503 Information

Summary

This section provides that where an event occurs requiring the withdrawal of relief, notification by the company and persons connected with the company, or in certain instances, by individuals, must be made to the inspector. In addition, the inspector has powers to require information.

Details

(1) An individual who has obtained relief is obliged to give notice in writing to the inspector, within 60 days of coming to know of certain events which would lead to a withdrawal of that relief. These events are where —

• the individual becomes connected with the company (section 492);
• the individual disposes of eligible shares in the company (section 496);
• the individual disposes of shares transferred by his/her spouse or civil partner at a time when they are living together (section 17(2));
• the individual receives value from the company (section 497(1)).

(2) The company, and any person connected with the company who has knowledge of the matter, is obliged to notify the inspector in writing within 60 days of the event, if relief is to be withdrawn because of the occurrence of one of the following events —

• the company ceases to be a qualifying company (section 494);
• the company ceases to be carrying on a relevant trading activities (section 494);
• the company gives value to any of its shareholders (sections 497 and 499);
• the company does anything which disqualifies an individual from the relief under the replacement capital rules (section 498);
• the eligible shares on which relief has been claimed were not issued for bona fide commercial purposes (section 500).

In the case of a connected person, the 60 day period runs from the date of his/ her coming to know of the event.

(3) Where an inspector has reason to believe that a person has failed to give such a notice, he/she may require that person, by a notice in writing, to furnish him/ her with such information relating to any event as the inspector may reasonably require for the purposes of this Part. The time limit prescribed by the inspector for furnishing the information must not be less than 60 days.

(4) & (5) Where there has been a claim for relief the inspector may serve a notice, requiring the provision of information, on the person concerned (being the claimant in the case of section 492(11), the company and any person controlling it in the case of section 494(12) and both in the case of section 500 should he/she have reason to believe that certain events justifying the refusal of relief have occurred. These events are —

• the person claiming relief has subscribed for the company’s shares as part of any arrangement which provides for another person to subscribe for shares in another company with which that individual, or any other individual who is a part to the arrangement, is connected (section 492(11));
• the company exercises or acquires some form of direct or indirect control over another company or comes under the control of another company (section 494(12));
• the shares have been subscribed for and issued as part of a scheme, the main purpose or one of the main purposes of which is the avoidance of tax (section 500).

(6) Where relief has been granted in respect of shares in a company, an inspector is able to trace the ultimate beneficiary where value passes from the company in the form of a payment or asset which may constitute value received within the meaning of section 497 or section 499(5). The recipient of such a payment or asset and any person on whose behalf it was received can be required by an inspector to state whether the payment or asset received by him/her was received on behalf of another person and if so to give the name and address of the person on whose behalf it was received.

(7) Where relief has been claimed in respect of shares, an inspector is entitled to ascertain the name and address of the beneficial owner of the shares not only where they are held in the name of a nominee but also where they are held through a series of nominees.

Accordingly, where any relief has been claimed, the inspector is empowered to require any person who holds or has held shares in the company, and any person on whose behalf any such shares are or were held, to state whether they are or were held on his/her address of that other person.

(8) No obligation of secrecy can preclude an inspector from disclosing to a company that relief has been given or claimed in respect of a particular number or proportion of its shares. (This power would not, however, entitle him/her to disclose which or whose shares have been the subject of relief).

Relevant Date: Finance Act 2019