Finance Act, 1996

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Amendment of section 17 (undertakings for collective investment) of Finance Act, 1993.

38.—(1) Section 17 (as amended by section 57 of the Finance Act, 1994 ) of the Finance Act, 1993 , is hereby amended—

(a) by the insertion after the proviso to paragraph (b) of subsection (2) of the following additional proviso to that paragraph:

“Provided also that in computing profits for the purposes of the foregoing provisions of this paragraph, subsection (1A) of section 13 shall apply as if the rate per cent. of capital gains tax specified in subsection (3) of section 3 of the Capital Gains Tax Act, 1975 , were the rate per cent. of corporation tax specified in paragraph (b) of subsection (1) of section 1.”,

(b) by the insertion after paragraph (d) of subsection (4) of the following paragraph:

“(e) Where in a chargeable period an undertaking for collective investment incurs a loss on the disposal (hereafter in this paragraph referred to as the ‘first-mentioned disposal’) of an asset the gain or loss in respect of a deemed disposal of which was included in a net amount to which paragraph (b) (ii) applied for any preceding chargeable period, so much of the allowable loss on the first-mentioned disposal as is equal to the excess of the amount of the loss over the amount which, if paragraph (a) had not been enacted, would have been the allowable loss on the first-mentioned disposal shall be treated for purposes of paragraph (b) as an allowable loss which would otherwise accrue to the undertaking for collective investment on disposals deemed by virtue of paragraph (a) to have been made in the chargeable period.”,

and

(c) by the insertion after subsection (6) of the following subsection:

“(6A) (a) Where in a chargeable period an undertaking for collective investment disposes of any securities and in the immediately following chargeable period or its basis period interest becoming payable in respect of the securities is receivable by the undertaking for collective investment, then, the gain or loss accruing on the disposal shall be computed as if the price paid by the undertaking for collective investment for the securities was reduced by the appropriate amount in respect of the interest:

Provided that where for a chargeable period the provisions of this paragraph apply so as to reduce the price paid for securities, the amount by which the price paid for the securities is reduced shall be treated as a loss arising, in the immediately following chargeable period, from the disposal of the securities.

(b) In this paragraph—

‘the appropriate amount in respect of the interest’ means the appropriate amount in respect of the interest which would be determined in accordance with Schedule 11 to the Income Tax Act, 1967 , if the undertaking for collective investment was the first buyer and it carried on a trade to which section 368 (1) of the said Act applies:

Provided that in determining the appropriate amount in respect of the interest in accordance with the said Schedule 11, paragraph 3 (4) of that Schedule shall apply as if there were deleted ‘in the opinion of the Appeal Commissioners’;

‘securities’ has the same meaning as in subsection (1) of section 29 of the Finance Act, 1984 .”.

(2) This section shall apply and have effect—

(a) as respects paragraph (a) of subsection (1), for accounting periods ending on or after the 1st day of April, 1995, and

(b) as respects paragraphs (b) and (c) of subsection (1), in relation to a disposal on or after the 28th day of March, 1996.