488 Interpretation (Part 16)

Summary

This section gives the meaning for various expressions and terms used throughout this Part.

Details

Definitions

(1) “associate” has the same meaning as in section 433(3) with the reference to “participator” being replaced by one to “persons”.

“company” means a body corporate;

“compliance period” means the pre-investment period and the relevant period.

“control” is construed in accordance with subsections (2) to of section 432.

“director” has the meaning set out in section 433(4).

“emoluments” has the same meaning as in section 983;

“General Block Exemption Regulation” means Commission Regulation (EU) No. 651/2014 of 17 June 2014.

“innovation” means process innovation or organisational innovation. Innovation can be implementing a new organisational method, or a significant improvement in production or delivery methods.

“market value” has the meaning set out in section 548 (that is, the price which assets might reasonably be expected to fetch on a sale in the open market).

“organisational innovation” means the implementation of a new organisational method in an undertaking’s business practices, workplace organisation or external relations, other than -

1. changes that are based on organisational methods already in use in the undertaking,
2. changes in management strategy, mergers and acquisitions, or any of the following -
   1. ceasing to use a process,
   2. simple capital replacement or extension,
   3. changes resulting purely from changes in factor prices, customisation, localisation, regular, seasonal and other cyclical changes, or
   4. trading of new or significantly improved products.

“PPS Number” has the meaning assigned to it in section 891B(1) (that is, in relation to an individual, means the individual’s personal public service number).

“pre-investment period”, in relation to relief in respect of any eligible shares issued by a company, means the period beginning 2 years before the shares were issued, or if later, beginning on the date the first company in the RICT group was incorporated and ending immediately before the subscription for eligible shares.

“process innovation” means the implementation of a new or significantly improved production or delivery method (including significant changes in techniques, equipment or software), other than -

1. minor changes or improvements,
2. increases in production or service capabilities through the addition of manufacturing or logistical systems which are very similar to those already in use, or
3. any of the following -
   1. ceasing to use a process,
   2. simple capital replacement or extension,
   3. changes resulting purely from changes in factor prices, customisation, localisation, regular, seasonal and other cyclical changes, or
   4. trading of new or significantly improved products.

“qualifying new venture” means a venture consisting of relevant trading activities which are set up and commenced by a new company other than -

1. activities which were previously carried on by another person and to which the company has succeeded, or
2. a venture, the activities of which were previously carried on as part of another person’s trade or profession;

“relevant period” in relation to relief in respect of any eligible shares issued by a company, means the period beginning on the date on which the shares were issued and ending 4 years after that date.

“relief” means a deduction from total income granted under this Part, and includes reliefs granted on a share issue at any time after 6 April 1984 (and the foregoing reference to this part includes this Part as it stood enacted at any time before the commencement of section 23 of the Finance Act 2018 or, as the case may be, the commencement of section 33(1)(a) of the Finance Act 2011) and subsection (2) supplements this definition;

“R&D+I” means research and development activities (within the meaning of section 766) and innovation.

Relief

(2) A reference to relief is a reference as it operates under one or all of section 502, section 503 (SCI) and section 507 (SURE).

Disposal of shares

(3) A disposal of shares is treated as occurring on the disposal of an interest or right in or over those shares, including an exchange of shares pursuant to section 587. Section 587 applies to a scheme of reconstruction or amalgamation whereby a company (the first company) issues shares to the shareholders in a second company. This is treated for capital gains tax purposes as comprising an “exchange of shares”. However, for the purposes of relief under this Part, such a deemed “exchange” of shares is treated as a disposal of the shares in the second company by the shareholders of that company and, for the purpose of restricting the relief under section 496 (disposal of shares), the value of the shares in the first company is a measure of the consideration received for the shares treated as disposed of by those shareholders.

Reduction of amounts

(4) References in this Part to the reduction of any amount include references to its reduction to nil.

General Block Exemption Regulations

(5) A word or expression that is used in this Part and is also used in General Block Exemption Regulation shall have the meaning in this Part that it has in that Regulation.

Relevant Date: Finance Act 2021