Regulation 5 Amendments to the 1986 Regulations

After regulation 6(2) of the 1986 Regulations there shall be inserted—

“(3)

Section 257 of the Taxes Act 1970 shall apply to an election under paragraph (1) (ff) as it applies to an election under subsection (1) or subsection (2) of section 256 of that Act but as if—

(a)

subsection (2) were omitted, and

(b)

the references in subsections (1), (3) and (4) to“the companies”were references to“the building society and the company”and the reference in subsection (3) to“each company”were a reference to“both the building society and the company”.

(4)

For the purposes of paragraph (1) (ff)—

(a)

a company shall be treated as a 51 per cent subsidiary of a building society if and so long as more than 50 per cent. of its ordinary share capital is owned directly or indirectly by the building society,

(b)

subject to paragraph (c), a building society shall be treated as owning share capital directly or indirectly in a company if it would be so treated for the purposes of section 532 of the Taxes Act, and

(c)

in determining whether a building society owns more than 50 per cent. of the ordinary share capital of a company, it shall be treated as not being the owner—

i)

of any share capital which it owns directly or indirectly in a company which is not resident in the United Kingdom, or

ii)

of any share capital which it owns indirectly and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt.”