What does paragraph 50 of Schedule 2 to the Income Tax Act 2007 do?

Paragraph 50 modifies the interpretation rules in section 151 when dealing with shares issued before 6 April 1998. It adjusts the definition of 'excluded company' to reflect the older terminology in use at the time and adds a non-UK residency condition to subsection (7), preserving the legislative intent that applied when those shares were originally issued.

How does paragraph 50 change the definition of excluded company for pre-6 April 1998 shares?

For shares issued before 6 April 1998, the definition of excluded company refers to dealing in shares, securities, land, trades or commodity futures, rather than the current wording covering land, commodities or futures, and shares, securities or other financial instruments. This reflects the scope and terminology that were in use when those shares were originally issued.

What is the non-UK residency condition introduced by paragraph 50?

Paragraph 50 extends subsection (7) of section 151 so that for pre-6 April 1998 shares, a company that is not resident in the United Kingdom is treated in the same way as an excluded company. This additional condition may affect the availability of loss relief on disposal of those shares.

What is the practical effect of paragraph 50 when claiming loss relief on older shares?

When claiming loss relief on shares issued before 6 April 1998, investors must apply section 151 as modified by paragraph 50 using the older definitions rather than the current wording. These transitional provisions were preserved and subsequently amended by the Corporation Tax Act 2010 to ensure consistency with the original legislative intent.

Income Tax Act 2007 Schedule 2 paragraph 50

Interpretation of Chapter

Paragraph 50 modifies the interpretation rules in section 151 when dealing with shares issued before 6 April 1998, adjusting the definition of "excluded company" and adding a non-UK residency condition.

Applies only to shares issued before 6 April 1998, modifying how section 151 is interpreted for those older share issues.
The definition of "excluded company" is changed so that it refers to dealing in shares, securities, land, trades or commodity futures, rather than the current wording covering land, commodities or futures, and shares, securities or other financial instruments.
An additional condition is inserted into subsection (7) so that a company qualifies not only if it is an excluded company but also if it is a non-UK resident.
These transitional modifications preserve the legislative intent that applied at the time the shares were originally issued.

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