BPF Response to Finance Bill 2017 clauses on Substantial Shareholdings ... · BPF Response to Finance Bill 2017 clauses on Substantial Shareholdings Exemption 1 To: [email protected]

BPF Response to Finance Bill 2017 clauses on Substantial Shareholdings Exemption

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To: [email protected] 1 February 2017

Introduction

1. The BPF represents the commercial real estate (CRE) sector – an industry with a market value of £1,662bn, which contributed more than £94bn to the economy in 2014. We promote the interests of those with a stake in the UK built environment, and our membership comprises a broad range of owners, managers and developers of real estate as well as those who support them.

2. The UK’s commercial real estate sector provides the nation’s built environment and is spreading out from its core investment in offices, shops, leisure facilities and factories, to support the new economy through investments in logistics, healthcare, student accommodation, infrastructure and housing, including through Build-to-Rent investment in new housing.

3. The sector is one of the most successful in the world at attracting domestic and overseas long-term investment capital into the renewal of the UK’s towns and cities. Such large, long-term, patient investors are critical to the urban redevelopment and regeneration of our country. Such investors include pension funds, sovereign wealth funds and other sovereign investors, insurance companies, property groups, REITs and private equity real estate funds (PERE).

4. For such investors, investment in UK CRE can form a significant part of their real estate investment strategy, but equally they will look to manage risk through diversification across jurisdictions. Similarly, many of the UK’s larger property groups are international in outlook, investing in CRE outside the UK, particularly within other EU member states, although they may also invest further afield.

5. As a result, we very much appreciated the government’s willingness to engage with stakeholders in considering various options for reform the substantial shareholding exemption (SSE), as reflected in the May 2016 Consultation Document: Reform of the Substantial Shareholding Exemption (the Consultation).

6. We welcome the government’s decision, announced at the subsequent Autumn Statement, to go ahead with reform to the rules relating to SSE in Finance Bill 2017. Even though the changes fall short of introducing the type of wider participation exemption that we argued for in our response to the Consultation, the proposed reforms should be beneficial for the CRE sector – and by extension for investment in our urban environment.

7. We set out below our key comments on the draft legislation in Part I of this response.

8. Detailed comments on the draft legislation itself follow at Part II.


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9. We would welcome the opportunity to discuss our comments in more detail. Please get in touch if you require any further information.

Ion Fletcher Director of Policy (Finance), BPF St Albans House, 57-59 Haymarket London SW1Y 4QX 020 7802 0105 [email protected]

mailto:[email protected]


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Part I: Key comments

A good first step …. but further reform must remain on the table 1. As noted above, we are pleased that the government has decided to proceed with reforming SSE, and

that it intends to legislate for the necessary changes in Finance Bill 2017.

2. In particular, we very much welcome the removal of the investor condition. This will be of particular benefit to property groups who engage in property development: it adds flexibility when considering a possible disposal of trading property assets, and helps limit the circumstances in which tax can distort commercial decision making, in keeping with the original drivers for SSE.

3. We also welcome the new targeted relief for qualified institutional investors (QIIs). Whereas the existing SSE was introduced to improve the competitiveness of UK business generally, this new QII SSE appears to be more outward looking. Its main purpose is to improve the attractiveness of the UK to global institutional investors, encouraging them to use the UK as the base for their investment holding platforms.

4. This is all positive, but we would encourage the government to not rest on its laurels - instead it should look to further enhance the UK’s attractiveness by implementing a full participation exemption. This would not only show that the UK is very much “open for business”, but equally would help level the playing field for UK CRE businesses that compete internationally for investment opportunities – ensuring that a UK holding platform is as viable an option for them as for global investors.

Compliance: keep it practical (and simple) 5. The new SSE relief for QIIs must be simple, certain and easy to apply.

6. This is particularly important given how the relief is structured. The focus of the legislation is on the identity and status (for tax purposes) of a company’s ultimate shareholders. This creates an immediate challenge for a UK corporate seller. The seller has the liability to tax - and so must self-assess whether relief is available (and to what extent). But the information that it needs to do that rests with others: its ultimate investors, with whom it may not even have a direct shareholding relationship. How is it to identify (with confidence) whether relief is available?

7. The rules need to recognise the practical issues that follow on from this approach to reform. The government should be realistic about what information is available to the seller. In particular, it should avoid imposing new information reporting requirements, but instead build on what is there already (such as the Common Reporting Standard).

8. Given the different ways in which QIIs invest in the UK, legislation by itself will struggle to deal all possible compliance scenarios.

9. Instead, guidance will play an important part in explaining how the relief works in practice. That guidance will need to be detailed, yet clear, so companies understand what is needed to substantiate the availability of relief under the new QII SSE.


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10. In particular, guidance should clarify:

10.1. how to determine whether an investor is a QII;

10.2. the steps a seller is expected to take to verify ownership by QIIs; and

10.3. the evidence a seller needs to retain to support its self-assessment.

11. For further discussion of the issues around compliance, see our comments on clause 28 relating to new paragraphs 3A(3), (4) and (9).

Listed company block 12. In its response to the Consultation, the government states that it wants to exclude “large trading

companies which have autonomy in their decision making” from the new QII SSE.

13. However, the legislation does not appear to achieve this aim.

14. Clause 28 includes a new paragraph 3A(7) which (in effect) acts as a block on the “tracing rules” of sections 1155 to 1157 Corporation Tax Act 2010 where share capital is owned through a listed company. There are two issues with the manner in which the government has sought to achieve its policy intention.

15. First, it appears that the listing on a recognised stock exchange is seen as shorthand for a “large trading company which has autonomy in its decision making”. However this is not always the case. It is possible for a company to be listed, but remain under the control of its major shareholders - and so not have the autonomy that the response to the Consultation suggests is a key factor to exclusion of such entities from the relief. A particular example of this is an institution-owned REIT, a type of REIT encouraged by changes to the REIT rules in 2012.

16. Secondly, paragraph 3A only excludes listed companies from the “look-through” required when tracing indirect ownership of share capital. A listed company is not excluded from the new QII SSE if it makes a direct disposal of an investment subsidiary and the QII ownership condition is met. It is not clear if this is intended.

17. We therefore ask the government to reconsider its exclusion of listed companies from the new QII SSE.

18. In particular:

18.1. we suggest that paragraph 3A be amended to allow “look-through” companies that, although listed, do not have the autonomy that the responses document emphasises; and

18.2. if the government intends to exclude both direct and indirect disposals by large autonomous trading companies, it should specifically exclude such companies from being the investing company for the purposes of paragraph 3A.

19. For further discussion of the issues around the listed company block, see our comments on clause 28 relating to new paragraph 3A(7).


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Part II: Detailed comments on Finance Bill clauses

General 1. In this Part II, references to:

1.1. “existing SSE” are to exemption conferred by paragraph 3;

1.2. the “new QII SSE” are to the relief to be conferred by paragraph 3A (and as set out in clause 28).

1.3. paragraph numbers are to paragraphs in Schedule 7AC Taxation of Chargeable Gains Act 1992 (TCGA);

1.4. the Consultation are to the “Reform of the Substantial Shareholding Exemption: a consultation”, published in May 2016; and

1.5. the Responses Document are to “Reform of the Substantial Shareholding Exemption: responses to the consultation”, published on 5 December 2016;

Clause 27: Substantial shareholding exemption 2. We have no specific comments on clause 27 itself.

The importance of guidance 3. The proposed amendments to existing SSE should simplify its application in practice. This is because the

focus of the exemption will now be on the investee company only. However, the underlying legislation is itself subject to only limited amendment: for example, only one paragraph is deleted in full, and only five others are amended. The remainder of the legislation is unchanged.

4. Taxpayers are still very likely to have questions in relation to the detail of the provisions. These could include confirming ownership (particularly where there have been earlier group reorganisations) and applying the “substantial extent” test to a specific sub-group.

5. As a result, the importance of clear, effective guidance cannot be underestimated. The current guidance is useful, but limited in terms of the help it gives. SSE has now been in operation for 14 years. In that time, HMRC will have reviewed many clearance applications and will be aware of the types of issue that lead to uncertainty for groups.

6. A key issue concerns the “substantial extent” test. As the current guidance notes at paragraph CG53116 of the Capital Gains Manual:

“Most companies groups and subgroups will have some activities that are not trading activities”.

7. The “balance of indicators” approach and the focus in the guidance on drilling down to individual items of detail, together with the guidance’s emphasis on the 80/20 “substantial extent” test as a “cliff-edge” (even if this may not be strictly the case in practice), will continue to create challenges for business, even with the narrower focus on the investee company/ sub-group post 1 April 2017.


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8. We recognise the challenges inherent in providing certainty on matters of fact, both given the concepts involved and the continually evolving nature of business. We also appreciate that the government does not want to be too prescriptive in how the tests are applied. That said, we ask that any update to the guidance acknowledges the importance to business of certainty by providing more detail on how the tests apply in practice, taking account of the specific issues that have proved to be the most challenging for groups in the past (for example, issues around intercompany balances).

9. We also ask the government to consider amending the guidance at CG531161 on the meaning of “substantial extent” itself for SSE purposes to, say, 25% or 30% per cent (rather than the current 20%). This would provide groups with a slightly greater degree of flexibility around the “edges” when applying the rules to their specific facts, but without “opening the doors to widespread abuse”. This will help reduce some of the frictional costs relating to disposals, and potentially reduce the need for businesses to seek clearances from HMRC on the rules.

Other possible amendments? 10. In our response to question 13 of the Consultation, we recommended that existing SSE be extended to

apply where there is a disposal of an interest in an (opaque) business entities that did not amount to share in a company (as defined for SSE purposes in paragraph 26(1)). In addition, we asked that the group test (that applies in determining ownership for SSE purposes) be modernised to reflect the variety of business structures available to businesses that operate globally.

11. The Responses Document states that:

“Many respondents agreed that the focus on ordinary share capital was overly restrictive, creating complexity and inconsistent results”,

and notes that only a smaller number of respondents considered that the focus on ordinary share capital did not lead to inconsistencies.

12. However, no change has been made (and the Responses Document does not comment on this particular

aspect of the Consultation). We ask that the government reconsider this issue.

13. The CGT group rules include only companies (as defined in section 170(9) TCGA). A company that does not have ordinary share capital cannot be a member of a group (other than as a principal company): see the Capital Gains Tax Manual at CG45105 and CG45110 (on the meaning of ordinary share capital). An opaque entity that is not a company with ordinary share capital is therefore a “block” in terms of tracing ownership. (A transparent entity, such as a partnership, can be looked through.)

14. Entities where this is relevant include unit trusts (interests in which are treated as “shares” under section 99 TCGA, but is not a company for SSE purposes) and the recently introduced co-ownership Authorised

1 In the guidance it is unclear whether the meaning of “substantial extent” in CG53116 applies just to SSE (given the reference to “in this context” or whether the comments in CG53116 reflect a general interpretation of the term (including for example for the purpose of

entrepreneur’s relief)). If the latter, then a legislative amendment may be required: but we would hope that this can be avoided.


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Contractual Scheme (CoACS). Both these entities are transparent for income purposes, but are opaque for CGT2.

15. In addition, a group may invest in a non-UK entity, such as a US LLC (limited liability company). The characterisation of a non-UK entity such as a US LLC for UK tax purposes is not clear-cut: the International Manual sets out relevant factors at INTM180010 (and also see Appendix 11 to the Capital Gains Manual).

16. Although a view as to the UK tax characterisation of a US LLC is given at INTM1800020, this is caveated. In particular, the guidance notes that “a fiscally opaque entity is not necessarily a “company” for UK tax purposes”. The definition of ordinary share capital is dependent on an entity being a company, and having “issued share capital (however described)”. Guidance on this is contained in Appendix 11 to the Capital Gains Manual: but this simply sets out a number of factors that need to be considered. For a Delaware LLC, the guidance says:

“If a DLLC issues “shares” in this way and the other factors relating to the company suggest that it has share capital then we will accept that these “shares” may be regarded as “ordinary share capital” for the purpose of Section 832 ICTA 1988. It should be noted that not all DLLCs issue share certificates but they may still have “ordinary share capital”. Regard must be had to the particular terms of the agreement by which the LLC has been created. In any case of doubt or difficulty regarding the status of the share certificates HMRC will advise in particular cases in line with the non-statutory business clearances.” [emphasis added]

17. This means that, in accordance with the general approach in the UK to entity classification, the status of a foreign subsidiary in the form of an LLC is ultimately fact-dependent on the facts relating to that LLC alone. This creates uncertainty - and therefore cost for business. Broadening the group test to either include such entities - or alternatively “look-through” them - would truly modernise SSE and provide clarity to business.

Commencement (Clause 27(5)) 18. The changes to SSE will take effect from 1 April 2017 but the Finance Bill is unlikely to obtain Royal

Assent until July 2017.

19. Questions therefore arise as to the treatment of disposals in the intervening period. For instance, assume a company sells a subsidiary on 1 May 2017. Under the “new” SSE (as set out in the draft Finance Bill clauses) the disposal is exempt from CGT.

20. However, as the Finance Bill progresses through Parliament, changes are made to the draft provisions.

21. We assume that the Finance Bill provisions will be given provisional statutory effect by resolution under the Provisional Collection of Taxes Act 1968 following the Budget. On this basis, the exemption would apply to the 1 May disposal even if the legislation is subsequently amended in a way that means a similar disposal made after Royal Assent would not be exempt. Can this be confirmed at the Budget, when the Finance Bill is published?

2 We recommend that the government should in any event consider allowing such entities to fall within the scope of the new QII SSE, if not the existing SSE, given that these types of entity are commonly used as an investment holding structure by real estate investment by institutional investors.


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22. Similarly, if the legislation is amended to have a wider application, would a disposal made after 1 April (but before Royal Assent) that falls within that wider SSE, but not within the provisions as they stand at the time of the disposal) be exempt?

Clause 28: Substantial shareholding exemption: qualifying institutional investors New paragraph 3A(2) 23. The new QII SSE potentially applies to a disposal by a UK resident company where:

23.1. (that UK company has a substantial shareholding in the investee company; and

23.2. the investee company is not a “trading company” for the purposes of the existing SSE.

24. “Substantial shareholding” is determined by the existing SSE rules, as extended by the new paragraph 8(1A).

25. As a result, if one or more QIIs establish a UK company (Holdco) to hold their investments in various activities, CGT exemption will be potentially available on:

25.1. a disposal of a trading subsidiary3 where Holdco owned at least 10 per cent of the ordinary share capital of that subsidiary (under existing SSE);

25.2. a disposal of a subsidiary that does not meet the trading condition (whether because it’s activities are investment only or “mixed”) where Holdco owned at least 10 per cent of the ordinary share capital of that subsidiary (under the “basic” new QII SSE); and

25.3. a disposal of a company that does not meet the trading condition (whether because it’s activities are investment only or “mixed”) where Holdco does not own at least 10 per cent of that subsidiary’s ordinary share capital but acquired its interest in that company for at least £50m (the “modified” new QII SSE).

26. Existing SSE favours sales of trading companies (in terms of conferring CGT exemption on gains). The purpose of the new QII SSE exemption is to extend those benefits to sales of any company, regardless of activity, where that company has QII investors. However, the effect of the modification to the substantial shareholding test in new paragraph 8(1A) is to favour sales of investment companies, given that this modification only applies to sales of non-trading companies/sub-groups.

27. Given the purpose of the new QII SSE exemption, we ask the government to consider applying the alternative substantial shareholding test to existing SSE, as well as the new QII SSE.

28. This would mean that:

28.1. for QIIs, the status of the investee company is irrelevant when determining if exemption/relief is available; and

3 This would include where the subsidiary is a holding company of a trading subgroup.


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28.2. equivalence of treatment on disposals of trading companies/sub-groups is maintained: taking account of the original drivers for SSE, we consider it important to maintain a level playing field in relation to a relief which is directed primarily at the activities of an underlying trading business (not its investors).

29. We acknowledge that the effect of the conditions in new paragraph 3A(2) ensures parity of treatment on disposals of trading companies, regardless of the identity of the ultimate owner. But the effect of this is that the policy rationale for the new QII SSE does not seem to be fully realised in the draft clauses.

30. The policy rationale for an alternative substantial shareholding requirement for QIIs applies as much to (indirect) interests in trading companies as to investment companies. The Responses Document states that:

“The government recognises the case for aligning the tax treatment, through SSE, for investors who are exempt or immune from tax on gains and losses on investments which they make directly, but are currently subject to tax on gains and losses made on investments held through UK resident companies.” (paragraph 3.9)

31. The exemption/immunity available to a QII on a direct disposal is the same, regardless of whether its shareholding is in a trading or investment company

32. The Responses Document continues (at paragraph 3.11):

“Under this [new QII SSE] exemption UK companies owned by qualifying institutional investors will be exempt from gains and losses on disposals of substantial shareholdings without regard for the trading status of the investing or the investee companies or sub-groups.”

33. The differing “substantial shareholding” requirements, depending on the activity of the investee

company, mean that the new exemption does have regard to the trading (or other) status of that company. It also means a different tax result may apply depending on how the QII’s holding platform is structured (i.e. the availability of relief could depend on whether the trading company is held directly by the Holdco or is part of a subgroup with investment companies, where the overall activities of that sub-group are not “to a substantial extent” trading4.

34. Although the minimum cost requirement is set at a high level (i.e. on a very simplistic basis, if £50m represents less than 10 per cent on acquisition, the subsidiary’s then value would be minimum £500m) - which should in practice limit when the modified shareholding test can apply - this does seem at odds with the policy underlying the new QII SSE. A QII setting up an investment platform in the UK may query why a relief is available on selling an investment company but not for selling an equivalent stake in a trading company.

35. To allow a QII-owned company to benefit from SSE when selling a trading subsidiary, an amendment could be made to clause 28(2) so that the new QII SSE applies to any disposal (regardless of whether the requirement in paragraph 19 is met).

4 We note that this means that this may mean that a QII with a significant (less than 10%) stake in a trading company could potentially structure around this, subject to its other activities. But the new QII SSE is a measure intended to attract investment: reliance on “structuring around” an issue seems counter-intuitive to that aim.


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36. However given that SSE was originally introduced to support investment in trading activities, we consider that instead the alternative substantial shareholding requirement should apply to any disposal of a trading company, regardless of the identity of the ultimate investors. This could be achieved if the new paragraph 8(1A) applied “for the purposes of this Schedule” and not just for the purposes of the exemption in paragraph 3A.

37. We note in this context that the Responses Document highlights that a number of respondents to the Consultation suggested a monetary value threshold for SSE in response to question 12/option 5.

38. In terms of the risk to the Exchequer of such a change to existing SSE, the level at which the minimum cost requirement is set means that SSE, as amended, would still only apply where a group holds a substantial investment in a company/group in any event, and the trading condition ensures that the relief remains targeted.

39. We therefore ask that the alternative substantial shareholding requirement apply to existing SSE, as well as to the new QII SEE.

New paragraphs 3A(3) and 3A(4): Identifying QII ownership: 40. Relief/exemption from CGT is determined by the extent of QII ownership. The ability of the selling

company (Seller) to claim relief is dependent on facts outside its control - particularly where the investment of the QII is indirect (whether through a series of intermediate holding companies or through a fund, where the investor relationship will be with the fund manager only).

41. The challenge for the Seller is the separation between the person that has the liability to tax (the Seller) and the person(s) that determine the extent of that liability (the investors). This then begs the question: what information can the seller be reasonably expected to have to determine whether, and the extent to which, the new QII SSE applies? And is that sufficient (from the perspective of HMRC) as a basis for determining the amount of CGT payable on a disposal?

42. A Seller will need certainty as to the steps it needs to take to confirm QII ownership so it can be confident its tax return is accurate. A QII investing via a UK structure will similarly want certainty that, on a disposal of underlying businesses, relief will be available. In the absence of that certainty, the QII may look to another jurisdiction to set up its platform where conditions link to the investee company’s activities only.

43. The amount of certainty available will, to an extent, depend on the investment structure. If a single QII sets up a captive platform, using the UK as the holding company jurisdiction, the new QII SSE should be simple to apply: ownership information should be relatively straightforward to obtain. Similarly, if the Seller is set up as part of joint venture arrangement, in which one or more QIIs co-invest, information should again be readily obtainable. This follows on from the relatively (if not fully) static nature of ownership, the degree of involvement of the QII(s) in management and the clear commonality of interest between “controlling” shareholder(s) and subsidiary.

44. However, in other cases, obtaining information that provides the Seller with the required degree of certainty as to percentage ownership could be more challenging. This will particularly be the case where the QII invests through a fund managed by a third party asset manager (including where it invests indirectly through a wholly-owned subsidiary (which will often be the case, as the QII can then “isolate” that


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particular investment)in terms of administration)). QIIs will often invest through such “independent” funds: it allows the QII to benefit from the expertise of a professional fund managers with specialist) investment experience as well as access the general benefits that arise from collective investment (namely, the ability to pool capital and thereby access investment opportunities which may not otherwise be available, as well as achieve risk diversification).

45. The types of fund that QIIs can invest in will vary in size: some will have a limited number of investors (say, no more than five); others can have significantly more. Investors may also include non-QIIs. Many of these funds will include a CRE component: linked not only to the returns potentially available, but also to risk diversification.

46. The investment strategy of such funds often involves buying existing companies. Within the CRE context, this could include a single purpose vehicle (SPV) holding a single property: a small property group holding a number of properties or, in some case, a substantial property group (that may have been previously listed). However funds may, for commercial reasons, take a stake in a company that is short of full ownership (but for these types of fund, it is unlikely to be a passive portfolio holding).

47. For Sellers owned (in whole or part) by funds, it is clearly possible that at least 25% of their share capital is owned by QIIs. However, access to information about ultimate investors will be less readily available to the Seller: the Seller’s contact will be with the fund manager only, and so its ability to obtain information is dependent on the information and records held by the fund manager and fund administrator (and the ability of the fund manager to share that information).

48. The commonality of interest between fund manager and Seller remains, but the nature of the information available will be (in practice) dependent on the fund manager’s systems for obtaining information from its investors. These will have been set up in response to other commercial and regulatory requirements - including certain tax reporting standards (eg FATCA and the Common Reporting Standard) and not with the UK taxation of chargeable gains in mind.

49. The challenge for Sellers in these circumstances is that SSE is an “absolute”: it applies if the relevant level of QII ownership exists. The drafting of the new QII SSE means that, certainly in relation to fund investments, it is possible that the relief/exemption will not apply as intended, if the Seller itself has to have perfect knowledge of its investors at all times. The Seller may easily overstate the CGT payable if it has not sufficient confidence in its knowledge5. This potentially means that, where a fund is able to choose how and where to invest, the benefit of CGT exemption that the new QII SSE is intended to confer may be seen as “too difficult”. A similar risk arises if the new QII SSE leads to the creation of new “special” information reporting requirements for fund managers, purely for the purposes of this relief.

50. Therefore for the new QII SSE to be “workable”, it is important that the legislation (and any related guidance) reflects the reality of the information that Sellers (and fund managers) will have access to and appropriately balances HMRC’s need to know that relief is only provided to those entitled to it with the Seller’s ability to identify in practice who its investors are.

5 This not only disadvantages its investors in diminishing their after-tax return, but could also create commercial friction between investors and/or fund manager given that the potential for moving from exemption to relief because of uncertainty as to one investor only. Investors would expect that any tax relief available on underlying investments is claimed in full: this puts the Seller and fund

manager in a difficult position where they are unable to assess the extent of the relief available with certainty.


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51. There are three specific elements to the relief in this context:

51.1. the Seller’s responsibilities in relation to obtaining the necessary information (given that it will not generally be in its possession or power to obtain);

51.2. timing of obtaining information (see paragraphs 57 to 68 below); and

51.3. status of investor as QII: see comments on new paragraph 3A(9) below.

52. In relation to 51.1, we consider that, provided that the Seller takes reasonable steps to confirm the extent of QII involvement, then it should be entitled to rely on the outcome from taking those steps in assessing its liability to CGT on a disposal in the absence of actual knowledge to the contrary. Guidance could comment on “what would be reasonable”, with the proviso as to actual knowledge providing additional comfort that the relief is not being provided to those not entitled. Alternatively, reasonable steps could be specified by a mixture of regulation and guidance, underpinning in legislation the key elements of “reasonableness” here, with guidance offering further explanation. Both regulations and guidance would be capable of amendment (on a forward looking basis only) should circumstances change.

53. Such an approach follows from that which applies generally to tax compliance requirements (eg the distinction between careless and deliberate mistakes in relation to the filing regime). It reflects appropriately the balance of information between Seller and investor. It gives a Seller (and ultimately its investors) the certainty that “it has done enough” to be able to calculate its CGT accurately.

54. In identifying what represents “reasonable steps”, regard should be had to the possible, not the ideal. Therefore those steps should reflect existing information tax-reporting standards, such as the Common Reporting Standard and anti-money laundering requirements (i.e. “KYC”), with modification only to the extent required to give effect to the policy aims underlying the new QII SSE.

55. If the Seller cannot obtain sufficient information to determine the full extent of QII interest, it should be allowed /required to determine its tax position solely on the information it has obtained: this needs to be clear within the legislation as this may mean (in reality) it is overpaying. We do not consider that it would be helpful to impose on the fund manager (or investors) an obligation to provide the information the Seller needs to determine its tax liability6: instead, the system should operate on commonality of interest.

56. Plus, for this to work in practice, the separation between Seller and ultimate investor means that the Seller has to be able to rely on information given to it by third parties (fund manager and/or investor) without having to verify independently: see comments on new paragraph 3A(9) below.

57. Finally, this may be an area where a Seller seeks confirmation from HMRC as to its investor constituency: is this something on which clearances could be sought?

Timing of obtaining information 58. The difficulties highlighted above in terms of information-gathering are compounded by the requirement

in the legislation that ownership be tested “immediately prior to the disposal”.

6 Even if such provisions were included, the investors and/or fund managers could be outside the UK in any event. This means that the

rules would always need to cater for a Seller not having been able to obtain the relevant information.


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59. “Disposal” for CGT purposes means the date of an (unconditional) contract – or, where a contract is conditional, the date the condition(s) are satisfied.

60. A sale of a subsidiary is a commercial negotiation. Although parties may agree a timetable for signing upfront, the nature of the process means that this may not be met – although as issues are ironed out, there should be more certainty as to timing, once the “deal is done” there is an imperative to sign then and there (and the seller is unlikely to be willing to “pause” to check the share register (or rather pause to ask a fund manager to confirm current holdings)).

61. If the contract is conditional, then that condition is likely to involve a third party. That limits the amount of control the parties have over the date of the disposal. Examples could include the consent of a governmental authority (eg competition issues; change of control provisions on an infrastructure project or a tax clearance).

62. Therefore in many cases ostensibly within the scope of new QII SSE a Seller may not know the percentage interest of QIIs (or other shareholders) immediately prior to disposal, particularly where the QIIs invest via a fund where the possibility of transfers of fund interests cannot be ruled out. As SSE is automatic if the conditions are met, and not something to be claimed, this issue raises particular challenges for the Seller in determining its entitlement to relief/exemption under the law. Again, this in itself could cause friction with shareholders, particularly if it ends up paying more tax than was necessary because it had insufficient information.

63. We appreciate that, even if the Seller does not know the precise figures at the time of the disposal, it will have time after the sale to try to obtain the required information before filing its tax return. However there may still be challenges in pinpointing information to a single point in time.

64. Existing information reporting requirements generally operate at the time of initial investment. Provided there is no change in circumstances then this information should still be valid at a later date. Therefore, provided a Seller can, in relation to taking reasonable steps, rely on information originally provided ahead of the disposal rather than having to verify anew, this timing issue may be mitigated.

65. In terms of changes of circumstances, this could be because of a change in investor status (see comments on new paragraph 3A(9) below) or because of a transfer. Transfers will be generally reported to the fund administrator after the event where there is a change in the registered owner of the investment. These would not generally be reported to the Seller: therefore, the Seller would rely on commonality of interest to be able to access such information. Where the Seller is wholly owned by a fund, then the fund manager (and potentially investment committee) would be involved in the decision to sell, which should (in practice) facilitate access to information.

66. But, in addition to tax reporting requirements, the Seller needs to know, as it negotiates the sale, the amount of CGT payable on the sale. It will know the “worst case” (i.e. full CGT) and it may also have some access to information to assess the likelihood of whether it should be entitled to exemption or relief (even though it may not be able to work out the precise percentage of relief.) But there remains a risk that the factual position at the point a Seller decides to pursue a particular strategy may not be the same as when the resultant disposal takes place - and so its initial assessment may differ from the reality at the time of disposal.


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67. If the difference is because a QII investor sells its interest just before a sale, meaning that the aggregate level of QII ownership falls below 80 per cent, then the seller’s reality would be paying at least 20.1% of the CGT from which it had assumed it would be exempt. That could be a significant amount.

68. Although a position with some relief is far better than none (and so ultimately beneficial), the resultant lack of certainty would impact the seller’s ability to assess, commercially, the consequences of a sale. If you assume that the “safe” assumption is a conservative estimate, then (although if the end result is better than expected, that is a positive – a nice problem to have, as it were) it leaves that the risk that an inaccurate assumption as to tax risk distorts commercial thinking. For funds in particular, certainty as to the financial consequences of particular actions is key. A relief based on facts of which the fund manager may not be aware cuts across that desire for certainty.

69. In relation to 51 above, we understand that the government considered a number of options for the QII investment test, including an averaging out of interests over a period. Such an approach would help avoid a cliff-edge because of a mistimed transfer: however, subject to how the averaging is determined, could lead to additional complication. We therefore agree that the current proposal is potentially simpler, particularly as (in practice) the risk of an investor transferring at the same time as a disposal takes place is hopefully remote7.

70. However we ask that the guidance acknowledges that the Seller does not need to have this information at the time of the disposal itself, and that “reasonable steps” reflect the fact that it may need to access information late - and address what happens if it cannot access transfer information.

New paragraphs 3A(5) and 3A(6) 71. It would be helpful if the guidance could include examples showing how ownership would be traced

under these provisions (building on the examples in the Responses Document).

72. In particular it would be helpful if guidance could comment on tracing ownership where a QII invests via a partnership structure (the relevant CTA provisions apply to tracing through bodies corporate only). Partnerships are commonly used by investors as an investment holding vehicle – particularly in the funds sector.

73. Paragraph 3.14 of the Responses Document says that: “If ownership of the company or any intermediary companies is held through a partnership then the ownership will be attributed to the partners”. This begs the question as to how the attribution will work in practice, particularly if the partnership has a variable profit sharing arrangement (linked to carried interest requirements, for example) or if a partnership is structured to have “income” and “capital” interests. Under partnership law, partners do not have proportionate interests in partnership assets – hence there is specific tax deeming for CGT purposes. Would that apply here?

7 Commercially funds will need to identify how relief is shared among investors, and this is a specific example of where the allocation of a (lost) relief may need to be provided for.


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New paragraph 3A(7) Direct v indirect disposals by listed companies: 74. Subparagraph (7) means that an indirect holding in a company that is held through a listed company is

not taken into account for the purposes of the new QII SSE.

75. However the drafting of this provision creates some inconsistencies in outcome on company sales. In particular, subparagraph (7) appears to mean that only companies indirectly held by a listed parent would be prevented from claiming the new QII SSE, but a listed company which is directly held by QIIs would be able to claim the new QII SSE exemption. The only distinction between the two companies in the above example is that the former is indirectly owned by QIIs and the latter is directly owned by QIIs.

76. We would have expected the same result to apply to each scenario from a policy perspective.

77. By way of example, assume QIIs hold (in aggregate) 80% of company A, a listed company.

77.1. Company A has two subsidiaries, company B and company C.

77.2. Company B has two subsidiaries, company D and company E.

77.3. Company C has a subsidiary, company F, a joint venture with one QII (on a 50/50 basis), and

77.4. Company F has a subsidiary, company G. Only company D is a trading company.

78. Looking at the how the new QII SSE could apply:

78.1. If the QII sells its interest in company A. no CGT will be payable given its exempt status.

78.2. If company B sells company D, no CGT is payable under existing SSE.

78.3. If company A sells either company B or company C, no CGT will be payable under the new QII SSE under the provisions as drafted.

This is because the QII owns the shares in company A directly, so subparagraph (7) does not apply. Even if the QIIs invested in company A through an intermediate holding company (UK or otherwise) no CGT would be payable provided that intermediate company was not listed. The existing SSE will not apply because the subgroup headed by company B is not a trading subgroup.

78.4. If company B sells company E, CGT will be payable in full because of the effect of subparagraph

(7). Likewise, if company C sells its interest in company F.

78.5. If company F sells company G, the new QII SSE applies given the indirect interest of QIIs in company G. This means 50% relief can be claimed.

However, the extent of the QII economic interest in company F, is significantly greater than that ((80% x 50%) + 50%). In contrast, had the QII been in a joint venture with company A directly, so the


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shareholders in company G are the QII and company A, any sale would be exempt from CGT under the new QII SSE - a very different result.

79. The Responses Document states (at paragraph 3.15):

“....where qualifying investors invest in large trading companies which have autonomy in their decision making, the policy objective is not to allow those trading companies to benefit from SSE on disposal of non-trading companies. For this reason companies are not considered owned by qualifying institutional investors if the share capital is held indirectly through a company which is listed on a recognised stock exchange.”

80. Subparagraph (7), as drafted, allows a large listed company that has autonomy in its decision making to

benefit from QII on disposals made directly by it (i.e. conferring a tax benefit on those groups that have a horizontal rather than a vertical holding structure). If this is not intended, then one possible amendment would be to include a new subparagraph that states that paragraph 3A does not apply where the investing company is a relevant listed company.

81. In addition, the different treatment of listed and unlisted companies could potentially provide a disincentive to raising capital by way of a new listing. A UK company whose parent becomes listed could lose the benefit of the SSE exemption where it is owned by QIIs. In reality however, the only distinction between the two subsidiaries in the above example is that in the latter case the parent has become listed on a recognised stock exchange. We therefore ask the government to consider amending subparagraph (7) so that “listing” by itself is not the determining factor for “switching off” indirect ownership.

Listed company/autonomy 82. The Responses Document states that the government wants to exclude “large trading companies which

have autonomy in their decision making” from the new QII SSE. However paragraph 3A(7) excludes companies where “any of the [ordinary share capital] is listed” on a recognised stock exchange. This test in effect assumes that the only companies that are listed are large trading companies with autonomous and independent management.

83. Although that assumption would be correct for many listed companies, that will not always be the case - see below for one specific example relating to certain REITs. Plus, “recognised stock exchange” includes a wide range of stock exchanges, each of which may have different “free float” requirements. As a result a group with a significant QII investor base can be listed, with only non-QII owned shares available to the public and the QIIs maintaining control.

84. In addition, markets like AIM, which are not recognised stock exchanges, will allow a smaller or mid-cap company (with autonomous management) to trade. A group with an AIM listing would be able to claim the new QII SSE, even though its management is as independent as that of a FTSE100 plc.

85. Given the Responses Document focus on (in effect) size and independence, perhaps the exclusion should not be to listing per se, but should additionally look to factors that would suggest autonomy. We suggest some factors that could be relevant here, but appreciate that each will need to be considered from a policy perspective:

85.1. a reference to the proportion of shares that are subject to a “free float” (similar to the test used in the close company rules - section 446(1)(a) CTA 2010); and/or


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85.2. the make-up of the board in terms of its independence from shareholder influence: if the majority of board members are appointed by the QIIs that are eligible investors, the company is unlikely to be autonomous (by analogy, a director nominated by a key shareholder is not seen as independent under the Code of Corporate Governance ); and/or

85.3. whether the management of the company is carried on by an investment manager which is not connected with the company.

86. In relation to 79.3 above, it is typically the case for a listed fund that the business of the fund will be carried on through an external investment manager. In such a case the board of directors of the fund would consist of a majority of non-executive directors and the company would enter into an investment management agreement to appoint the investment manager to manage the business of the fund, including the making of disposals on its behalf.

87. For example, some of the new REITs formed since 2012 have an external investment manager, as confirmed in their published offer documents. We note that the drafting of the legislative test could use a set of conditions based on the "independent investment manager conditions" in section 1146 CTA 2010. Although applicable to non-residents, the same conditions could be adapted for a UK resident company making a disposal to which the QII exemption can apply. This ensures that a listed private fund would not be excluded from being able to claim SSE on disposals.

Institution-owned REITs 88. The Finance Act 2012 amended Part 12 Corporation Tax Act 2010 (the REIT rules) to allow REITs to be set

up by certain types of “institutional investor” (as defined in section 528(4) CTA). The changes in effect “switched off” the close company condition within the REIT rules where the REIT would have been regarded as close because of the interest held by institutional investors8. Although Condition C (admittance to trading on a recognised stock exchange) as set out in section 528(3) CTA was relaxed as part of the 2012 amendments, it was not abolished. Institutional investor owned REITs still have to be either listed (within the meaning of section 1139(2)(b) CTA) or traded on a recognised stock exchange to qualify under Part 12 Corporation Tax Act 2010: see sections 528(3) and 528A.Certain categories of “institutional investor” will (or may) overlap with the proposed definition of QII. The 2012 changes to the REIT rules, which allowed institutional investors to set up REITs, were designed to encourage investment in the regime (and as a result support expansion of the property sector and stimulate the construction industry9).

89. A number of REITs have been established as a result of these rules, with institutional investors having a significant shareholding interest in the REIT. For these investors, a REIT offers an attractive holding platform for investing in UK companies that own real estate. The choice of REIT as vehicle is influenced by its tax attributes, with the investment in that REIT simply seen as one aspect of the institution’s overall investment portfolio. The listing of the REIT follows on from the requirements of the REIT rules: many such REITs list on the Channel Islands Stock Exchange given the derogation available in relation to “free float” requirements.

90. Unlike many ‘corporate’ REITs, these institutional investor owned REITs are effectively private listed REITs, with significant (and often substantial) institutional investor ownership. As a result, their investment strategy is more akin to that of a fund - or depending on the exact ownership structure, a joint venture

8 Section 528(4))b) CTA. 9 See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/192111/reits_improvements.pdf.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/192111/reits_improvements.pdf


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arrangement - with investors influencing the decision-making (instead of the classic listed company model of an autonomous and independent management team).

91. We ask the government to consider amending the “listing block” to allow a QII to be regarded as owning share capital in an investee company through a listed body corporate where that body corporate is an institution-owned REIT. Whether or not the new QII SSE would be available on a disposal of that investee company would depend on the aggregate interest of QIIs: so if the institutional investors that owned the listed parent were not themselves QIIs (or indeed if QIIs had less than a 25% interest in that company), SSE would not be available.

92. Such a change would not therefore be broadening the scope of the new QII SSE: instead it would in many ways support the policy underlying the changes that allowed institutional investor owned REITS - i.e. encouraging investment in the UK by certain qualifying types of investor. At the time the 2012 changes were introduced, the government was not willing to drop the listing requirement within the REIT rules - as a result, for institution-owned REITs, listing is (in substance) a condition that has to be met, rather than an object in itself.

93. We consider that amending paragraph (3A)(7) to exclude institution-owned REITs could be achieved relatively simply by excluding from subparagraph (b) a company that is a REIT for the purposes of Chapter 12 Corporation Tax Act 2010 which satisfies Condition D in section 528 CTA 2010 only because of subsection (b) of that section10. This then links the exclusion specifically to the reforms made in 2012 to allow institution owned REITs: in particular (ii) focuses on the REITs that rely on their listing (and not regular trading on a stock exchange) to meet the condition: which in effect references the “private” nature of such REITs.

94. In addition, given the inclusion of sovereign immune entities as QIIs, for completeness we also note that a REIT controlled by the Crown or an overseas government will still meet Condition D of section 528, given section 443 CTA (see also CTM60270-80). A similar amendment should be made to that suggested above for institutional owned REITs to enable an overseas government (a QII given its sovereign immunity11 ) to be able to benefit from SSE when it sets up and controls a REIT.

New paragraph 3A(9) Categories of investor: 95. The types of investor listed include two specific UK categories of investor (at limb E and F). The other

types of investor will include global institutions that are not familiar with the UK tax law and practice referenced in limbs A to D. A Seller is unlikely to have the necessary factual information available to determine if an investor meets the applicable UK tax criteria (and equally may not, in relation to categories A and B, have the relevant technical expertise in any event, given the specialist nature of these definitions.

96. As a result, we ask that guidance provide a summary of the key aspects of each of limbs A to D. This needs to be written so that both (a) the Seller and/or fund manager can readily identify (and as required communicate to investors) the characteristics of a QII and (b) a non-UK person considering investing in a UK

10 A similar change would also need to be made to any provision that dis-applied paragraph (3A) where a listed company was the investing company: see 80 above. 11 See INTM155010.


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company can readily identify whether or not they qualify as a QII: i.e. the guidance needs to be factual and written in non-technical terms.

97. Exemption/relief from SSE is automatic if the conditions are met: the guidance should enable the company making the disposal to obtain the required degree of certainty as to the availability and extent of relief12.

Pension funds: 98. A UK pension fund should know whether it is an “investment-regulated scheme” or not. However the

position is different for an overseas pension scheme.

99. The guidance should therefore set out first (a) what is an overseas pension scheme, referencing any key characteristics (whether tax and/or regulatory) and (b) what features could mean that it would be outside the definition (as a putative investment-regulated scheme) - in particular how to test whether a member can influence investment strategy: basically what types of scheme rules would suggest that a pension fund does not qualify as a QII13.

100. If an investor is not certain as to its status, the guidance should set out how an investor can obtain confirmation from HMRC as to its eligibility as a QII.

Life assurance businesses: 101. The complexity of business models for life assurance means that the guidance should be very clear as to

when the condition as to the investment being held for policy holder benefits would be met. Again, there should be an ability to seek clearance if an investor is uncertain.

Sovereign immune investors: 102. For sovereign immune entitles, the current published guidance on sovereign immunity is rather limited

(see INTM155010) and would not enable a UK Seller to have the required certainty as to an investor’s status by itself (except in the most straightforward of cases).

103. Within the context of other provisions, sovereign immune status has to be “claimed”: see for example, paragraph 11.3 of the Non-resident Landlord Scheme Guidance Notes (April 2016). This is also the case for treaty relief. Plus, even though a recent consultation on changes to the Double Taxation Treaty Passport Scheme (May 2016) considered expanding the Scheme to sovereign immune investors, such investors would still need to register with HMRC to get a passport14 - and so be pre-cleared as sovereign immune under the Scheme. This general approach of the UK to sovereign immunity indicates that this is not something a Seller would want to take a view on itself.

104. Therefore the guidance should set our clearly what the UK company can rely on as evidence of sovereign immunity. This could include for example any letter confirming immunity issued by HMRC, or a non-resident landlord confirmation of the ability to receive rental income gross on the grounds of sovereign immunity or (should the DTTP Scheme be extended) the existence of a passport - in each case, within a particular

12 This is relevant not only for completing the company’s tax return, but also (in relation to a fund) to allow the company to assess how much needs to be reserved for tax, and how much can be distributed to investors (the fund documents will require distributions of after-tax proceeds within a stated period, absent permitted re-investment). 13 The guidance at PTM125100 is not sufficient for this purpose as currently written. 14 See sections 2.15 to 2.18, and Questions 9 and 10, of the DTTPS Consultation.


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timeframe. As a fall back, the guidance should set out how an investor can obtain confirmation as to its status for the purposes of this new SSE - including what information needs to be provided in relation to such an application.

Charities: 105. The Explanatory Notes refer to satisfying the conditions set out in Part 1 of Schedule 6 to the Finance Act

2010. The guidance should explain clearly how these should be tested and/or evidenced. Publication in a HMRC register (as allowed under paragraph 6 of Schedule 6) or, for a UK charity, registration with the Charity Commission would presumably be sufficient evidence of charitable status - with the charity itself confirming the holding of the investment for its charitable purposes? For EU charities, could a list of equivalent registers be provided? For charities not within a HMRC register, how would the management condition be met: should this be assumed to be met for the purposes of SSE?

Widely marketed UK investment schemes: 106. Although such schemes will be able to identify whether they satisfy the applicable definitions, guidance

should confirm that the “genuine diversity of ownership” test, which applies “throughout the accounting period”, does not create a risk of requiring an adjustment to the QII percentage after the disposal has taken place (given how the test operates within the relevant regulations).

Reliance on information provided by investors 107. A Seller should be entitled to rely on the confirmation and/or evidence as to status given to it by the QII

itself or, where the QII invests indirectly, a person acting on behalf of that QII in relation to the investment (such as a fund manager).

108. As a result we recommend that investor eligibility for relief/exemption under the new QII SSE be based on a form of self-certification, without the Seller (or fund manager) having to investigate the status of a particular investor independently.

109. This would mean that where a Seller has received confirmation from an investor as to its status as a QII, it can assume that such investor is a QII unless notified to the contrary. CGT due on a disposal of a non-trading subsidiary would then be calculated on the basis of the confirmations given.

110. If however a Seller has requested confirmation or evidence without success, then we consider that UK taxpayer should complete its tax return on the basis that the investor is not a QII. This would need to be provided for in the legislation (or regulations) as the test, as currently drafted, is based purely on the status of investors, and not on the extent to which the person making the disposal has knowledge as to who its investors are.

111. Such a provision is necessary so that the Seller can meet its compliance obligations where, acting reasonably, it makes an assessment as to the quantum of relief/exemption available but, because of the lack of information - or inaccuracy of that information - from its investors, that assessment does not reflect the “true” QII position. See also comments on new paragraphs 3A(3) and (4) above.

112. We consider this necessary in the context of balancing the Seller’s need to ensure it reports tax matters correctly (given its tax compliance obligations) with its commercial obligations to investors. Allowing the Seller to file on the basis that “no confirmation/evidence” means that the investor is assumed not to be a QII will provide the Seller with some protection from action by investors in connection with being seen to “pay too much tax”.


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113. This suggested approach is similar to that recently adopted for the purposes of the qualifying private placement exemption in section 888A Income Tax Act 2007. The Qualifying Private Placement Regulations 2015 (SI 2015/2002) enable a UK company to rely on a certificate (as to status) provided by, or on behalf of, the creditor for withholding tax purposes. These provisions were drafted in order to facilitate situations where the lender was a partnership, for example: the general partner would be able to confirm status on behalf of all partners, and the borrower entitled to rely on the general partner’s self-certification15. Self-certification, subject to a reasonableness test, also underpins the procedures set up under the Common Reporting Standard. As set out in our comments on new paragraphs 3A(3) and (4) above, we consider that any information requirement should reflect existing information tax-reporting standards.

114. In this context, the Common Reporting Standard provides that a financial institution cannot rely on information provided where information already held by it conflicts with the confirmation it has received from the investor)(see AEIM103490 in the Guidance Notes on Automatic Exchange of Financial Account Information (September 2015). Given that the liability to CGT is that of the Seller (and not the investor) it would seem appropriate for an equivalent limitation to apply to new QII SSE.

115. Adapting the approach used in the Common Reporting Standard would also mean that there would be a consistency in terms of due diligence, even if additional information to that currently would be needed. This should mean that “financial institutions” such as fund managers would be able to adapt existing systems relatively easily to “add on” those requirements relating to QII ownership as are necessary16.

116. In this context, the Common Reporting Standard requirements apply when an account is opened. Any compliance obligations (in terms of evidence as to QII status) for “new” investments should similarly be tested when the investment is being made. The Seller should generally be able to rely on that information, even though it is acquired significantly in advance of any disposal, unless and until the investor notifies it that it is no longer correct.

Types of QII 117. Paragraphs 3.24 to 3.25 of the Responses Document set out the policy rationale underlying the

categories of QII set out in the draft legislation. Paragraph 3.27 states:

“The above definition also does not include every type of UK fund, notably excluding real estate investment trusts (REITs). This is due to a number of factors including the fact that their exemption from tax on gains is limited to gains on assets used in property rental business, which distinguishes them from other UK funds. However, the government will continue to consider whether there is a case for including REITs within this definition.”

118. We welcome the government’s willingness to consider further the possible inclusion of REITs as a QII , in

particular their exempt property rental business, where gains arising on sales of property assets are currently not subject to tax in the hands of the REIT. further. We are separately engaging with the relevant officials in HM Treasury and HMRC on the specific considerations relevant to REITs and will provide comments relating to the position of REITs separately (save for the comments made above in relation to institution- REITs in connection with the new paragraph 3A(7)).

15 HM Revenue & Customs reserved the right to (in effect) to stop the borrower relying on any certificate given where an officer reasonably believed it was inaccurate in a material respect (regulation 7). 16 Similarly, any obligations should also seek to be consistent with requirements under applicable anti-money laundering regulations (i.e. ”KYC” processes).


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New paragraphs 8(1A) and (1B) 119. See comments on new paragraph 3A(2) above.

120. We assume that guidance will confirm that “cost” in paragraph 8(1B) is to b construed in a similar way to section 38(1)(a) TCGA 1992 (particularly in relation to what represents an “incidental cost”).

121. The alternative substantial shareholding condition must be met for a continuing 12 month period at any time in the six years preceding disposal. In general this should be relatively straightforward, even where there are a series of acquisitions over time. If however Company A also makes some disposals in that six year period (as for example might happen if Company B is a joint venture company), what rules (if any) will apply in terms of identifying shares bought with shares sold in terms of determining the aggregate “cost” of the shares remaining? As Company A would be UK resident, would the share pooling rules generally apply to average out base cost across the holding: is that the intention here as well?

Clauses 28(4) 122. No comments.

Clause 28(5) 123. Does paragraph 9 need amending to refer to paragraph 8(1A)?

124. Paragraph 8(1A) applies an alternative definition of substantial shareholding that feeds back into the condition in paragraph 7. Paragraphs 8(1A) does not offer a new condition as such, and paragraph 9 (as currently drafted) applies to paragraph 7 in general (and not just paragraph 8(1)).

Clause 28(6) 125. The changes to SSE will take effect from 1 April 2017 but the Finance Bill is unlikely to obtain Royal

Assent until July 2017. See comments on clause 27(5) above.

Documents

BPF Response to Finance Bill 2017 clauses on Substantial Shareholdings ... · BPF Response to Finance Bill 2017 clauses on Substantial Shareholdings Exemption 1 To: [email protected]