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Amendment of certain provisions relating to exempt income.
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35.—(1) The Principal Act is amended—
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(a) in section 231—
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(i) by renumbering the existing provision as subsection (1) of that section,
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(ii) by substituting in that provision “shall be exempt from income tax and corporation tax” for “shall not be taken into account for any purpose of the Tax Acts”, and
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(iii) by inserting the following after that provision:
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“(2) As respects the making of a return of income (being a return which a chargeable person, within the meaning of section 950, is required to deliver under section 951), the Tax Acts shall apply—
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(a) as if subsection (1) had not been enacted,
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(b) notwithstanding anything to the contrary in Part 41, as if a person to whom profits or gains referred to in subsection (1) arise for any chargeable period (within the meaning of section 321(2)) were, if such person would not otherwise be, a chargeable person (within the meaning of section 950) for that chargeable period,
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(c) where a person to whom profits or gains referred to in subsection (1) arise for any chargeable period (within the meaning of section 321(2)) is a person to whom a notice under section 951(6) has been issued, as if such a notice had not been issued, and
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(d) in so far as those Acts relate to the keeping of records (within the meaning of section 886) and the making available of such records for inspection, as if such profits or gains were chargeable to income tax or corporation tax, as the case may be.
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(3) For the purposes of subsection (2)—
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(a) profits or gains referred to in subsection (1) or a loss referred to in paragraph (b) shall be computed in accordance with the Tax Acts as if subsection (1) had not been enacted, and
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(b) where a loss is incurred for any chargeable period (within the meaning of section 321(2)), the amount of that loss shall be included in the return of income referred to in subsection (2) for that chargeable period.”,
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(b) in section 232—
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(i) in subsection (2), by substituting “shall be exempt from income tax and corporation tax” for “shall not be taken into account for any purpose of the Tax Acts”, and
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(ii) by inserting the following after subsection (2):
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“(3) As respects the making of a return of income (being a return which a chargeable person, within the meaning of section 950, is required to deliver under section 951), the Tax Acts shall apply—
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(a) as if subsection (2) had not been enacted,
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(b) notwithstanding anything to the contrary in Part 41, as if a person to whom profits or gains referred to in subsection (2) arise for any chargeable period (within the meaning of section 321(2)) were, if such person would not otherwise be, a chargeable person (within the meaning of section 950) for that chargeable period,
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(c) where a person to whom profits or gains referred to in subsection (2) arise for any chargeable period (within the meaning of section 321(2)) is a person to whom a notice under section 951(6) has been issued, as if such a notice had not been issued, and
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(d) in so far as those Acts relate to the keeping of records (within the meaning of section 886) and the making available of such records for inspection, as if such profits or gains were chargeable to income tax or corporation tax, as the case may be.
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(4) For the purposes of subsection (3)—
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(a) profits or gains referred to in subsection (2) or a loss referred to in paragraph (b) shall be computed in accordance with the Tax Acts as if subsection (2) had not been enacted, and
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(b) where a loss is incurred for any chargeable period (within the meaning of section 321(2)), the amount of that loss shall be included in the return of income referred to in subsection (3) for that chargeable period.”,
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and
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(c) in section 233—
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(i) in subsection (2), by substituting “shall be exempt from income tax and corporation tax” for “shall not be taken into account for any purpose of the Tax Acts”, and
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(ii) by inserting the following after subsection (2):
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“(3) As respects the making of a return of income (being a return which a chargeable person, within the meaning of section 950, is required to deliver under section 951), the Tax Acts shall apply—
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(a) as if subsection (2) had not been enacted,
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(b) notwithstanding anything to the contrary in Part 41, as if a person to whom profits or gains referred to in subsection (2) arise for any chargeable period (within the meaning of section 321(2)) were, if such person would not otherwise be, a chargeable person (within the meaning of section 950) for that chargeable period,
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(c) where a person to whom profits or gains referred to in subsection (2) arise for any chargeable period (within the meaning of section 321(2)) is a person to whom a notice under section 951(6) has been issued, as if such a notice had not been issued, and
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(d) in so far as those Acts relate to the keeping of records (within the meaning of section 886) and the making available of such records for inspection, as if such profits or gains were chargeable to income tax or corporation tax, as the case may be.
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(4) For the purposes of subsection (3)—
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(a) profits or gains referred to in subsection (2) or a loss referred to in paragraph (b) shall be computed in accordance with the Tax Acts as if subsection (2) had not been enacted, and
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(b) where a loss is incurred for any chargeable period (within the meaning of section 321(2)), the amount of that loss shall be included in the return of income referred to in subsection (3) for that chargeable period.”.
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(2) Subsection (1) applies as respects any chargeable period (within the meaning of section 321(2) of the Principal Act) commencing on or after 1 January 2004.
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