“Construction of references to oaths, etc.

1096A.—(1) Without prejudice to any express provision made elsewhere in those Acts in that behalf, references in the Tax Acts and the Capital

Gains Tax Acts to an oath shall, in the case of persons for the time being allowed by law to affirm instead of swearing, be construed as including references to an affirmation, and references in those Acts to the administration, taking or swearing of an oath shall be construed accordingly.

(2) In subsection (1) ‘law’ includes the Oaths Act, 1888, and, without prejudice to their application by virtue of any other provision of the Tax Acts or the Capital Gains Tax Acts, the Oaths Act, 1888, and every other enactment for the time being in force authorising an oath to be taken or an affirmation to be made in any particular manner, shall apply to an oath required to be taken or an affirmation required to be made by the Tax Acts or the Capital Gains Tax Acts.”.

“Securitisation of assets.

110.—(1) In this section—

‘initial period’ in relation to any one originator or original lender means the 3 month period com- mencing on the day on which any qualifying assets were first acquired from that originator or original lender, as the case may be;

‘original lender’ means any government, public or local authority, company or other body corporate;

‘originator’ means an original lender who is not resident in the State;

‘qualified company’ has the same meaning as in section 446;

‘qualifying asset’ in relation to a company means—

(a) in a case where the company is a qualified company, an asset of an originator which the qualified company acquired directly or indirectly from the originator other than an asset which was created, acquired or held by or in connection with a branch or agency through which the originator carries on a trade in the State, and

(b) in any other case, an asset of an original lender which the company acquired directly or indirectly from the original lender,

where the asset—

(i) in a case where paragraph (a) applies, consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receivable or other debt or receivable whether secured or unsecured,

(ii) and in the case of a company to which paragraph (b) applies, consists of, or of an interest in any financial asset (within the meaning of section 496);

‘qualifying company’ means a company—

(a) which is resident in the State,

(b) which carries on in the State a business of management of qualifying assets,

(c) which, apart from activities ancillary to that business, carries on no other activities in the State, and

(d) in relation to which the market value throughout the initial period of all qualifying assets acquired from any one originator or original lender, as the case may be, is not less than £10,000,000,

but a company shall not be a qualifying company if any transaction is carried out by it otherwise than by way of a bargain made at arm's length.

(2) For the purposes of the Tax Acts in relation to activities carried out in the course of a business carried on by—

(a) a qualifying company which is a qualified company—

(i) such activities shall be deemed to be activities carried out in the course of a trade, the profits or gains of which are chargeable to tax under Case I of Schedule D,

(ii) there shall be deducted as an expense of the trade the amount in so far as it is not—

(I) otherwise deductible, or

(II) recoverable from the originator, or under any insurance, contract of indemnity or otherwise howsoever,

of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad, and

(iii) where at any time an amount or part of an amount which has been deducted as an expense under subparagraph (ii) is recovered or is no longer estimated to be bad, the amount which has been so deducted shall, in so far as it is recovered or is no longer estimated to be bad, be treated as trading income of the trade at that time, and

(b) any other qualifying company—

(i) profits arising from such activities shall, notwithstanding any other provisions of the Tax Acts, be treated as annual profits or gains within Schedule D and shall be chargeable to corporation tax under Case III of that Schedule, and for that purpose shall be computed in accordance with the provisions applicable to Case I of that Schedule,

(ii) there shall be deducted, in computing the amount of the profits to be charged to tax the amount, in so far as it is not—

(I) otherwise deductible, or

(II) recoverable from the original lender or under any insurance, contract of indemnity or otherwise howsoever,

of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad; but the amount of the debt shall not be deducted under this paragraph unless it would have been deductible as an expense of the trade of the original lender, where the original lender is a company or other body corporate, if that debt had been proved or estimated to be bad before it was acquired by the qualifying company, and

(iii) where at any time an amount or part of an amount which has been deducted as an expense under subparagraph (ii) is recovered or is no longer estimated to be bad, the amount which has been deducted shall, in so far as it is recovered or no longer estimated to be bad, be treated as income of the qualifying company at that time.”.

“Relief for gifts to the Scientific and Technological Education (Investment) Fund.

485B.—(1) In this section—

‘Minister’ means the Minister for Education and Science;

‘relevant gift’ means a gift of money which—

(a) on or after the 6th day of April, 1998, is made to STEIF,

(b) is or will be applied by STEIF solely for the purposes for which the fund was established, and

(c) apart from this section is not deductible in computing for the purposes of tax the profits or gains of a trade or profession, or is not income to which section 792 applies or is not a gift of money to which section 484 applies;

‘STEIF’ means the Scientific and Technological Education (Investment) Fund established under the Scientific and Technological Education (Investment) Fund Act, 1997 (as amended by the Scientific and Technological Education (Investment) Fund (Amendment) Act, 1998 ).

(2) Where it is proved to the satisfaction of the Revenue Commissioners that a person has made a relevant gift and the person claims relief from tax by reference to that gift, subsection (5) or, as the case may be, subsection (6) shall apply.

(3) Where a relevant gift is made by a chargeable person within the meaning of Part 41, a claim under this section shall be made with the return required to be delivered by that person under section 951 for the chargeable period in which the gift is made.

(4) In determining the net amount of the relevant gift for the purposes of subsection (5) or subsection (6), the amount or value of any consideration received by the person concerned as a result of making the gift, whether received directly or indirectly from STEIF or otherwise, shall be deducted from the gift.

(5) For the purposes of income tax for the year of assessment in which a person makes a relevant gift to which this section applies, the net amount of the gift shall be deducted from or set off against any income of the person chargeable to income tax for that year and tax shall where necessary be discharged or repaid accordingly, and the total income of the person or, where the person's spouse is assessed to income tax in accordance with section 1017, the total income of the spouse shall be calculated accordingly.

(6) Where a relevant gift is made by a company, the net amount of the gift shall, for the purposes of corporation tax, be deemed to be a loss incurred by the company in a separate trade in the accounting period of the company in which the gift is made.

(7) Relief under this section shall not be given to a person for any year of assessment or accounting period, as the case may be, if the net amount of the gift (or the aggregate of the net amount of gifts) made by such person in that year or accounting period, as the case may be, is less than £1,000.

(8) STEIF, when required to do so by notice from the Minister, shall within the time limited by the notice prepare and deliver to the Minister a return containing particulars of the aggregate amount of relevant gifts received by it in the period specified in the notice and the disposal of such gifts.

(9) For the purposes of a claim to relief under this section, STEIF shall, on acceptance of a relevant gift, give to the person making the gift a receipt which shall—

(a) contain a statement that—

(i) it is a receipt for the purposes of this section, and

(ii) the gift in respect of which the receipt is given is a relevant gift for the purposes of this section,

and

(b) show—

(i) the name and address of the person making the relevant gift,

(ii) the amount of the relevant gift in both figures and words,

(iii) the date of the relevant gift,

(iv) the date on which the receipt was issued.”.

“Returns of interest paid to non-residents.

891A.—(1) In this section—

‘appropriate inspector’ has the same meaning as in section 950(1);

‘chargeable period’ has the same meaning as in section 321(2);

‘relevant interest’ means interest to which subsection (2) of section 246 does not apply by virtue only of paragraph (h) (inserted by the Finance Act, 1999) of subsection (3) of that section;

‘relevant person’ has the same meaning as in section 246;

‘specified return date for the chargeable period’ has the same meaning as in section 894(1).

(2) (a) Subject to paragraph (c), every relevant person who pays relevant interest in a chargeable period shall prepare and deliver to the appropriate inspector on or before the specified return date for the chargeable period a return of all relevant interest so paid by the relevant person in the chargeable period stating in the case of each person to whom that relevant interest was paid—

(i) the name and address of the person,

(ii) the amount of relevant interest paid to the person in the chargeable period, and

(iii) the territory in which the person is resident for tax purposes.

(b) Section 891 shall not apply, in respect of the payment of relevant interest, to any relevant person to whom paragraph (a) applies.

(c) Sections 1052 and 1054 shall apply to a failure by a relevant person to deliver a return required by paragraph (a) and to each and every such failure, as they apply to a failure to deliver a return referred to in section 1052.”.

“Residential accommodation: allowance to owner-occupiers in respect of certain expenditure on construction or refurbishment.

372RA.—(1) In this section—

‘qualifying expenditure’, in relation to an individual, means an amount equal to the amount of the expenditure incurred by the individual on the construction or, as the case may be, refurbishment of a qualifying premises which is a qualifying owner-occupied dwelling in relation to the individual after deducting from that amount of expenditure any sum in respect of or by reference to—

(a) that expenditure,

(b) the qualifying premises, or

(c) the construction or, as the case may be, refurbishment work in respect of which that expenditure was incurred,

which the individual has received or is entitled to receive, directly or indirectly, from the State, any board established by statute or any public or local authority;

‘qualifying owner-occupied dwelling’, in relation to an individual, means a qualifying premises which is first used, after the qualifying expenditure has been incurred, by the individual as his or her only or main residence;

‘qualifying premises’, in relation to the incurring of qualifying expenditure, means, subject to subsections (4) and (5) of section 372S, a house—

(a) the site of which is wholly within a qualifying rural area,

(b) which is used solely as a dwelling,

(c) in respect of which, if it is not a new house (for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979 ) provided for sale, there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of construction or, as the case may be, refurbishment of the house is not less than the expenditure actually incurred on such construction or refurbishment, as the case may be, and

(d) the total floor area of which is not less than 38 square metres and not more than—

(i) in the case where the qualifying expenditure has been incurred on the construction of the qualifying premises, 210 square metres, or

(ii) in the case where the qualifying expenditure has been incurred on the refurbishment of the qualifying premises, 210 square metres;

‘refurbishment’ has the same meaning as in section 372R.

(2) (a) Where an individual, having made a claim in that behalf, proves to have incurred qualifying expenditure in a year of assessment, the individual shall be entitled, for that year of assessment and for any of the 9 subsequent years of assessment in which the qualifying premises in respect of which the individual incurred the qualifying expenditure is the only or main residence of the individual, to have a deduction made from his or her total income of an amount equal to—

(i) in the case where the qualifying expenditure has been incurred on the construction of the qualifying premises, 5 per cent of the amount of that expenditure, or

(ii) in the case where the qualifying expenditure has been incurred on the refurbishment of the qualifying premises, 10 per cent of the amount of that expenditure.

(b) A deduction shall be given under this section in respect of qualifying expenditure only in so far as that expenditure is to be treated under section 372S(7) as having been incurred in the qualifying period.

(3) Where qualifying expenditure in relation to a qualifying premises is incurred by 2 or more persons, each of those persons shall be treated as having incurred the expenditure in the proportions in which they actually bore the expenditure, and the expenditure shall be apportioned accordingly.

(4) Section 372S shall apply for the purposes of supplementing this section.”,

“Capital allowances for buildings used for certain childcare purposes.

843A.—(1) In this section—

‘pre-school child’ and ‘pre-school service’ have the meanings respectively assigned to them by section 49 of the Child Care Act, 1991 ;

‘qualifying expenditure’ means capital expenditure incurred on or after the 2nd day of December, 1998, on the construction, conversion or refurbishment of a qualifying premises;

‘qualifying premises’ means a building or structure which—

(a) apart from this section is not an industrial building or structure within the meaning of section 268, and

(b) is in use for the purposes of providing—

(i) a pre-school service, or

(ii) a pre-school service and a day-care or other service to cater for children other than pre-school children,

and in respect of which it can be shown (to the extent that it is being used for the purposes of providing a pre-school service) that the requirements of Article 9, 10(1) or 11, as appropriate, of the Child Care (Pre-School Services) Regulations, 1996 (S.I. No. 398 of 1996), have been complied with,

but does not include any part of a building or structure in use as or as part of a dwelling-house.

(2) Subject to subsections (3) to (5), the provisions of the Tax Acts relating to the making of allowances or charges in respect of capital expenditure incurred on the construction or refurbishment of an industrial building or structure shall, notwithstanding anything to the contrary in those provisions, apply in relation to qualifying expenditure on a qualifying premises—

(a) as if a qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under Part 9 by reason of its use for a purpose specified in section 268(1)(a), and

(b) where any activity carried on in the qualifying premises is not a trade, as if it were a trade.

(3) In relation to qualifying expenditure on a qualifying premises section 272 shall apply as if—

(a) in subsection (3)(a)(ii) of that section the reference to 4 per cent were a reference to 15 per cent, and

(b) in subsection (4)(a)(ii) of that section the reference to 25 years were a reference to 7 years.

(4) Notwithstanding section 274(1), no balancing allowance or balancing charge shall be made in relation to a qualifying premises by reason of any event referred to in that section which occurs—

(a) more than 10 years after the qualifying premises was first used, or

(b) in a case where section 276 applies, more than 10 years after the qualifying expenditure on refurbishment of the qualifying premises was incurred.”.

Interpretation (Part 11A).

380A.—In this Part—

‘lease’, ‘lessee’, ‘lessor’, ‘premium’ and ‘rent’ have the same meanings respectively as in Chapter 8 of Part 4;

‘market value’, in relation to a building, structure or house, means the price which the unencumbered fee simple of the building, structure or house would fetch if sold in the open market in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the building, structure or house, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the building, structure or house is constructed;

‘qualifying area’ means an area or areas specified as a qualifying area in the relevant guidelines;

‘qualifying period’ means, the period commencing on the 1st day of April, 1999, and ending on the 31st day of March, 2003;

‘the relevant guidelines’ means guidelines issued for the purposes of this Part by the Minister for Education and Science in consultation with the Minister for the Environment and Local Government and with the consent of the Minister for Finance and, without prejudice to the generality of the foregoing, such guidelines may include provisions in relation to all or any one or more of the following—

(i) the design and the construction of, conversion into, or refurbishment of, houses,

(ii) the total floor area and dimensions of rooms within houses, measured in such manner as may be determined by the Minister for the Environment and Local Government,

(iii) the provision of ancillary facilities and amenities in relation to houses,

(iv) the granting of certificates of reasonable cost,

(v) the designation of qualifying areas,

(vi) the terms and conditions relating to qualifying leases, and

(vii) the educational institutions and the students attending those institutions for whom the accommodation is provided.

Rented residential accommodation: deduction for certain expenditure on construction.

380B.—(1) In this section—

‘qualifying lease’, in relation to a house, means, subject to section 380E(2), a lease of the house the consideration for the grant of which consists—

(a) solely of periodic payments all of which are or are to be treated as rent for the purposes of Chapter 8 of Part 4, or

(b) of payments of the kind mentioned in paragraph (a), together with a payment by means of a premium which does not exceed 10 per cent of the relevant cost of the house;

‘qualifying premises’ means, subject to subsections (3), (4)(a), (5) and (6) of section 380E, a house—

(a) the site of which is wholly within a qualifying area,

(b) which is used solely as a dwelling,

(c) the total floor area of which complies with the requirements of the relevant guidelines,

(d) in respect of which, if it is not a new house (for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979 ) provided for sale, there is in force a certificate of reasonable cost, the amount specified in which in respect of the cost of construction of the house is not less than the expenditure actually incurred on such construction, and

(e) which without having been used is first let in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (except for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease;

‘relevant cost’, in relation to a house, means, subject to subsection (4), an amount equal to the aggregate of—

(a) the expenditure incurred on the acquisition of, or of rights in or over, any land on which the house is constructed, and

(b) the expenditure actually incurred on the construction of the house;

‘relevant period’, in relation to a qualifying premises, means the period of 10 years beginning on the date of the first letting of the premises under a qualifying lease.

(2) Subject to subsection (3), where a person, having made a claim in that behalf, proves to have incurred expenditure on the construction of a qualifying premises—

(a) such person shall be entitled, in computing for the purposes of section 97(1) the amount of a surplus or deficiency in respect of the rent from the qualifying premises, to a deduction of so much (if any) of that expenditure as is to be treated under section 380E(8) or under this section as having been incurred by such person in the qualifying period, and

(b) Chapter 8 of Part 4 shall apply as if that deduction were a deduction authorised by section 97(2).

(3) (a) This subsection shall apply to any premium or other sum which is payable, directly or indirectly, under a qualifying lease or otherwise under the terms subject to which the lease is granted, to or for the benefit of the lessor or to or for the benefit of any person connected with the lessor.

(b) Where any premium or other sum to which this subsection applies, or any part of such premium or such other sum, is not or is not treated as rent for the purposes of section 97, the expenditure to be treated as having been incurred in the qualifying period on the construction of the qualifying premises to which the qualifying lease relates shall be deemed for the purposes of subsection (2) to be reduced by the lesser of—

(i) the amount of such premium or such other sum or, as the case may be, that part of such premium or such other sum, and

(ii) the amount which bears to the amount mentioned in subparagraph (i) the same proportion as the amount of the expenditure actually incurred on the construction of the qualifying premises which is to be treated under section 380E(8) as having been incurred in the qualifying period bears to the whole of the expenditure incurred on that construction.

(4) Where a qualifying premises forms a part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary—

(a) of the expenditure incurred on the construction of that building or those buildings, and

(b) of the amount which would be the relevant cost in relation to that building or those buildings if the building or buildings, as the case may be, were a single qualifying premises,

for the purposes of determining the expenditure incurred on the construction of the qualifying premises and the relevant cost in relation to the qualifying premises.

(5) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs—

(a) the house ceases to be a qualifying premises, or

(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises,

then, the person who before the occurrence of the event received or was entitled to receive a deduction under subsection (2) in respect of expenditure incurred on the construction of the qualifying premises shall be deemed to have received on the day before the day of the occurrence of the event an amount as rent from the qualifying premises equal to the amount of the deduction.

(6) (a) Where the event mentioned in subsection (5)(b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the house passes shall be treated for the purposes of this section as having incurred in the qualifying period an amount of expenditure on the construction of the house equal to the amount which under section 380E(8) or under this section (apart from subsection (3)(b)) the lessor was treated as having incurred in the qualifying period on the construction of the house, but, in the case of a person who purchases such a house, the amount so treated as having been incurred by such person shall not exceed the relevant price paid by such person on the purchase.

(b) For the purposes of this subsection and subsection (7), the relevant price paid by a person on the purchase of a house shall be the amount which bears to the net price paid by such person on that purchase the same proportion as the amount of the expenditure actually incurred on the construction of the house which is to be treated under section 380E(8) as having been incurred in the qualifying period bears to the relevant cost in relation to that house.

(7) (a) Subject to paragraph (b), where expenditure is incurred on the construction of a house and before the house is used it is sold, the person who purchases the house shall be treated for the purposes of this section as having incurred in the qualifying period expenditure on the construction of the house equal to the lesser of—

(i) the amount of such expenditure which is to be treated under section 380E(8) as having been incurred in the qualifying period, and

(ii) the relevant price paid by such person on the purchase,

but, where the house is sold more than once before it is used, this subsection shall apply only in relation to the last of those sales.

(b) Where expenditure is incurred on the construction of a house by a person carrying on a trade or part of a trade which consists, as to the whole or any part of the trade, of the construction of buildings with a view to their sale and the house, before it is used, is sold in the course of that trade or, as the case may be, that part of that trade—

(i) the person (in this paragraph referred to as ‘the purchaser’) who purchases the house shall be treated for the purposes of this section as having incurred in the qualifying period expenditure on the construction of the house equal to the relevant price paid by the purchaser on the purchase (in this paragraph referred to as ‘the first purchase’), and

(ii) in relation to any subsequent sale or sales of the house before the house is used, paragraph (a) shall apply as if the reference to the amount of expenditure which is to be treated as having been incurred in the qualifying period were a reference to the relevant price paid on the first purchase.

(8) Section 380E shall apply for the purposes of supplementing this section.

Rented residential accommodation: deduction for certain expenditure on conversion.

380C.—(1) In this section—

‘conversion expenditure’ means, subject to subsection (2), expenditure incurred on—

(a) the conversion into a house of a building—

(i) the site of which is wholly within a qualifying area, and

(ii) which has not been previously in use as a dwelling,

and

(b) the conversion into 2 or more houses of a building—

(i) the site of which is wholly within a qualifying area, and

(ii) which before the conversion had not been in use as a dwelling or had been in use as a single dwelling,

and references in this section and in section 380E to ‘conversion’, ‘conversion into a house’ and ‘expenditure incurred on conversion’ shall be construed accordingly;

‘qualifying lease’, in relation to a house, means, subject to section 380E(2), a lease of the house the consideration for the grant of which consists—

(a) solely of periodic payments all of which are or are to be treated as rent for the purposes of Chapter 8 of Part 4, or

(b) of payments of the kind mentioned in paragraph (a), together with a payment by means of a premium which does not exceed 10 per cent of the market value of the house at the time the conversion is completed and, in the case of a house which is a part of a building and is not saleable apart from the building of which it is a part, the market value of the house at the time the conversion is completed shall for the purposes of this paragraph be taken to be an amount which bears to the market value of the building at that time the same proportion as the total floor area of the house bears to the total floor area of the building;

‘qualifying premises’ means, subject to subsections (3), (4)(b), (5) and (6) of section 380E, a house—

(a) which is used solely as a dwelling,

(b) the total floor area of which complies with the requirements of the relevant guidelines,

(c) in respect of which there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of conversion in relation to the house is not less than the expenditure actually incurred on such conversion, and

(d) which without having been used subsequent to the incurring of the expenditure on the conversion is first let in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (except for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease;

‘relevant period’, in relation to a qualifying premises, means the period of 10 years beginning on the date of the first letting of the premises under a qualifying lease.

(2) For the purposes of this section, expenditure incurred on the conversion of a building shall be deemed to include expenditure incurred in the course of the conversion on either or both of the following—

(a) the carrying out of any works of construction, reconstruction, repair or renewal, and

(b) the provision or improvement of water, sewerage or heating facilities,

in relation to the building or any outoffice appurtenant to or usually enjoyed with the building, but shall not be deemed to include—

(i) any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts, or

(ii) any expenditure attributable to any part (in this section referred to as a ‘non-residential unit’) of the building which on completion of the conversion is not a house.

(3) For the purposes of subsection (2)(ii), where expenditure is attributable to a building in general and not directly to any particular house or non-residential unit comprised in the building on completion of the conversion, such an amount of that expenditure shall be deemed to be attributable to a non-residential unit as bears to the whole of that expenditure the same proportion as the total floor area of the non-residential unit bears to the total floor area of the building.

(4) Subject to subsection (5), where a person, having made a claim in that behalf, proves to have incurred conversion expenditure in relation to a house which is a qualifying premises—

(a) such person shall be entitled, in computing for the purposes of section 97(1) the amount of a surplus or deficiency in respect of the rent from the qualifying premises, to a deduction of so much (if any) of the expenditure as is to be treated under section 380E(8) or under this section as having been incurred by such person in the qualifying period, and

(b) Chapter 8 of Part 4 shall apply as if that deduction were a deduction authorised by section 97(2).

(5) (a) This subsection shall apply to any premium or other sum which is payable, directly or indirectly, under a qualifying lease or otherwise under the terms subject to which the lease is granted, to or for the benefit of the lessor or to or for the benefit of any person connected with the lessor.

(b) Where any premium or other sum to which this subsection applies, or any part of such premium or such other sum, is not or is not treated as rent for the purposes of section 97, the conversion expenditure to be treated as having been incurred in the qualifying period in relation to the qualifying premises to which the qualifying lease relates shall be deemed for the purposes of subsection (4) to be reduced by the lesser of—

(i) the amount of such premium or such other sum or, as the case may be, that part of such premium or such other sum, and

(ii) the amount which bears to the amount mentioned in subparagraph (i) the same proportion as the amount of the conversion expenditure actually incurred in relation to the qualifying premises (which is to be treated under section 380E(8) as having been incurred in the qualifying period) bears to the whole of the conversion expenditure incurred in relation to the qualifying premises.

(6) Where a qualifying premises forms a part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the expenditure incurred on the conversion of that building or those buildings for the purposes of determining the conversion expenditure incurred in relation to the qualifying premises.

(7) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs—

(a) the house ceases to be a qualifying premises, or

(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises,

then, the person who before the occurrence of the event received or was entitled to receive a deduction under subsection (4) in respect of conversion expenditure incurred in relation to the qualifying premises shall be deemed to have received on the day before the day of the occurrence of the event an amount as rent from the qualifying premises equal to the amount of the deduction.

(8) Where the event mentioned in subsection (7)(b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the house passes shall be treated for the purposes of this section as having incurred in the qualifying period an amount of conversion expenditure in relation to the house equal to the amount of the conversion expenditure which under section 380E(8) or under this section (apart from subsection (5)(b)) the lessor was treated as having incurred in the qualifying period in relation to the house, but, in the case of a person who purchases such a house, the amount so treated as having been incurred by such person shall not exceed—

(a) the net price paid by such person on the purchase, or

(b) in case only a part of the conversion expenditure incurred in relation to the house is to be treated under section 380E(8) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the conversion expenditure incurred in relation to the house.

(9) Where conversion expenditure is incurred in relation to a house and before the house is used subsequent to the incurring of that expenditure it is sold, the person who purchases the house shall be treated for the purposes of this section as having incurred in the qualifying period conversion expenditure in relation to the house equal to the lesser of—

(a) the amount of such expenditure which is to be treated under section 380E(8) as having been incurred in the qualifying period, and

(b) (i) the net price paid by such person on the purchase, or

(ii) in case only a part of the conversion expenditure incurred in relation to the house is to be treated under section 380E(8) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the conversion expenditure incurred in relation to the house,

but, where the house is sold more than once before it is used subsequent to the incurring of the conversion expenditure in relation to the house, this subsection shall apply only in relation to the last of those sales.

(10) This section shall not apply in the case of a conversion unless planning permission in respect of the conversion has been granted under the Local Government (Planning and Development) Acts, 1963 to 1998.

(11) Section 380E shall apply for the purposes of supplementing this section.

Rented residential accommodation: deduction for certain expenditure on refurbishment.

380D.—(1) In this section—

‘qualifying lease’, in relation to a house, means, subject to section 380E(2), a lease of the house the consideration for the grant of which consists—

(a) solely of periodic payments all of which are or are to be treated as rent for the purposes of Chapter 8 of Part 4, or

(b) of payments of the kind mentioned in paragraph (a), together with a payment by means of a premium—

(i) which is payable on or subsequent to the date of the completion of the refurbishment to which the relevant expenditure relates or which, if payable before that date, is so payable by reason of or otherwise in connection with the carrying out of the refurbishment, and

(ii) which does not exceed 10 per cent of the market value of the house on the date of completion of the refurbishment to which the relevant expenditure relates and, in the case of a house which is a part of a building and is not saleable apart from the building of which it is a part, the market value of the house on that date shall for the purposes of this subparagraph be taken to be an amount which bears to the market value of the building on that date the same proportion as the total floor area of the house bears to the total floor area of the building;

‘qualifying premises’ means, subject to subsections (3), (4)(b), (5) and (6) of section 380E, a house—

(a) which is used solely as a dwelling,

(b) the total floor area of which complies with the requirements of the relevant guidelines,

(c) in respect of which there is in force a certificate of reasonable cost the amount specified in which in respect of the cost of refurbishment in relation to the house is not less than the relevant expenditure actually incurred on such refurbishment, and

(d) which on the date of completion of the refurbishment to which the relevant expenditure relates is let (or, if not let on that date, is, without having been used after that date, first let) in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (except for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease;

‘refurbishment’, in relation to a building, means either or both of the following—

(a) the carrying out of any works of construction, reconstruction, repair or renewal, and

(b) the provision or improvement of water, sewerage or heating facilities,

where the carrying out of such works or the provision of such facilities is certified by the Minister for the Environment and Local Government, in any certificate of reasonable cost granted by that Minister in relation to any house contained in the building, to have been necessary for the purposes of ensuring the suitability as a dwelling of any house in the building and whether or not the number of houses in the building, or the shape or size of any such house, is altered in the course of such refurbishment;

‘relevant expenditure’ means expenditure incurred on the refurbishment of a specified building, other than expenditure attributable to any part (in this section referred to as a ‘non-residential unit’) of the building which on completion of the refurbishment is not a house, and for the purposes of this definition where expenditure is attributable to the specified building in general (and not directly to any particular house or non-residential unit comprised in the building on completion of the refurbishment), such an amount of that expenditure shall be deemed to be attributable to a non-residential unit as bears to the whole of that expenditure the same proportion as the total floor area of the non-residential unit bears to the total floor area of the building;

‘relevant period’, in relation to a qualifying premises, means the period of 10 years beginning on the date of the completion of the refurbishment to which the relevant expenditure relates or, if the premises was not let under a qualifying lease on that date, the period of 10 years beginning on the date of the first such letting after the date of such completion;

‘specified building’ means a building—

(a) the site of which is wholly within a qualifying area,

(b) in which before the refurbishment to which the relevant expenditure relates there are 2 or more houses, and

(c) which on completion of that refurbishment contains (whether in addition to any non-residential unit or not) 2 or more houses.

(2) Subject to subsection (3), where a person, having made a claim in that behalf, proves to have incurred relevant expenditure in relation to a house which is a qualifying premises—

(a) such person shall be entitled, in computing for the purposes of section 97(1) the amount of a surplus or deficiency in respect of the rent from the qualifying premises, to a deduction of so much (if any) of the expenditure as is to be treated under section 380E(8) or under this section as having been incurred by such person in the qualifying period, and

(b) Chapter 8 of Part 4 shall apply as if that deduction were a deduction authorised by section 97(2).

(3) (a) This subsection shall apply to any premium or other sum which—

(i) is payable, directly or indirectly, under a qualifying lease or otherwise under the terms subject to which the lease is granted, to or for the benefit of the lessor or to or for the benefit of any person connected with the lessor, and

(ii) is payable on or subsequent to the date of completion of the refurbishment to which the relevant expenditure relates or, if payable before that date, is so payable by reason of or otherwise in connection with the carrying out of the refurbishment.

(b) Where any premium or other sum to which this subsection applies, or any part of such premium or such other sum, is not or is not treated as rent for the purposes of section 97, the relevant expenditure to be treated as having been incurred in the qualifying period in relation to the qualifying premises to which the qualifying lease relates shall be deemed for the purposes of subsection (2) to be reduced by the lesser of—

(i) the amount of such premium or such other sum or, as the case may be, that part of such premium or such other sum, and

(ii) the amount which bears to the amount mentioned in subparagraph (i) the same proportion as the amount of the relevant expenditure actually incurred in relation to the qualifying premises (which is to be treated under section 380E(8) as having been incurred in the qualifying period) bears to the whole of the relevant expenditure incurred in relation to the qualifying premises.

(4) Where a qualifying premises forms a part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the relevant expenditure incurred on that building or those buildings for the purposes of determining the relevant expenditure incurred in relation to the qualifying premises.

(5) Where a house is a qualifying premises and at any time during the relevant period in relation to the premises either of the following events occurs—

(a) the house ceases to be a qualifying premises, or

(b) the ownership of the lessor's interest in the house passes to any other person but the house does not cease to be a qualifying premises.

then, the person who before the occurrence of the event received or was entitled to receive a deduction under subsection (2) in respect of relevant expenditure incurred in relation to the qualifying premises shall be deemed to have received on the day before the day of the occurrence of the event an amount as rent from the qualifying premises equal to the amount of the deduction.

(6) Where the event mentioned in subsection (5)(b) occurs in the relevant period in relation to a house which is a qualifying premises, the person to whom the ownership of the lessor's interest in the house passes shall be treated for the purposes of this section as having incurred in the qualifying period an amount of relevant expenditure in relation to the house equal to the amount of the relevant expenditure which under section 380E(8) or under this section (apart from subsection (3)(b)) the lessor was treated as having incurred in the qualifying period in relation to the house, but, in the case of a person who purchases such a house, the amount so treated as having been incurred by such person shall not exceed—

(a) the net price paid by such person on the purchase, or

(b) in case only a part of the relevant expenditure incurred in relation to the house is to be treated under section 380E(8) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house.

(7) Where relevant expenditure is incurred in relation to a house and before the house is used subsequent to the incurring of that expenditure it is sold, the person who purchases the house shall be treated for the purposes of this section as having incurred in the qualifying period relevant expenditure in relation to the house equal to the lesser of—

(a) the amount of such expenditure which is to be treated under section 380E(8) as having been incurred in the qualifying period, and

(b) (i) the net price paid by such person on the purchase, or

(ii) in case only a part of the relevant expenditure incurred in relation to the house is to be treated under section 380E(8) as having been incurred in the qualifying period, the amount which bears to that net price the same proportion as that part bears to the whole of the relevant expenditure incurred in relation to the house,

but, where the house is sold more than once before it is used subsequent to the incurring of the relevant expenditure in relation to the house, this subsection shall apply only in relation to the last of those sales.

(8) This section shall not apply in the case of any refurbishment unless planning permission, in so far as it is required, in respect of the work carried out in the course of the refurbishment has been granted under the Local Government (Planning and Development) Acts, 1963 to 1998.

(9) Expenditure in respect of which a person is entitled to relief under this section shall not include any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts.

(10) Section 380E shall apply for the purposes of supplementing this section.

Provisions supplementary to sections 380B to 380D.

380E.—(1) In sections 380B to 380D—

‘certificate of reasonable cost’ means a certificate granted, having regard to the relevant guidelines, by the Minister for the Environment and Local Government for the purposes of section 380B, 380C or 380D, as the case may be, stating that the amount specified in the certificate in relation to the cost of construction of, conversion into, or refurbishment of, the house to which the certificate relates appears to that Minister at the time of the granting of the certificate and on the basis of the information available to that Minister at that time to be reasonable, and section 18 of the Housing (Miscellaneous Provisions) Act, 1979 , shall, with any necessary modifications, apply to a certificate of reasonable cost as if it were a certificate of reasonable value within the meaning of that section;

‘house’ includes any building or part of a building used or suitable for use as a dwelling and any outoffice, yard, garden or other land appurtenant to or usually enjoyed with that building or part of a building;

‘total floor area’ means the total floor area of a house measured in the manner referred to in section 4(2)(b) of the Housing (Miscellaneous Provisions) Act, 1979 .

(2) A lease shall not be a qualifying lease for the purposes of section 380B, 380C or 380D if—

(a) the terms of the lease contain any provision enabling the lessee or any other person, directly or indirectly, at any time to acquire any interest in the house to which the lease relates for a consideration less than that which might be expected to be given at that time for the acquisition of the interest if the negotiations for that acquisition were conducted in the open market at arm's length, and

(b) it does not comply with the requirements of the relevant guidelines.

(3) A house shall not be a qualifying premises for the purposes of section 380B, 380C or 380D if—

(a) it is occupied as a dwelling by any person connected with the person entitled, in relation to the expenditure incurred on the construction of, conversion into, or, as the case may be, refurbishment of, the house, to a deduction under section 380B(2), 380C(4) or 380D(2), as the case may be, and

(b) the terms of the qualifying lease in relation to the house are not such as might have been expected to be included in the lease if the negotiations for the lease had been at arm's length.

(4) (a) A house shall not be a qualifying premises for the purposes of section 380B unless it complies with such conditions, if any, as may be determined by the Minister for the Environment and Local Government from time to time for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979 , in relation to standards of construction of houses and the provision of water, sewerage and other services in houses.

(b) A house shall not be a qualifying premises for the purposes of section 380C or 380D unless it complies with such conditions, if any, as may be determined by the Minister for the Environment and Local Government from time to time for the purposes of section 5 of the Housing (Miscellaneous Provisions) Act, 1979 , in relation to standards for improvements of houses and the provision of water, sewerage and other services in houses.

(5) A house shall not be a qualifying premises for the purposes of section 380B, 380C or 380D unless persons authorised in writing by the Minister for the Environment and Local Government for the purposes of those sections are permitted to inspect the house at all reasonable times on production, if so requested by a person affected, of their authorisations.

(6) A house shall not be a qualifying premises for the purposes of section 380B, 380C or 380D unless throughout the relevant period (within the meaning of section 380B, 380C or 380D, as the case may be) it is used for letting to and occupation by students in accordance with the relevant guidelines.

(7) For the purposes of sections 380B to 380D, references in those sections to the construction of, conversion into, or refurbishment of, any premises shall be construed as including references to the development of the land on which the premises is situated or which is used in the provision of gardens, grounds, access or amenities in relation to the premises and, without prejudice to the generality of the foregoing, as including in particular—

(a) demolition or dismantling of any building on the land,

(b) site clearance, earth moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works,

(c) walls, power supply, drainage, sanitation and water supply, and

(d) the construction of any outhouses or other buildings or structures for use by the occupants of the premises or for use in the provision of amenities for the occupants.

(8) (a) For the purposes of determining, in relation to any claim under section 380B(2), 380C(4) or 380D(2), as the case may be, whether and to what extent expenditure incurred on the construction of, conversion into or refurbishment of, a qualifying premises is incurred or not incurred during the qualifying period, only such an amount of that expenditure as is properly attributable to work on the construction of, conversion into or refurbishment of, the premises actually carried out during the qualifying period shall be treated as having been incurred during that period.

(b) Where by virtue of subsection (7) expenditure on the construction of, conversion into or refurbishment of, a qualifying premises includes expenditure on the development of any land, paragraph (a) shall apply with any necessary modifications as if the references in that paragraph to the construction of, conversion into or refurbishment of, the qualifying premises were references to the development of such land.

(9) (a) For the purposes of sections 380B and 380C other than the purposes mentioned in subsection (8)(a), expenditure incurred on the construction of, or, as the case may be, conversion into, a qualifying premises shall be deemed to have been incurred on the date of the first letting of the premises under a qualifying lease.

(b) For the purposes of section 380D other than the purposes mentioned in subsection (8)(a), relevant expenditure incurred in relation to the refurbishment of a qualifying premises shall be deemed to have been incurred on the date of the commencement of the relevant period, in relation to the premises, determined as respects the refurbishment to which the relevant expenditure relates.

(10) For the purposes of sections 380B to 380D, expenditure shall not be regarded as incurred by a person in so far as it has been or is to be met, directly or indirectly, by the State, by any board established by statute or by any public or local authority.

(11) Section 555 shall apply as if a deduction under section 380B(2), 380C(4) or 380D(2), as the case may be, were a capital allowance and as if any rent deemed to have been received by a person under section 380B(5), 380C(7) or 380D(5), as the case may be, were a balancing charge.

(12) An appeal to the Appeal Commissioners shall lie on any question arising under this section or under section 380B, 380C or 380D (other than a question on which an appeal lies under section 18 of the Housing (Miscellaneous Provisions) Act, 1979 ) in the like manner as an appeal would lie against an assessment to income tax or corporation tax, and the provisions of the Tax Acts relating to appeals shall apply accordingly.

Provision against double relief.

380F.—Where relief is given by virtue of any provision of this Part in relation to expenditure incurred on any premises, relief shall not be given in respect of that expenditure under any other provision of the Tax Acts.”.

“Transitional provisions in respect of section 623.

623A.—(1) In this section ‘the new definition’ means section 616 as amended by section 56 of the Finance Act, 1999, and ‘the old definition’ means that section as it had effect on the 10th day of February, 1999.

(2) Where—

(a) on the 11th day of February, 1999, a company ceases, for the purposes of section 616 and the provisions of this Part subsequent to that section, to be a member of a group by reason only of the substitution for the old definition of the new definition, and

(b) in consequence of ceasing to be such a member the company would, apart from this section, be treated by virtue of section 623(4) as selling an asset at any time,

the company shall not be treated as selling the asset at that time unless the conditions in subsection (3) become satisfied, assuming for that purpose that the old definition applies.

(3) The conditions referred to in subsection (2) are—

(a) that for the purposes of section 623, the company ceases at any time (in this subsection referred to as the ‘relevant time’) to be a member of the group referred to in subsection (2)(a),

(b) that, at the relevant time, the company (or an associated company also ceasing to be a member of that group at that time) owns, otherwise than as trading stock, the asset, or property on the acquisition of which a chargeable gain in relation to the asset has been deferred on a replacement of business assets, and

(c) that the time of acquisition of the asset referred to in section 623(2) fell within the period of 10 years ending with the relevant time.”,

“Transitional provisions in respect of section 625.

625A.—(1) In this section—

‘the subsidiary’ and ‘the chargeable company’ have the same meanings, respectively, assigned to them by 625(1);

‘the new definition’ means section 616 as amended by section 56 of the Finance Act, 1999, and ‘the old definition’ means that section as it had effect on the 10th day of February, 1999.

(2) Where—

(a) on the 11th day of February, 1999, the subsidiary company ceases, for the purposes of section 616 and the provisions of this Part subsequent to that section, to be a member of a group by reason only of the substitution for the old definition of the new definition, and

(b) in consequence of ceasing to be such a member the chargeable company would, apart from this section, be treated by virtue of section 625(2) as selling shares in the subsidiary at any time,

the chargeable company shall not be treated as selling the shares at that time unless the conditions in subsection (3) become satisfied assuming for that purpose that the old definition applies.

(3) The conditions referred to in subsection (2) are—

(a) that for the purposes of section 625 the subsidiary ceases at any time (in this subsection referred to as ‘the relevant time’) to be a member of the group referred to in subsection (2)(a), and

(b) that the time of the earlier occasion referred to in section 625(1)(a) fell within the period of 10 years ending with the relevant time.”,

“Restriction on set-off of pre-entry losses.

626A.—For the purposes of Part 20, Schedule 18A (which makes provision in relation to losses accruing to a company before the time when it becomes a member of a group of companies and losses accruing on assets held by any company at such a time) shall apply.”.

“Section 626A.

SCHEDULE 18A

Restriction on set-off of Pre-entry Losses

Application and construction of Schedule

1. (1) This Schedule shall apply in the case of a company which is or has been a member of a group of companies (in this Schedule referred to as ‘the relevant group’) in relation to any pre-entry losses of the company.

(2) In this Schedule ‘pre-entry loss’, in relation to a company, means—

(a) an allowable loss that accrued to the company at a time before it became a member of the relevant group in so far as the loss has not been allowed as a deduction from chargeable gains accruing to the company prior to that time, or

(b) the pre-entry proportion of an allowable loss accruing to the company on the disposal of a pre-entry asset,

and for the purposes of this Schedule the pre-entry proportion of an allowable loss shall be calculated in accordance with paragraph 2.

(3) In this Schedule ‘pre-entry asset’, in relation to a disposal means, subject to subparagraph (4), an asset which was held by a company at the time immediately before the company became a member of the relevant group.

(4) An asset is not a pre-entry asset in relation to a disposal where—

(a) the company which held the asset at the time the company became a member of the relevant group is not the company which makes the disposal, and

(b) since that time the asset has been disposed of otherwise than by a disposal to which section 617 applies,

but, without prejudice to subparagraph (8), where, on a disposal to which section 617 does not apply, an asset would cease to be a pre-entry asset by virtue of this subparagraph and the company making the disposal retains any interest in or over the asset in question, that interest shall be a pre-entry asset for the purposes of this Schedule.

(5) References in this Schedule, in relation to a pre-entry asset, to the relevant time are references to the time when the company by reference to which the asset is a pre-entry asset became a member of the relevant group and for the purposes of this Schedule—

(a) where a company has become a member of the relevant group on more than one occasion, an asset is a pre-entry asset by reference to the company if the asset would be a pre-entry asset by reference to the company in respect of any one of those occasions, and

(b) references in the following provisions of this Schedule to the time when a company became a member of the relevant group, in relation to assets held on more than one such occasion as is mentioned in clause (a), are references to the later or latest of those occasions.

(6) Where—

(a) the principal company of a group of companies (in this paragraph referred to as ‘the first group’) has at any time become a member of another group (in this paragraph referred to as ‘the second group’) so that the two groups are treated as the same by virtue of subsection (3) of section 616, and

(b) the second group, together in pursuance of the said subsection (3) with the first group, is the relevant group,

then, except where subparagraph (7) applies, the members of the first group shall be treated for the purposes of this Schedule as having become members of the relevant group at that time, and not by virtue of the said subsection (3) at the times when they became members of the first group.

(7) This subparagraph applies where—

(a) the persons who immediately before the time when the principal company of the first group became a member of the second group owned the shares comprised in the issued share capital of the principal company of the first group are the same as the persons who, immediately after that time, owned the shares comprised in the issued share capital of the principal company of the relevant group, and

(b) the company which is the principal company of the relevant group immediately after that time—

(i) was not the principal company of any group immediately before that time, and

(ii) immediately after that time had assets consisting entirely, or almost entirely, of shares comprised in the issued share capital of the principal company of the first group.

(8) For the purposes of this Schedule—

(a) an asset (in this subparagraph referred to as ‘the first asset’) acquired or held by a company at any time and an asset (in this subparagraph referred to as ‘the second asset’) held at a later time by the company (or by any company which is or has been a member of the same group of companies as the company) shall be treated as the same asset if the value of the second asset is derived in whole or in part from the first asset, and

(b) where—

(i) an asset is treated (whether by virtue of clause (a) or otherwise) as the same as an asset held by a company at a later time, and

(ii) the first asset would have been a pre-entry asset in relation to the company,

the second asset shall also be treated as a pre-entry asset in relation to the company,

and clause (a) shall apply in particular where the second asset is a freehold and the first asset is a leasehold the lessee of which acquires the reversion.

(9) In determining for the purposes of this Schedule whether an allowable loss accruing to a company on a disposal under section 719 or 738(4)(a) is a loss that accrued before the company became a member of the relevant group the provisions of section 720 or 738(4)(b), as the case may be, shall be disregarded.

Calculation of pre-entry loss by reference to market value

2. (1) Where an allowable loss accrues on the disposal by a company of any pre-entry asset, the pre-entry proportion of that loss shall be whichever is the smaller of the amounts mentioned in subparagraph (2).

(2) The amounts referred to in subparagraph (1) are—

(a) the amount of the allowable loss which would have accrued if the asset had been disposed of at the relevant time at its market value at that time, and

(b) the amount of the allowable loss accruing on the disposal mentioned in subparagraph (1).

Gains from which pre-entry losses are to be deductible

3. (1) Notwithstanding section 78(2) a pre-entry loss that accrued to a company on a disposal before the company became a member of the relevant group shall only be deductible from a chargeable gain accruing to the company where the gain is one accruing—

(a) on a disposal made by the company before the date (in this paragraph referred to as ‘the entry date’) on which the company became a member of the relevant group and made in the same accounting period in which the entry date falls,

(b) on the disposal of an asset which was held by the company immediately before the entry date, or

(c) on the disposal of an asset which—

(i) was acquired by the company on or after the entry date from a person who was not a member of the relevant group at the time of the acquisition, and

(ii) since its acquisition from the person has not been used or held for any purposes other than those of a trade which was being carried on by the company at the time immediately before the entry date and which continued to be carried on by the company until the disposal.

(2) Notwithstanding section 78(2) the pre-entry proportion of an allowable loss accruing to a company on the disposal of a pre-entry asset shall only be deductible from a chargeable gain accruing to the company where—

(a) the gain is one accruing on a disposal made by the company before the entry date and made in the same accounting period in which the entry date falls and the company is the one (in this subparagraph referred to as ‘the initial company’) by reference to which the asset on the disposal of which the loss accrues is a pre-entry asset,

(b) the pre-entry asset and the asset on the disposal of which the gain accrues were each held by the same company at a time immediately before the company became a member of the relevant group, or

(c) the gain is one accruing on the disposal of an asset which—

(i) was acquired by the initial company (whether before or after the initial company became a member of the relevant group) from a person who, at the time of the acquisition, was not a member of that group, and

(ii) since its acquisition from the person has not been used or held for any purposes other than those of a trade which was being carried on, immediately before the entry date, by the initial company and which continued to be carried on by the initial company until the disposal.

(3) Where 2 or more companies become members of the relevant group at the same time and those companies were all members of the same group of companies immediately before those companies became members of the relevant group, then—

(a) an asset shall be treated for the purposes of subparagraph (1)(b) as held, immediately before the company became a member of the relevant group, by the company to which the pre-entry loss in question accrued if the company is one of those companies and the asset was in fact so held by another of those companies,

(b) two or more assets shall be treated for the purposes of subparagraph (2)(b) as assets held by the same company immediately before the company became a member of the relevant group wherever they would be so treated if all those companies were treated as a single company, and

(c) the acquisition of an asset shall be treated for the purposes of subparagraphs (1)(c) and (2)(c) as an acquisition by the company to which the pre-entry loss in question accrued if the company is one of those companies and the asset was in fact acquired (whether before or after those companies became members of the relevant group) by another of those companies.

Change of a company's nature

4. (1) Where—

(a) within any period of 3 years, a company becomes a member of a group of companies and there is (either earlier or later in that period, or at the same time) a major change in the nature or conduct of a trade carried on by the company, or

(b) at any time after the scale of the activities in a trade carried on by a company has become small or negligible, and before any considerable revival of the trade, the company becomes a member of a group of companies,

the trade carried on before the change mentioned in clause (a), or, as the case may be, the trade mentioned in clause (b), shall be disregarded for the purposes of subparagraphs (1)(c) and (2)(c) of paragraph 3 in relation to any time before the company became a member of the group in question.

(2) In subparagraph (1) the reference to a major change in the nature or conduct of a trade includes a reference to—

(a) a major change in the type of property dealt in, or services or facilities provided, in the trade, or

(b) a major change in customers, markets or outlets of the trade,

and this paragraph shall apply even if the change is the result of a gradual process which began outside the period of 3 years mentioned in subparagraph (1)(a).

(3) Where the operation of this paragraph depends on circumstances or events at a time after the company becomes a member of a group of companies (but not more than 3 years after), an assessment to give effect to this paragraph shall not be out of time if made within 6 years from that time or the latest such time.

Companies changing groups on certain transfers of shares etc.

5. For the purposes of this Schedule, where—

(a) a company which is a member of a group of companies becomes at any time a member of another group of companies as the result of a disposal of shares in or other securities of the company or any other company, and

(b) that disposal is one on which, by virtue of any provision of the Tax Acts or the Capital Gains Tax Acts, neither a gain nor a loss would accrue,

this Schedule shall apply in relation to the losses that accrued to the company before that time and the assets held by the company at that time as if any time when the company was a member of the first group were included in the period during which the company is treated as having been a member of the second group.”.

“Exchange of shares held as trading stock.

751A.—(1) In this section—

‘new holding’, in relation to original shares, and ‘original shares’ have, respectively, the same meanings as in section 584(1).

(2) Subsections (4) and (5) shall apply where a transaction to which this section applies occurs in relation to any original shares—

(a) to which a person carrying on a business consisting wholly or partly of dealing in securities is beneficially entitled, and

(b) which are such that a profit on their sale would form part of the trading profits of that business.

(3) This section applies to any transaction, being a disposal of original shares which, if the original shares were not such as are mentioned in subsection (2) would result in the disposal not being treated as a disposal by virtue of sections 584 to 587; but does not apply to any transaction in relation to which section 751B applies.

(4) Subject to subsection (5), in making any computation in accordance with the provisions of the Tax Acts applicable to trading profits chargeable to tax under Case I of Schedule D—

(a) the transaction to which this section applies shall be treated as not involving any disposal of the original shares, and

(b) the new holding shall be treated as the same asset as the original shares.

(5) Where, under a transaction to which this section applies, the person concerned receives or becomes entitled to receive any consideration in addition to the new holding, subsection (4) shall have effect as if the references to the original shares were references to the proportion of them which the market value of the new holding at the time of the transaction bears to the aggregate of that value and the market value at that time (or, if it is cash, the amount) of that consideration.

(6) Subsections (4) and (5) shall have effect with the necessary modifications in relation to any computation made for the purposes of section 707(4) in a case where the original shares held by the company concerned and the new holding are treated as the same asset by virtue of any of sections 584 to 587.

Exchange of Irish Government bonds.

751B.—(1) In this section—

‘chargeable period’ has the same meaning as in section 321(2);

‘the exchange’ in relation to an investor, means the exchange of old securities for new securities under the Exchange Programme in Irish Government bonds as designated by the National Treasury Management Agency;

‘investor’ means any person who as beneficial owner of securities exchanges them for new securities under the exchange;

‘last payment day’ in relation to old securities, means the last day, before the day on which the exchange takes place, on which interest is payable in respect of the old securities; and in a case where a payment of such interest may be made on a number of days, that interest shall be treated as payable on the first of those days; but if there has not been any day upon which interest in respect of old securities has been payable before the day on which the exchange takes place, the last payment day means the day of issue of the old securities;

‘old securities’ means the first-mentioned securities in the definition of ‘investor’;

‘new securities’ means the securities issued to an investor in exchange for old securities under the exchange;

‘securities’ means securities to which section 36 applies.

(2) (a) Subsections (3) and (5) shall apply as respects an investor who is a person carrying on a trade or business which consists wholly or partly of dealing in securities in respect of which any profits or gains are chargeable to tax under Case I of Schedule D.

(b) Subsection (6) shall apply as respects any investor other than an investor referred to in paragraph (a).

(3) There shall be computed for the chargeable period in which the exchange by an investor to whom this subsection applies takes place, an amount of tax (in this section referred to as ‘the deferred tax’) where the deferred tax is found by the formula—

(a) in a case where the investor is chargeable to tax in the chargeable period in respect of interest received in the chargeable period—

A - B - C, and

(b) in any other case—

A - B

where—

A   is the amount of tax which, apart from this section, would finally fall to be borne by the investor for that chargeable period;

B   is the amount of tax which, apart from this section, would finally fall to be borne by the investor for that chargeable period if the exchange were not taken into account in computing that tax, but, in a case to which paragraph (b) applies, includes the tax on interest which has accrued in respect of old securities from the beginning of that chargeable period, or the day on which the old securities were acquired by the investor, whichever is later, to the day on which the exchange took place; and

C   is the amount representing the tax on accrued interest for that chargeable period in respect of old securities which is included in A.

(4) For the purposes of subsection (3) the accrued interest in respect of old securities is the interest accrued on such securities from—

(a) the last payment day in respect of the old securities, or

(b) the day on which the old securities were acquired by an investor,

whichever is later.

(5) Where an investor to whom this section applies so elects, the amount of tax which, apart from this subsection, finally falls to be borne for the chargeable period in which the exchange takes place, shall be reduced by the amount of the deferred tax and the amount of the deferred tax shall be deemed to be an amount of tax which finally falls to be borne for the chargeable period (in this subsection referred to as ‘the later chargeable period’) in which the new securities are disposed of in addition to any tax, which apart from this subsection, finally falls to be borne for the later chargeable period and the provisions of Part 41 shall apply accordingly.

(6) (a) Subject to paragraph (b), the amount of capital gains tax, which apart from this subsection, would be chargeable on chargeable gains accruing to an investor to whom this subsection applies, on the disposal of old securities, after such chargeable gains have been reduced by any allowable losses under section 31, shall, if the investor so elects, be deemed to be an amount of capital gains tax chargeable on chargeable gains which are deemed to accrue to the investor in the chargeable period (in this subsection referred to as ‘the later chargeable period’) in which the new securities are disposed of (and not in any other chargeable period) in addition to any capital gains tax chargeable on chargeable gains accruing to the investor in the later chargeable period and the provisions of Part 41 shall apply accordingly.

(b) Section 815 shall apply to the disposal of the old securities to which paragraph (a) applies as if—

(i) there were inserted, in subsection (3)(b) of that section after ‘profits of the trade’, ‘unless the trade consists wholly or partly of a life business the profits of which are not assessed to corporation tax under Case I of Schedule D for that accounting period’, and

(ii) subsection (3)(c) of that section were deleted.

(7) The election referred to in subsections (5) and (6) shall be made within a period of two years after the end of the chargeable period in which the disposal of the old securities takes place.”.

“Liability of non-transferors.

807A.—(1) This section shall apply where—

(a) by virtue or in consequence of a transfer of assets, either alone or in conjunction with associated operations, income becomes payable to a person who is resident or domiciled out of the State, and

(b) an individual who is resident or ordinarily resident in the State and who is not liable to tax under section 806 by reference to the transfer, receives a benefit provided out of assets which are available for the purpose by virtue or in consequence of the transfer or of any associated operations.

(2) Subject to the provisions of this section, the amount or value of any such benefit as is mentioned in subsection (1), if not otherwise chargeable to income tax in the hands of the recipient, shall—

(a) to the extent to which it falls within the amount of relevant income of years of assessment up to and including the year of assessment in which the benefit is received, be treated for all the purposes of the Income Tax Acts as the income of the individual for that year of assessment,

(b) to the extent to which it is not by virtue of this subsection treated as the income of the individual for that year of assessment and falls within the amount of relevant income of the next following year of assessment, be treated for those purposes as the individual's income for the next following year of assessment,

and so on for subsequent years of assessment, taking the reference in paragraph (b) to the year of assessment mentioned in paragraph (a) as a reference to that year of assessment and any other year of assessment before the subsequent year of assessment in question.

(3) Subject to subsection (8), the relevant income of a year of assessment, in relation to an individual, is any income which arises in that year of assessment to a person resident or domiciled out of the State and which by virtue or in consequence of the transfer or associated operations referred to in subsection (1) can directly or indirectly be used for providing a benefit for the individual or for enabling a benefit to be provided for the individual.

(4) Income tax chargeable by virtue of this section shall be charged under Case IV of Schedule D.

(5) An individual who is domiciled out of the State shall not, in respect of any benefit not received in the State, be chargeable to tax under this section by reference to relevant income which is such that, if the individual had received it, the individual would not, by reason of the individual being so domiciled, have been chargeable to income tax in respect of it, and section 72 shall apply for the purposes of this subsection as it would apply for the purposes of section 71 (3) if the benefit were income arising from securities and possessions in any place outside the State.

(6) Where—

(a) the whole or part of the benefit received by an individual in a year of assessment is a capital payment within the meaning of section 579A or 579F(2) (by virtue of not falling within the amount of relevant income referred to in subsection (2)(a)), and

(b) chargeable gains are by reason of that payment treated under either section 579A or 579F(2) as accruing to the individual in that or a subsequent year of assessment,

subsection (2)(b) shall apply in relation to any year of assessment (in this subsection referred to as ‘a year of charge’) after one in which chargeable gains have been so treated as accruing to the individual, as if a part of the amount or value of the benefit corresponding to the amount of those gains had been treated under that subsection as income of the individual for a year of assessment before the year of charge.

(7) Subsections (8) and (9) of section 806 shall apply for the purposes of this section as they apply for the purposes of subsections (4) and (5) of that section.

(8) This section shall apply irrespective of when the transfer or associated operations referred to in subsection (1) took place, but shall apply only to relevant income arising on or after the 11th day of February, 1999.”,