and share dividends).
(2) The following make similar provision outside this Chapter—
(a) section 1075 (exempt distributions), and
(b) paragraph 6 of Schedule 12 to FA 1988 (transfer of building society's business to a company: qualifying benefits).
1030A Distributions in respect of share capital prior to dissolution of company
(1) This section applies where—
(a) the procedure in section 1000 of the Companies Act 2006 (power to strike off company not carrying on business or in operation) has been commenced in relation to a company, and
(b) the company makes a distribution in respect of share capital in anticipation of its dissolution under that section.
(2) This section also applies where—
(a) a company intends to make, or has made, an application under section 1003 of that Act (striking off on application by company), and
(b) the company makes a distribution in respect of share capital in anticipation of its dissolution under that section.
(3) The distribution is not a distribution of a company for the purposes of the Corporation Tax Acts if conditions A and B are met (but see section 1030B).
(4) Condition A is that, at the time of the distribution, the company—
(a) intends to secure, or has secured, the payment of any sums due to the company, and
(b) intends to satisfy, or has satisfied, any debts or liabilities of the company.
(5) Condition B is that—
(a) the amount of the distribution, or
(b) in a case where the company makes more than one distribution falling within subsection (1)(b) or (2)(b), the total amount of the distributions,
does not exceed £25,000.
(6) In the case of a company incorporated in a territory outside the United Kingdom, any reference in subsection (1) or (2) to a section of the Companies Act 2006 is to be read as a reference to any provision of the law of that territory corresponding to that section.
1030B Section 1030A: effect of company not being dissolved, etc
(1) Where this section applies, a distribution made by a company is to be treated for the purposes of the Corporation Tax Acts as if section 1030A(3) had never applied to it.
(2) This section applies where 2 years have passed since the making of the distribution and—
(a) the company has not been dissolved during that time, or
(b) the company has failed—
(i) to secure, so far as is reasonably practicable, the payment of all sums due to the company, or
(ii) to satisfy all of its debts and liabilities.
(3) In a case where this section applies, all such adjustments as are required in order to give effect to subsection (1) are to be made, whether by the making of assessments or otherwise.
1031 Distribution as part of a cross-border merger
If—
(a) a company making a distribution as part of a merger ceases to exist (without being wound up), and
(b) section 140E or 140F of TCGA 1992 (cross-border mergers) applies in relation to the merger,
the distribution is not a distribution of a company for the purposes of the Corporation Tax Acts.
1032 Interest etc paid in respect of certain securities
(1) Any interest or other distribution which—
(a) is paid out of the assets of a company (“the borrower”) to another company which is within the charge to corporation tax,
(b) is paid in respect of securities of the borrower which are special securities (as defined in section 1015), and
(c) does not fall within paragraph E in section 1000(1) (distributions in respect of non-commercial securities),
is not a distribution for the purposes of the Corporation Tax Acts.
(2) But subsection (1) does not apply if the company to which the interest or other distribution is paid is entitled under any enactment to an exemption from tax in respect of that interest or distribution.
1033 Purchase by unquoted trading company of own shares
(1) A payment made by a company on the redemption, repayment or purchase of its own shares is not a distribution for the purposes of the Corporation Tax Acts if—
(a) the company is an unquoted trading company, or the unquoted holding company of a trading group, and
(b) either Condition A or Condition B is met.
(2) Condition A is that—
(a) the redemption, repayment or purchase is made wholly or mainly for the purpose of benefiting a trade carried on by the company or any of its 75% subsidiaries,
(b) the redemption, repayment or purchase does not form part of a scheme or arrangement the main purpose or one of the main purposes of which is—
(i) to enable the owner of the shares to participate in the profits of the company without receiving a dividend, or
(ii) the avoidance of tax, and
(c) the requirements set out in sections 1034 to 1043 (so far as applicable) are met.
(3) Condition B is that the whole or substantially the whole of the payment (apart from any sum applied in paying capital gains tax charged on the redemption, repayment or purchase)—
(a) is applied by the person to whom it is made in discharging a liability of that person for inheritance tax charged on a death, and
(b) is applied in that way within two years after the death.
(4) But if condition B is met, subsection (1) does not apply so far as the liability in question could without undue hardship have been discharged otherwise than through the redemption, repayment or purchase of—
(a) shares in the company, or
(b) shares in another unquoted company which is a trading company or the holding company of a trading group.
(5) In sections 1034 to 1043—
“the purchase” means the redemption, repayment or purchase referred to in subsection (1), and
“the seller” means the owner of the shares at the time the redemption, repayment or purchase is made.
(6) In this section and sections 1034 to 1047 references to a payment made by a company include anything else that—
(a) is a distribution, or
(b) would be a distribution but for this section.
(1) The seller must be resident ... in the United Kingdom in the tax year in which the purchase is made.
(2) If the shares are held through a nominee, the nominee must also be resident ... in the United Kingdom in the tax year in which the purchase is made.
(3) The residence ... of personal representatives are taken for the purposes of this section to be the same as the deceased person's residence ... immediately before that person's death.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) The shares must have been owned by the seller throughout the 5 years ending with the date of the purchase.
(2) In determining whether the requirement in subsection (1) is met in a case where the seller acquired shares of the same class at different times—
(a) shares acquired earlier are taken into account before shares acquired later, and
(b) any previous disposal by the seller of shares of that class is assumed to be a disposal of shares acquired later rather than of shares acquired earlier.
(3) If the time when any shares were acquired would be determined for the purposes of capital gains tax under any provision of Chapter 2 of Part 4 of TCGA 1992 (reorganisation of share capital, conversion of securities etc) then, unless the shares—
(a) were allotted for payment, or
(b) were comprised in share capital to which section 1049 (stock dividends) applies,
the time when the shares were acquired is determined in the same way for the purposes of this section.
(1) If at any time during the period mentioned in section 1035(1) the shares were transferred to the seller by a person (“the transferor”) who—
(a) was then the seller's spouse or civil partner, and
(b) was then living with the seller (see section 1116),
any period during which the shares were owned by the transferor is treated for the purposes of section 1035(1) as a period of ownership by the seller.
(2) But subsection (1) does not apply if at the date of the purchase the transferor is alive but is no longer the seller's spouse or civil partner living with the seller.
(3) If the seller became entitled to the shares under the will or on the intestacy of a previous owner, or is the personal representative of a previous owner—
(a) any period during which the shares were owned by the previous owner, or the personal representatives of the previous owner, is treated for the purposes of section 1035(1) as a period of ownership by the seller, and
(b) section 1035(1) has effect as if it referred to three years instead of five.
1037 Requirement as to reduction of seller's interest as shareholder
(1) If, immediately after the purchase, the seller owns shares in the company, the seller's interest as a shareholder must be substantially reduced.
This is subject to section 1043.
(2) If, immediately after the purchase, any associate of the seller owns shares in the company, the combined interests as shareholders of the seller and the seller's associates must be substantially reduced.
This is subject to section 1043.
(3) The seller's interest as a shareholder is substantially reduced if (and only if) the seller's subsequent interest is not more than 75% of the seller's prior interest.
This is subject to section 1038.
(4) “The seller's prior interest” means the total nominal value of the shares owned by the seller immediately before the purchase, expressed as a fraction of the issued share capital of the company at that time.
(5) “The seller's subsequent interest” means the total nominal value of the shares owned by the seller immediately after the purchase, expressed as a fraction of the issued share capital of the company at that time.
(6) The question whether the combined interests as shareholders of the seller and the seller's associates are substantially reduced is determined in the same way as the question whether a seller's interest as shareholder is substantially reduced, except that the seller is assumed to have the interests of the seller's associates as well as the seller's own.
1038 Section 1037: effect of entitlement to profits
(1) The seller's interest as a shareholder is not taken to be substantially reduced for the purposes of section 1037(1) if—
(a) the seller would, if the company distributed all its profits available for distribution immediately after the purchase, be entitled to a share of those profits, and
(b) that share expressed as a fraction of the total of those profits is more than 75% of the corresponding fraction immediately before the purchase.
(2) In determining for the purposes of subsection (1) the division of profits among the persons entitled to them, a person entitled to periodic distributions calculated by reference to fixed rates or amounts is regarded as entitled to a distribution of the amount, or maximum amount, to which the person would be entitled for a year.
(3) In subsection (1) “profits available for distribution” has the meaning given by section 830(2) of the Companies Act 2006, but with the differences mentioned in subsections (4) and (5).
(4) For the purposes of subsection (1) the amount of the profits available for distribution (whether immediately before or immediately after the purchase) is treated as increased—
(a) in the case of every company, by £100, and
(b) in the case of a company from which any person is entitled to periodic distributions calculated by reference to fixed rates or amounts, by a further amount equal to that required to make the distribution to which the person is entitled in accordance with subsection (2).
(5) If the total of the sums payable by the company—
(a) on the purchase, and
(b) on any redemption, repayment or purchase of other shares of the company taking place at the same time,
exceeds the amount of the profits available for distribution immediately before the purchase, that amount is treated as further increased by an amount equal to the excess.
(6) References in this section to entitlement are, except in the case of trustees and personal representatives, references to beneficial entitlement.
1039 Requirements where purchasing company is a member of a group
(1) This section applies if the company making the purchase is immediately before the purchase a member of a group.
(2) In this section and sections 1040 to 1041 that group is referred to as “the purchaser's group”.
(3) If—
(a) immediately after the purchase the seller owns shares in one or more other members of the purchaser's group (whether or not the seller then owns shares in the company making the purchase), or
(b) immediately after the purchase the seller owns shares in the company making the purchase, and immediately before the purchase the seller owns shares in one or more other members of the group,
the seller's interest as a shareholder in the group must be substantially reduced (see section 1040(1)).
(4) If immediately before the purchase an associate of the seller owns shares in any member of the purchaser's group, the combined interests as shareholders in the group of the seller and the seller's associates must be substantially reduced (see section 1040(4)).
(5) This section is subject to section 1043 (relaxation of requirements in certain cases).
1040 Determining whether interests as shareholders in a group are substantially reduced
(1) The seller's interest as a shareholder in the purchaser's group is taken to be substantially reduced if (and only if) it is not more than 75% of the corresponding interest immediately before the purchase.
This is subject to section 1041(1).
(2) The seller's interest as a shareholder in the group is calculated by—
(a) expressing the total nominal value of the shares owned by the seller in each relevant company as a fraction of the issued share capital of the company,
(b) adding together the fractions obtained under paragraph (a), and
(c) dividing the result by the number of relevant companies (including any in which the seller owns no shares).
(3) In this section and section 1041 “relevant company” means—
(a) the company making the purchase, and
(b) any other member of the purchaser's group in which the seller owns shares immediately before or immediately after the purchase.
This is subject to subsection (4).
(4) The question whether the combined interests as shareholders in the purchaser's group of the seller and the seller's associates are substantially reduced is determined in the same way as the question whether a seller's interest as a shareholder in a group is substantially reduced, except that—
(a) the seller is assumed to have the interests of the seller's associates as well as the seller's own, and
(b) references in subsection (2) and section 1041(2) to a relevant company are read accordingly.
1041 Section 1040: effect of entitlement to profits
(1) The seller's interest as a shareholder in the purchaser's group is not taken to be substantially reduced if—
(a) the seller would, if every member of the group distributed all its profits available for distribution immediately after the purchase (including any profits received by it on a distribution by another member), be entitled to a share of the profits of one or more of them, and
(b) the new entitlement exceeds 75% of the old entitlement.
(2) In subsection (1)—
“the new entitlement” means the share, or the aggregate of the shares, mentioned in subsection (1)(a), expressed as a fraction of the aggregate of the profits available for distribution of every member of the group which is—
a relevant company, or
a 51% subsidiary of a relevant company, and
“the old entitlement” means the corresponding fraction immediately before the purchase.
(3) Subsections (2) to (5) of section 1038 apply for the purposes of this section as they apply for the purposes of section 1038(1).
(1) The seller must not, immediately after the purchase, be connected with—
(a) the company making the purchase, or
(b) any other company which is a member of the same group as that company.
(2) The purchase must not be part of a scheme or arrangement which is designed, or likely, to result in—
(a) the seller, or
(b) an associate of the seller,
having disqualifying interests in the company.
(3) For the purposes of subsection (2), interests in the company are disqualifying interests if any of the requirements in subsection (1) and sections 1037 and 1039 could not be met if the person in question had those interests immediately after the purchase.
(4) A transaction occurring within one year after the purchase is treated for the purposes of subsection (2) as part of a scheme or arrangement of which the purchase is also part.
(5) Subsections (1) and (2) are subject to section 1043.
(1) Subsection (2) applies if—
(a) any requirement under any of sections 1037 to 1042 which is applicable is not met in relation to the seller, but
(b) the seller proposed or agreed to the purchase in order that the requirement in section 1037(2) or 1039(4) could be met in respect of the redemption, repayment or purchase of shares owned by a person of whom the seller is an associate.
(2) So far as that result is achieved through the purchase, section 1033(2) has effect as if the requirements in sections 1037 to 1042 were met in relation to the seller.
1044 Advance clearance of payments by Commissioners
(1) A company may make an application under this section to the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) before making a payment on the redemption, repayment or purchase of its own shares.
(2) If, before the payment is made, the Commissioners notify the company that they are satisfied that section 1033 will apply to it, the payment is treated as one to which section 1033 applies.
(3) If, before the payment is made, the Commissioners notify the company that they are satisfied that section 1033 will not apply to it, the payment is treated as one to which section 1033 does not apply.
(1) An application under section 1044—
(a) must be in writing, and
(b) must contain particulars of the relevant transactions.
(2) The Commissioners may by notice require the applicant to provide further particulars for the purpose of enabling them to make their decision.
(3) The power under subsection (2) must be exercised within 30 days of the receipt of—
(a) the application, or
(b) any further particulars previously required under subsection (2).
(4) If a notice under subsection (2) is not complied with within 30 days, or any longer period that the Commissioners may allow, the Commissioners need not proceed further on the application.
(5) The Commissioners must notify their decision to the applicant—
(a) within 30 days of receiving the application, or
(b) if they give notice under subsection (2), within 30 days of the notice being complied with.
(6) If particulars provided under this section do not fully and accurately disclose all facts and circumstances material for the decision of the Commissioners, any resulting notification by the Commissioners is void.
(1) A company which treats a payment made by it as one to which section 1033 applies must make a return to an officer of Revenue and Customs giving details of—
(a) the payment, and
(b) the circumstances by reason of which section 1033 is regarded as applying to it.
(2) The return must be made within 60 days after the payment.
(3) A person connected with a company must give notice to an officer of Revenue and Customs if—
(a) the company treats a payment made by it as one to which section 1033 applies and in relation to which Condition A in that section is met, and
(b) the person knows of any scheme or arrangement of the kind mentioned in section 1042(2) that affects the payment.
(4) The notice—
(a) must contain particulars of the scheme or arrangement, and
(b) must be given within 60 days after the person first knows of both the payment and the scheme or arrangement.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1047 Meaning of “group” and “51% subsidiary” in sections 1033 to 1047
(1) In this section and sections 1033 to 1046 “group” (except in the expression “trading group”) means a company which has one or more 51% subsidiaries but is not itself a 51% subsidiary of any other company, together with those subsidiaries.
This is subject to subsection (2).
(2) If the whole or a significant part of the business carried on by an unquoted company (“the successor company”) was previously carried on by—
(a) the company making the purchase, or
(b) a company which is, apart from this subsection, a member of a group to which the company making the purchase belongs,
the successor company and any company of which it is a 51% subsidiary are treated as being members of the same group as the company making the purchase (whether or not, apart from this subsection, the company making the purchase is a member of a group).
(3) But subsection (2) does not apply if the successor company first carried on the business in question more than 3 years before the time of the purchase.
(4) For the purposes of this section and sections 1033 to 1046, a company which has ceased to be a 51% subsidiary of another company before the time of the purchase is treated as continuing to be a 51% subsidiary of that company if at the time of the purchase there exist arrangements under which it could again become such a subsidiary.
(1) In sections 1033 to 1047—
“holding company” means a company whose business (ignoring any trade carried on by it) consists wholly or mainly of holding shares or securities of one or more companies which are its 75% subsidiaries,
“quoted company” means a company whose shares (or any class of whose shares) are listed in the official list of a stock exchange,
“shares” includes stock,
“trade” does not include dealing in shares, securities, land or futures,
“trading company” means a company whose business consists wholly or mainly of carrying on a trade or trades,
“trading group” means a group the business of whose members (taken together) consists wholly or mainly of carrying on a trade or trades, and
“unquoted company” means a company which is neither a quoted company nor a 51% subsidiary of a quoted company.
(2) In the definition of “trading group” in subsection (1) “group” means a company which has one or more 75% subsidiaries, together with those subsidiaries.
(3) References in sections 1033 to 1047 to the owner of shares are to the beneficial owner except where the shares—
(a) are settled property, or
(b) are comprised in the estate of a person who has died.
In such cases the references are to the trustees of the settlement or, as the case may be, the deceased's personal representatives.
(4) References in sections 1033 to 1047 to a payment made by a company are to be read in accordance with section 1033(6).
(1) This section applies to—
(a) share capital issued by a UK resident company in lieu of a cash dividend, and
(b) bonus share capital issued by a UK resident company in respect of shares in the company of a qualifying class.
(2) For the purposes of subsection (1)(b) shares are of a qualifying class if—
(a) shares of that class carry the right to receive bonus share capital in the company (of the same or a different class), and
(b) that right is conferred by the terms on which shares of that class were originally issued or by those terms as subsequently extended or otherwise varied.
(3) If the share capital is issued in a case where section 410(2), (3) or (4) of ITTOIA 2005 (stock dividend income) applies—
(a) the share capital does not, despite paragraph C in section 1000(1) (redeemable share capital), constitute a distribution within the meaning of section 1000(1), and
(b) the share capital is not, for the purposes of—
(i) section 1022 (bonus issues following repayment of share capital), or
(ii) section 1026 (distributions following a bonus issue),
treated as issued “as paid up otherwise than by the receipt of new consideration”.
(4) This section is subject to—
(a) section 1050, and
(b) paragraph 108 of Schedule 2 (special rules for share capital issued in respect of shares issued before 6 April 1975).
1050 Application of section 1049 where bonus share capital is converted etc
(1) This section applies if bonus share capital falling within section 1049(1)(b) is converted into, or exchanged for, shares in the company of a different class.
(2) In this section “replacement shares” means shares in the company issued—
(a) in connection with the conversion or exchange, and
(b) in consideration of the cancellation, extinguishment or acquisition by the company of the bonus share capital.
(3) Section 1049 does not apply to any replacement shares.
(4) But if section 410 of ITTOIA 2005 (stock dividend income) applied to any of the bonus share capital, subsection (5) applies to replacement shares issued in consideration of the cancellation, extinguishment or acquisition by the company of the bonus share capital to which section 410 of ITTOIA 2005 applied.
(5) The replacement shares referred to in subsection (4)—
(a) do not, despite paragraph C in section 1000(1), constitute a distribution within the meaning of section 1000(1), and
(b) are not, for the purposes of—
(i) section 1022 (bonus issues following repayment of share capital), or
(ii) section 1026 (distributions following a bonus issue),
treated as issued “as paid up otherwise than by the receipt of new consideration”.
1051 “Bonus share capital” and “in lieu of a cash dividend”
(1) In sections 1049 and 1050 “bonus share capital” means—
(a) share capital issued otherwise than wholly for new consideration, or
(b) the part (if there is such a part) of any share capital so issued that is not properly referable to new consideration.
(2) For the purposes of section 1049(1)(a) share capital is issued by a company in lieu of a cash dividend if—
(a) it is issued in consequence of the exercise by a person of an option conferred on the person, and
(b) that option is an option to receive, in respect of shares in the company, either a dividend in cash or additional share capital.
(3) For the purposes of subsection (2), an option to receive either a dividend in cash or additional share capital is conferred on a person not only—
(a) if the person is required to choose one or the other, but also
(b) if the person is offered the one subject to a right, however expressed, to choose the other instead.
(4) The reference in subsection (2) to a person's exercise of an option includes a person's abandonment of, or failure to exercise, a right such as is mentioned in subsection (3)(b).
1052 Share capital to which section 1049 applies: returns
(1) If a company issues, in an accounting period, share capital to which section 1049 applies (“relevant share capital”), the company must make a return of the capital for each return period in which it was issued (see section 1053).
(2) The return must be made—
(a) to an officer of Revenue and Customs, and
(b) within 30 days from the end of the return period.
(3) A return made under this section for a return period must give the following information for any relevant share capital issued by the company in the period—
(a) the date on which it was issued,
(b) the date on which the company was first required to issue it (if different from the date on which it was issued),
(c) details of the terms on which it was issued, and
(d) what its cash equivalent is under section 412 of ITTOIA 2005.
(4) If it appears to an officer of Revenue and Customs that a company should have, but has not, made a return under this section for a particular return period, the officer may by notice require the company to do so.
(5) If no relevant share capital was issued by the company in the return period, a return required to be made under subsection (4) must state that that is the case.
(6) The notice under subsection (4) must specify the period within which the return must be made.
(7) That period must be at least 30 days.
(1) For the purposes of section 1052 a company's return periods in any accounting period are the periods that begin and end as follows.
Rule 1 A return period begins at the beginning of the accounting period.
Rule 2 If one or more quarterly days fall within the accounting period (excluding the last day of the accounting period), the end of each such day is the end of a return period, and a new return period begins immediately afterwards.
Rule 3 A return period ends at the end of the accounting period.
(2) For the purposes of subsection (1) the quarterly days are 31 March, 30 June, 30 September and 31 December.
(1) This section applies if—
(a) any interest, or
(b) any dividend or other distribution,
is payable in respect of shares in, or a deposit with or loan to, a building society.
(2) No part of the interest, or of the dividend or other distribution, is a distribution of the society for corporation tax purposes.
(3) See also section 372 of ITTOIA 2005 (which makes provision about the income tax treatment of building society dividends).
1055 Registered societies : interest and share dividends
(1) Interest paid by a registered society in respect of a mortgage, loan, loan stock or deposit is not a distribution for corporation tax purposes.
(2) If any dividend, bonus, interest or other sum—
(a) is paid to a shareholder in a registered society , and
(b) is payable by reference to the amount of the shareholder's holding in the society's share capital,
it is not a distribution for corporation tax purposes.
(3) Subsections (1) and (2) apply even if the amount in question would otherwise be a distribution by virtue of any enactment relating to corporation tax.
(4) For the purposes of this section crediting an amount counts as paying it.
(5) See also section 379(1) of ITTOIA 2005 (income tax treatment of sums payable as mentioned in subsection (2)).
(1) This section applies if—
(a) a dividend or bonus is granted by a registered society , and
(b) section 132 of CTA 2009 (dividends etc relating to transactions with a registered society ) allows the sum representing the dividend or bonus to be deducted in calculating the profits of a trade.
(2) The dividend, or the bonus, is not a distribution for the purposes of the Corporation Tax Acts.
1057 UK agricultural or fishing co-operatives: interest and share dividends
(1) Interest paid by a UK agricultural or fishing co-operative in respect of a mortgage, loan, loan stock or deposit is not a distribution for corporation tax purposes.
(2) If any dividend, bonus, interest or other sum—
(a) is paid to a shareholder in a UK agricultural or fishing co-operative, and
(b) is payable by reference to the amount of the shareholder's holding in the co-operative's share capital,
it is not a distribution for corporation tax purposes.
(3) Subsections (1) and (2) apply even if the amount in question would otherwise be a distribution by virtue of any enactment relating to corporation tax.
(4) For the purposes of this section crediting an amount counts as paying it.
(5) See also section 379(1) of ITTOIA 2005 (income tax treatment of sums payable as mentioned in subsection (2)).
1058 Meaning of “UK agricultural or fishing co-operative”
(1) In section 1057 “UK agricultural or fishing co-operative” means a co-operative association—
(a) which is established in the United Kingdom and UK resident, and
(b) whose primary object is assisting its members in—
(i) carrying on agricultural or horticultural businesses on land occupied by them in the United Kingdom, or
(ii) carrying on businesses consisting of the catching or taking of fish or shellfish.
(2) In subsection (1) “co-operative association” means a body with a written constitution from which the Secretary of State is satisfied that it is in substance a co-operative association.
(3) For the purposes of subsection (2) the Secretary of State must have regard to the way in which the body's constitution provides for its income to be applied for its members' benefit, and all other relevant provisions.
(4) In Northern Ireland subsections (2) and (3) apply with the substitution for “the Secretary of State” of “the Department of Agriculture and Rural Development”.