Commentary on Sections Part 10: General provisions Chapter 3: Supplementary and general provisions Section 878: Other definitions
3313.Subsection (1) defines various terms.
3314.The definition of “houseboat” is based on section 15(1) of ICTA. It effects a change in the law because it applies a single definition of “houseboat” for the whole Act. See Change 150 in Annex 1.
3315.The definition of “Inland Revenue” is new. See Change 149 in Annex 1.
3316.The definition of “personal representatives” is new. See Change 151 in Annex 1.
3317.Subsection (3) provides a general rule concerning the making of claims and elections. It is based on section 42(11) of TMA and paragraph 2 of Schedule 1A to TMA.
3318.In the source legislation some provisions specify that a claim or election has to be in writing while others are silent. But the effect of paragraph 2(3) to (5) of Schedule 1A to TMA is that claims and elections have to be in writing (unless a specific provision says otherwise).
3319.Subsection (5) defines whether persons are connected by reference to section 839 of ICTA. Section 839 of ICTA applies the following tests in determining whether persons are “connected”:
“(1)For the purposes of, and subject to, the provisions of the Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).(2)A person is connected with an individual if that person is the individual’s wife or husband, or is a relative, or the wife or husband of a relative, of the individual or of the individual’s wife or husband.(3)A person, in his capacity as trustee of a settlement, is connected with—(a)any individual who in relation to the settlement is a settlor,(b)any person who is connected with such an individual, and(c)any body corporate which is connected with that settlement.In this subsection “settlement” and “settlor” have the same meaning as in Chapter IA of Part XV (see section 660G(1) and (2)).(3A)For the purpose of subsection (3) above a body corporate is connected with a settlement if—(a)it is a close company (or only not a close company because it is not resident in the United Kingdom) and the participators include the trustees of the settlement; or(b)it is controlled (within the meaning of section 840) by a company falling within paragraph (a) above.(4)Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the wife or husband or relative of any individual with whom he is in partnership.(5)A company is connected with another company—(a)if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other; or(b)if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.(6)A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.(7)Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.(8)In this section—“company” includes any body corporate or unincorporated association, but does not include a partnership, and this section shall apply in relation to any unit trust scheme as if the scheme were a company and as if the rights of the unit holders were shares in the company;“control” shall be construed in accordance with section 416; and“relative” means brother, sister, ancestor or lineal descendant.”
3320.Subsection (6) applies the definition of “control” in section 840 of ICTA. Section 840 of ICTA defines “control” in relation to a body corporate as follows:
“For the purposes of, and subject to, the provisions of the Tax Acts which apply this section, “control”, in relation to a body corporate, means the power of a person to secure—(a)by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate; or(b)by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate,that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person, and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.”