Commentary on Sections Overview Overview Section 816: Meaning of “disregarded company income”
2395.This section sets out the various descriptions of income which are defined as “disregarded company income”. It is based on section 151(2) of FA 2003 and paragraphs 1(1) and (2), 2(1) and 3(1) of Schedule 26 to that Act.
2396.The term “disregarded company income” mirrors the term “disregarded income” defined in section 813 for the purposes of section 811. Section 151(2) of FA 2003 sets out the “income to which this section applies”, but does not make use of a defined term.
2397.Subsection (1)(c) relates to income arising from transactions carried out through a broker in the United Kingdom and introduces the conditions, referred to as “the independent broker conditions”, which must be met if the income is to be disregarded company income.
2398.Subsection (1)(d) relates to income arising from investment transactions carried out through an investment manager in the United Kingdom and introduces the conditions, referred to as “the independent investment manager conditions”, which must be met if the income is to be disregarded company income.
2399.Subsection (1)(c) and (d) are based on section 151(2)(c) of FA 2003, which refers to a transaction carried out through a broker or investment manager in the United Kingdom “acting as an agent of independent status in the ordinary course of his business”. Schedule 26 to that Act then sets out the conditions which must be met if the broker or investment manager is to be treated as so acting.
2400.This structure has been simplified so that subsection (1)(c) and (d) refer directly to the independent broker conditions in section 817 and the independent investment manager conditions in sections 818 to 824.
2401.The effect of the words “in the course of that company’s trade” in paragraph 1(1) of Schedule 26 to FA 2003 has been preserved by including the equivalent words in subsection (1)(c) and (d).