Paragraph 3 Non-close condition

Section 528 is amended as follows.

In subsection (4)—

After subsection (4B) insert—

“(4C)

The non-close condition is met—

(a)

in relation to a company, if—

(i)

it is not a close company, or

(ii)

it is a close company but only because it has an institutional investor as a direct or indirect participator, and

(b)

in relation to a person or scheme other than a company, if it would fall within paragraph (a)(i) or (ii) if—

(i)

the person’s business or the scheme were a company, and

(ii)

the interests of persons in the business or scheme were shares in the company.”

In subsection (5), for “subsection (4)(a)” substitute “determining whether the non-close condition is met”.

After subsection (5A) (as inserted by paragraph 4) insert—

“(5B)

For the purposes of subsection (4C)(a)(ii)—

(a)

a person is a “direct participator” if the person is a participator for the purposes of Part 10 of CTA 2010 (see section 454), and

(b)

a person is an “indirect” participator in a company if the person has a share or interest in the capital or income of the company through another body corporate or other bodies corporate.

(5C)

In determining whether a person is an indirect participator—

(a)

reference to having a share or interest in the capital or income of a company through a body corporate is to be read in accordance with sub-paragraphs (9) and (10) of paragraph 46 of Schedule 5AAA to TCGA 1992 (meaning of direct or indirect participator), and

(b)

a person is regarded for the purposes of those sub-paragraphs, and for the purposes of subsection (5B)(b) of this section, as having a share or interest in the capital or income of a company if the person would be a participator in the company as a result of section 454(2) of CTA 2010.”

Section 528 has effect, and is to be deemed always to have had effect, with the amendments made by this paragraph.