Finance Bill 2002
Amendment 211 Page 77 Lines 13&14
Mr Paul Boateng MP (Labour Brent South)
Clause 100, page 77, leave out lines 13 and 14 and insert-
?(6) For the purposes of subsection (5) above, ?control?, in relation to a company, means the power of a person to secure-
(a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
(b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,that the affairs of the company are conducted in accordance with his wishes.
(7) There shall be left out of account for the purposes of subsection (6) above-
(a) any shares held by a company, and
(b) any voting power or other powers arising from shares held by a company,if a profit on a sale of the shares would be treated as a trading receipt of a trade carried on by the company and the shares are not, within the meaning of Chapter 1 of Part 12, assets of an insurance company's long-term insurance fund (see section 431(2)).?.
EXPLANATORY NOTE
SUMMARY
1. The amendment removes an unintended restriction that denies relief for interest on genuine commercial securities issued by some banks and securities houses.
DETAILS OF THE AMENDMENT
2. The amendment deletes the definition of control (which operates by reference to section 416 ICTA 1988) and inserts new subsections 209A(6) and 209A(7) to redefine control for the purposes of section 209A.
3. New section 209A(6) is based on an existing definition of control (that in section 840 ICTA 1988) and operates by reference to the power of a person to secure through shareholdings, voting power or other powers that the affairs of the company are conducted in accordance with his wishes.
4. New section 209A(7) provides that shares and voting power or other powers held by a company are ignored where the sale of the shares would give rise to a trading receipt. This exemption applies mainly to banks and securities houses, but not where the shares are assets of an insurance company's long term insurance fund.
BACKGROUND
5. The amendment takes account of representations made following the publication of the Bill.
6. The definition of control for this clause in the Bill as published excludes some banks and securities houses from obtaining the intended relief. This is because they structure their business for sound, commercial reasons in a way that is within this definition of ?control?. The amendment to revise the definition of ?control? removes this unintended restriction.