Search Legislation

Finance Act 2006

 Help about what version

What Version

 Help about advanced features

Advanced Features

Changes over time for: Income and Corporation Taxes Act 1988

 Help about opening options

No versions valid at: 22/03/2006

Alternative versions:

Status:

Point in time view as at 22/03/2006. This version of this part contains provisions that are not valid for this point in time. Help about Status

Close

Status

Not valid for this point in time generally means that a provision was not in force for the point in time you have selected to view it on.

Changes to legislation:

There are currently no known outstanding effects for the Finance Act 2006, Income and Corporation Taxes Act 1988. Help about Changes to Legislation

Close

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. At the current time any known changes or effects made by subsequent legislation have been applied to the text of the legislation you are viewing by the editorial team. Please see ‘Frequently Asked Questions’ for details regarding the timescales for which new effects are identified and recorded on this site.

Valid from 19/07/2006

Income and Corporation Taxes Act 1988U.K.

Amendments of ICTA: introductoryU.K.

1ICTA is amended as follows.

Section 741: application subject to sections 741B and 741CU.K.

2(1)Section 741 (exemption from sections 739 and 740) is amended as follows.

(2)At the beginning of the section insert “ (1) ”.

(3)At the end of the section insert—

(2)This section is subject to sections 741B and 741C (application of this section and section 741A etc)..

(4)In consequence of amendments made by this Schedule, the heading of the section becomes “ Exemption from sections 739 and 740 (transactions before 5th December 2005) ”.

(5)The amendments made by this paragraph shall be taken to have come into force on 5th December 2005.

Exemption from sections 739 and 740: new provisionU.K.

3(1)After section 741 insert—

741AExemption from sections 739 and 740 (transactions on or after 5th December 2005)

741A(1)The individual is not liable to income tax by virtue of section 739 or 740 for the year of assessment by reference to the relevant transactions if he satisfies an officer of the Board—

(a)that Condition A is met, or

(b)in a case where Condition A is not met, that Condition B is met.

(2)Condition A is that it would not be reasonable to draw the conclusion, from all the circumstances of the case, that the purpose of avoiding liability to taxation was the purpose, or one of the purposes, for which the relevant transactions or any of them were effected.

(3)Condition B is that—

(a)all the relevant transactions were genuine commercial transactions, and

(b)it would not be reasonable to draw the conclusion, from all the circumstances of the case, that any one or more of those transactions was more than incidentally designed for the purpose of avoiding liability to taxation.

(4)The intentions and purposes of any person who, whether or not for consideration,—

(a)designs or effects the relevant transactions or any of them, or

(b)provides advice in relation to the relevant transactions or any of them,

are to be taken into account in determining the purposes for which those transactions or any of them were effected.

(5)A relevant transaction is a commercial transaction only if it is effected—

(a)in the course of a trade or business, or

(b)with a view to setting up and commencing a trade or business,

and, in either case, for the purposes of that trade or business.

(6)For that purpose, the making and managing of investments, or the making or managing of investments, is not a trade or business except to the extent that—

(a)the person by whom it is done, and

(b)the person for whom it is done,

are independent persons dealing at arm's length.

(7)In this section—

  • commercial transaction” does not include—

    (a)

    a transaction on terms other than those that would have been made between independent persons dealing at arm's length, or

    (b)

    a transaction that would not have been entered into between independent persons dealing at arm's length;

  • independent persons” means persons who are not connected with each other (within the meaning given by section 839);

  • relevant transactions” means—

    (a)

    the transfer, and

    (b)

    any associated operations;

  • revenue” includes taxes, duties and national insurance contributions;

  • taxation” includes any revenue for whose collection and management the Commissioners for Her Majesty's Revenue and Customs are responsible.

(8)Any associated operation that would not (apart from this subsection) fall to be taken into account for the purposes of this section must be taken into account for those purposes if, were it to be so taken into account, the conditions in subsection (1) above would be failed by reference to—

(a)that associated operation, or

(b)that associated operation taken together with the transfer or any one or more other associated operations.

(9)The jurisdiction of the Special Commissioners on any appeal includes jurisdiction to review any decision taken by an officer of the Board in exercise of the officer's functions under this section.

(10)This section is subject to sections 741B and 741C (application of section 741 and this section etc)..

(2)The amendment made by this paragraph shall be taken to have come into force on 5th December 2005.

Application of sections 741 and 741AU.K.

4(1)After section 741A insert—

741BApplication of sections 741 and 741A

741B(1)This section makes provision with respect to the application for the year of assessment of—

(a)section 741,

(b)section 741A, or

(c)section 741C,

in the case of the individual and the relevant transactions.

(2)In this section—

  • new transaction” means a relevant transaction effected on or after the relevant date;

  • old transaction” means a relevant transaction effected before the relevant date;

  • the relevant date” means 5th December 2005;

  • relevant transactions” means—

    (a)

    the transfer, and

    (b)

    any associated operations.

(3)If all the relevant transactions are old transactions, section 741 is the provision to be applied.

(4)If all the relevant transactions are new transactions, section 741A is the provision to be applied.

(5)If—

(a)any one or more of the relevant transactions are old transactions, and

(b)any one or more of the relevant transactions are new transactions,

section 741C is the provision to be applied.

741CCases where there are both old transactions and new transactions

741C(1)This section applies by virtue of section 741B if the case falls within subsection (5) of that section.

(2)Sections 739 and 740 do not apply, unless subsection (3) below applies.

(3)This subsection applies if—

(a)the conditions in section 741(1) are failed by reference to the old transactions or any of them, or

(b)the conditions in section 741A(1) are failed by reference to the new transactions or any of them.

(4)Where subsection (3) above applies, the general rule is that sections 739 and 740 apply as they would have applied apart from any exemption by virtue of sections 741 to 741C.

(5)In any case where subsection (3) above applies by virtue only of paragraph (b) of that subsection, the general rule has effect subject to, and in accordance with, the Rules in subsections (6) to (8) below.

(6)Rule 1 is that, for the purposes of section 739(2) or (3), any income arising before the relevant date must not be brought into account as income of the person resident or domiciled outside the United Kingdom.

(7)Rule 2 is that for the purposes of section 740, where—

(a)a benefit is received by the individual in a year of assessment ending after the relevant date, and

(b)relevant income of years of assessment up to and including that year falls to be determined,

the general rule requires years ending before the relevant date to be brought into account as well as years ending after that date.

(8)Rule 3 is that, for the purposes of section 740, a benefit received by the individual in the year 2005-06 is to be left out of account to the extent that, on a time apportionment basis, it fell to be enjoyed in any part of the year that falls before the relevant date.

(9)This section is to be read as one with section 741B..

(2)The amendment made by this paragraph shall be taken to have come into force on 5th December 2005.

Just and reasonable apportionment in certain casesU.K.

5(1)After section 741C insert—

741DSection 739: just and reasonable apportionment in certain cases

741D(1)This section applies where—

(a)an individual is liable to tax by virtue of section 739 for a year of assessment (the “taxable year”), but

(b)the conditions in subsections (2) to (4) below are met.

(2)Condition 1 is that since the making of the transfer there have been one or more years of assessment when the circumstances were such that, so far as relating to such of the relevant transactions as were effected before the end of the year, the individual—

(a)was not liable to tax by virtue of section 739, or

(b)would not have been liable to tax by virtue of section 739 if there had been any deemed income of his under that section,

because an appropriate exemption applied or, in a case falling within paragraph (b) above, would have applied.

(3)Condition 2 is that the individual is liable to tax under section 739 in the taxable year in consequence of Condition B in section 741A(3) not being met.

(4)Condition 3 is that the income by reference to which the individual is liable to tax for the taxable year is attributable—

(a)partly to relevant transactions by reference to which the appropriate exemption applied for the last exempt year of assessment, and

(b)partly to associated operations not falling within paragraph (a) above (“chargeable operations”).

(5)For the purposes of this section, a year of assessment is “exempt” if it is one of the years of assessment mentioned in subsection (2) and there is no earlier year of assessment for which—

(a)the individual was liable to tax by virtue of section 739, or

(b)the individual would have been liable to tax by virtue of section 739, if there had been any deemed income of his under that section.

(6)Where this section applies, the liability of the individual is to be reduced as if it fell to be determined by reference to only so much of the income as appears to an officer of the Board to be justly and reasonably attributable to chargeable operations in all the circumstances of the case.

(7)The facts and matters that may be taken into account in determining for the purposes of subsection (6) above whether income may be regarded as justly and reasonably attributable to chargeable operations include whether, and to what extent, the chargeable operations or any of them directly or indirectly affect any of the following—

(a)the character, description or amount of any income of any person,

(b)any person's power to enjoy any income,

(c)the character, description or amount of any income which a person has power to enjoy.

(8)The jurisdiction of the Special Commissioners on any appeal includes jurisdiction to review any decision taken by an officer of the Board in exercise of the officer's functions under this section.

(9)In this section—

  • appropriate exemption” means exemption by virtue of—

    (a)

    paragraph (b) of section 741(1), or

    (b)

    Condition B in section 741A(3);

  • relevant transactions” means—

    (a)

    the transfer, and

    (b)

    any associated operations..

(2)The amendment made by this paragraph shall be taken to have come into force on 5th December 2005.

Section 742: interpretation of the ChapterU.K.

6(1)Section 742 (interpretation of sections 739 to 741) is amended as follows.

(2)In subsection (1) (meaning of “associated operations”) for “sections 739 to 741” substitute “ this Chapter ”.

(3)At the end of subsection (1), insert— “ It is immaterial whether the operation is effected before, after, or at the same time as the transfer. ”.

(4)After subsection (1) insert—

(1A)The income that becomes payable to, or has become income of, a person resident or domiciled outside the United Kingdom that is referred to in section 739(1) or (3) or section 740(1) includes any income which becomes payable to, or has become income of, the person by virtue or in consequence of—

(a)the transfer,

(b)one or more associated operations, or

(c)the transfer and one or more associated operations.

(1B)The income which an individual has power to enjoy, as mentioned in section 739(2), includes any income which he has power to enjoy by virtue or in consequence of—

(a)the transfer,

(b)one or more associated operations, or

(c)the transfer and one or more associated operations..

(5)The heading to the section accordingly becomes “ Interpretation of this Chapter ”.

(6)The amendments made by this paragraph shall be taken to have come into force on 5th December 2005.

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Point in Time: This becomes available after navigating to view revised legislation as it stood at a certain point in time via Advanced Features > Show Timeline of Changes or via a point in time advanced search.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

Timeline of Changes

This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.

Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources