Annex 1: Minor changes in the law Change 59: Interpretation: definition of “personal representatives” for the purposes of the Corporation Tax Acts: section 1119
This change applies the defined term “personal representatives” for the purposes of the Corporation Tax Acts.
It brings the income tax and corporation tax codes back into line.
The application of the defined term to the Income Tax Acts is described in Change 150 in Annex 1 to the explanatory notes on ITA. This note draws substantially on the contents of that note.
With the exception of sections 229 and 701 of ICTA, wherever the term “personal representatives” is used in the Corporation Tax Acts, other than in CTA 2009 and Part 4 of FA 2004, the term is undefined. Places where it is so used include the following provisions on which this Act is based:
	Section 254(12) of ICTA (interpretation of Part 6 of ICTA) (see section 1117);
	section 417(3) of ICTA (meaning of “associate” for the purposes of Part 11 of that Act (close companies)) (see section 448);
	section 777(7) of ICTA (provisions supplementary to sections 775 and 776 of that Act (transactions in land)) (see section 825);
	section 784(2) of ICTA (leased assets subject to hire-purchase agreements) (see section 875 but note the rewrite does not use the term “personal representatives”)
	paragraph 50(1) of Schedule 16 to FA 2002 (meaning of “associate” for the purposes of that Schedule) (see section 268).
Section 229(1) of ICTA (interpretative provisions for sections 219 to 228 of ICTA) defines “personal representatives” as “persons responsible for administering the estate of a deceased person”. Section 701(4) of ICTA (rewritten in section 968 of CTA 2009) had a more detailed definition that had some similarities with the definition of “personal representatives” formerly in section 111(3) of FA 1989, which is the basis of the definition in section 989 of ITA (see Change 150 in Annex 1 to the explanatory notes on that Act). The definition in section 701(4) of ICTA provided that:
““Personal representatives” means, in relation to the estate of a deceased person, his personal representatives as defined in relation to England and Wales by section 55 of the Administration of Estates Act 1925 and persons having in relation to the deceased under the law of another country any functions corresponding to the functions for administration purposes under the law of England and Walesof personal representatives as so defined.”
Section 55(1)(xi) of the Administration of Estates Act 1925 provides that:
““personal representative” means the executor, original or by representation, or administrator for the time being of a deceased person, and as regards any liability for the payment of death duties includes any person who takes possession of or intermeddles with the property of a deceased person without the authority of the personal representatives or the court, and “executor” includes a person deemed to be appointed executor as respects settled land.”
The definition in section 55 of the Administration of Estates Act 1925 refers to executors as well as administrators. Under English law, executors are generally appointed by the will. Administrators are appointed by the court where no one is appointed as executor by the will or where the deceased dies without leaving a valid will.
English law recognises three other categories of executor. The first is executor according to the tenor, who on the terms of the will is appointed to perform the essential duties of an executor where the deceased person has failed to nominate a person to be his executor. The second is executor de son tort, who is a person who takes upon himself the position of executor or intermeddles with the goods of the deceased person without having been appointed executor or administrator. The third is special executor, the term given to a person who is a trustee of settled land at the time of the death.
The position is similar for Northern Ireland.
For the purposes of Scottish law, an executor is appointed either expressly or impliedly by the deceased, in which case he is known as an executor nominate, or by the court, in which case he is known as an executor dative. So the term “executor” under Scottish law is broadly equivalent to an “executor or administrator” under English law. Scottish law also recognises judicial factors and executor-creditors who may be appointed by the court to administer the deceased’s estate or part of it. Although a judicial factor could not be described as an executor, such a factor might be regarded as an “administrator”.
So, whether in relation to England and Wales or any other part of the United Kingdom, a deceased person’s personal representatives within the meaning of section 701(4) of ICTA are the persons responsible for administering the person’s estate.
Accordingly, the first limb of the definition in section 1119, that personal representatives are:
“in the United Kingdom, persons responsible for administering the estate of the deceased,”
catches the same persons in relation to each part of the United Kingdom as did section 701(4) of ICTA, but does so more directly and succinctly (and broadly matches the definition in section 229(1) of ICTA).
It follows from this that the application of the first limb of the definition in section 1119 in relation to the provisions in the Corporation Tax Acts which use the expression “personal representatives” without definition, including those rewritten in this Act, reflects the ordinary meaning of that term in each part of the United Kingdom.
The second limb of the definition in section 1119 is in similar terms to the equivalent part of section 701(4) of ICTA. It provides that personal representatives are:
“in a territory outside the United Kingdom, those persons having functions under its law equivalent to those of administering the estate of the deceased”
Section 701(4) of ICTA was rewritten in section 968 of CTA 2009, for the purposes of Chapter 3 of Part 10 of that Act (beneficiaries’ income from estates in administration) in terms matching those in section 989 of ITA. The definition in section 1119 matches section 968 of CTA 2009 but applies for the purposes of the Corporation Tax Acts (whether in CTA 2009, this Act or elsewhere). As a result, section 968 of CTA 2009 is repealed by this Act.
That leaves the question of whether there is any change involved in applying the second limb to provisions in the Corporation Tax Acts which use the expressions “personal representatives” without definition, as those provisions apply to countries and territories outside the United Kingdom.
The terms “executor” and “administrator” are not terms of art in relation to countries and territories outside the United Kingdom. But it seems likely that a court would hold that references to “personal representatives” in tax legislation would, in the absence of a definition, cover the people that most closely resemble executors or administrators in the United Kingdom. In view of what is said above, that means the people who have functions corresponding to those of personal representatives in the United Kingdom, that is, functions equivalent to those of administering the estate of the deceased.
References to “personal representatives” without definition in the Corporation Tax Acts, including in those provisions on which this Act is based, can be read as references to anyone with responsibility for administering a deceased person’s estate, including those with equivalent responsibilities in other jurisdictions. These provisions can be divided into two categories.
In the first category are provisions which confirm that, on an individual’s death, rights and liabilities which are or would otherwise have been conferred on the individual are conferred on the individual’s personal representatives.
In this context it is clear that the references to “personal representatives” are to whoever in fact has the role of administering the property of the deceased person. These provisions are intended to confirm that such persons have the same ability and responsibility to deal with the deceased individual’s tax affairs as the individual would have had if the individual were still alive, and are subject to the same tax liabilities.
Provisions in this category rewritten in this Act include section 777(7) of ICTA. Such provisions which are not being rewritten include paragraph 62 of Schedule 18 to FA 1998 which provides that personal representatives may vary or revoke a claim, election, application or notice to the extent the deceased could do so if alive.
The second category covers those provisions which apply only because a person has died, so that his or her property is being administered by his or her personal representatives.
In this category of cases, the fact that someone has died creates a gap in the law (or at least a doubt as to what the law is) or requires some special arrangement to be made. The provisions in question fill the gap or satisfy the requirement. So it is consistent with the aim of these provisions for them to be interpreted as applying in all cases in which a person has died and his or her property is being administered by others.
Provisions in this category rewritten in this Act include:
	section 220(3) of ICTA which provides that the residence and ordinary domicile of personal representatives are the same as those of the deceased in relation to the conditions for disapplication of the company distribution rules to a purchase of the company’s own shares; and
	the meaning of “associate” given by section 417(3) of ICTA and paragraph 50(1) of Schedule 16 to FA 2002, which provide that a person who has an interest in shares or obligations forming part of a deceased’s estate is an associate of the personal representatives of the deceased.
Provisions in this category which are not being rewritten include section 76(5)(d) of ICTA, which provides that a deceased person’s personal representatives count for the purposes of determining amounts relevant to the expenses of insurance companies as would have been the case had the deceased been alive.
As a consequence of the inclusion of this definition in section 1119, the definition to the same effect in section 968 of CTA 2009 is, as mentioned above, no longer necessary and is repealed by Schedule 3 to this Act. Section 229(1) of ICTA is also repealed.
This change has no implications for the amount of tax paid, who pays it or when. It affects (in principle but not in practice) only administrative matters.