HC Deb 08 February 2001 vol 362 cc1115-7

Amendments made: No. 2, in page 4, line 44, at end insert—

'(3A) The liability by virtue of section 2(3) to pay Class 1 contributions in respect of a gain realised on the assignment or release of the original right shall be determined—

  1. (a) as if (notwithstanding anything in section 136(1) of the Income and Corporation Taxes Act 1988) the replacement right were or, as the case may be, were part of the valuable consideration given for the assignment or release; and
  2. (b) as if the value of so much of that consideration as is represented by the replacement right were equal to whichever is the smaller of the following amounts—
    1. (i) the amount which (in accordance with the provisions of section 135(3)(a) of that Act) would have been taken to be the gain realised by an exercise in full of the original right immediately before the time of its assignment or release; and
    2. (ii) the amount which (in accordance with those provisions) would have been taken to be the amount of the gain realised by an exercise in full of the replacement right at that time (assuming it to be exercisable at that time) which falls immediately after it is given in consideration of the assignment or release.'.

No. 3, in page 5, line 7, leave out from "determined" to first "to" in line 29 and insert— 'in accordance with the following provisions of this section. (4A) Subject to subsection (5), so much of section 136(1) of the Income and Corporation Taxes Act 1988 (charge to tax in roll-over cases) as provides for sections 135 and 136 of that Act to apply as mentioned in section 136(1) of that Act in relation to the replacement right, or in relation to any subsequent replacement right, shall be deemed to have effect (or, as the case may be, to have had effect) for the purposes of the determination mentioned in subsection (4) of this section—

  1. (a) as if it provided for those sections to apply (and to apply as so mentioned) in relation to that right'.

No. 4, in page 5, line 31, at end insert— (5) Where—

  1. (a) the whole or any part of any consideration given for the assignment or release of the replacement right or of any subsequent replacement right does not (or did not) comprise a subsequent replacement right, and
  2. (b) as a consequence, a gain would (but for this Act) be taken for the purposes of section 135 of the Income and Corporation Taxes Act 1988 to be realised (or to have been realised) on that assignment or release,
that gain shall be taken for the purposes of the determination mentioned in subsection (4) to be (or, as the case may be, to have been) equal to the amount in respect of which liability to pay Class 1 contributions would have been preserved, on the assumptions mentioned in subsection (5A), by virtue of section 2(3) (read with subsection (3A) of this section) or, if no such liability would have been so preserved, to nil. (5A) Those assumptions are—
  1. (a) that (subject to paragraph (c)) the right assigned or released is a right the liability to pay Class 1 contributions in respect of which is a liability to which section 2(1)(a) or (b) applied;
  2. (b) that references in subsection (3A) of this section to the original right and to the replacement right are references, respectively, to the right that is assigned or released and to the right comprised in the consideration for the assignment or release; and
  3. (c) that so much of the right assigned or released as is a right to acquire additional shares is to be disregarded for the purposes of both section 2(3) and subsection (3A) of this section.

(5B) Nothing in the preceding provisions of this section shall limit or remove, or be deemed to have limited or removed, any liability to pay Class 1 contributions in respect of a gain arising on the exercise, assignment or release of the replacement right, or of any subsequent replacement right, in any case in which the right in question or that gain derives (directly or indirectly) from a transaction the purpose, or one of the main purposes, of which was to make use of the provisions of this Act to avoid the payment of such contributions in respect of a benefit conferred after 19th May 2000.'.

No. 5, in page 5, line 36, leave out from "right" to "the" in line 37 and insert— 'with a value that matches the value of'.

No. 6, in page 5, line 41, leave out from "right" to end of line 49 and insert— 'shall be taken to have a value that matches the value of the shares obtainable in exercise of the old right to the extent, and to the extent only, that the following amounts are the same—

  1. (a) the amount which (in accordance with the provisions of section 135(3)(a) of the Income and Corporation Taxes Act 1988) would be taken to be the amount of the gain realised by an exercise of the new right at the relevant time (assuming it to be exercisable at that time) for obtaining the shares; and
  1. (b) the amount which would have been taken (in accordance with those provisions) to be the gain realised by a full exercise of the old right immediately before the time of its assignment or release;
and in this subsection "the relevant time", in relation to the new right, means the time which falls immediately after it is given in consideration of the assignment or release of the old right.'.

No. 7, in page 6, line 7, at end insert— '( ) All such apportionments as may be necessary shall be made in determining for the purposes of this section, in a case in which the number of additional shares cannot be a whole number, to what extent a liability to pay Class 1 contributions arises in relation to the exercise, assignment or release of a right to acquire any such shares.'.

No. 8, in page 6, line 8, leave out— 'require the assumptions set out in subsections (5) and (6) to be used' and insert "apply"—[Mr. Timms.]

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