Clause 3 - Special provision for roll-overs
Social Security Contributions
12:00 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
I beg to move amendment No. 14, in page 4, line 15, leave out from beginning to end of line 15 on page 6 and insert—
`(1) In this section—
(a) an ``original right'' is a right to acquire shares in a body corporate granted after 5th April 1999 and before 20th May 2000 (and which includes a new right which is subsequently exchanged for a further new right);
(b) a ``new right'' is a right to acquire shares granted or acquired in consideration for the assignment or release of an original right (whether comprising all or part of the consideration for that assignment or release);
(c) a ``parity exchange'' occurs on the grant of a new right where the gain which could reasonably be expected to be made on the exercise of the relevant new right immediately after the grant or acquisition of that right, together with the value of any other consideration given for the assignment or release of the original right, is not manifestly less than the gain which could reasonably be expected to be made from the exercise of the original right immediately prior to the assignment or release of that right;
(d) an ``enhanced exchange'' occurs on the grant or acquisition of a new right where a parity exchange does not occur; and
(e) the gains which might be reasonably expected to be made on the exercise of a right to acquire shares shall be determined by section 135(3)(a) of the Income and Corporation Taxes Act 1988.
(2) On a parity exchange
(a) any notices made, or deemed to have been made, under this Act in respect of the original right shall be deemed to have been made in respect of the equivalent new right;
(b) any special contribution paid, or deemed to have been paid, under this Act in respect of the original right shall be deemed to have been paid in respect of the equivalent new right; and
(c) the Income and Corporation Taxes Act 1988 shall apply to the new right as they applied to the original right.
(3) On an enhanced exchange the new right shall be apportioned on a just and equitable basis agreed with the Inland Revenue into two rights, the first of which representing the new right which would have been granted or acquired as the result of a parity exchange (which shall be treated according to subsection (2) above) and the second of which representing the balance of the actual new right (which shall be treated under this Act and the Income and Corporation Taxes Act 1988 as if no notice had been made and no special contributions paid in respect of that right). On any subsequent partial exercise of the new right the second apportioned right shall be treated as having been exercised in priority to the first apportioned right.
(4) Where a new right is granted or acquired as a result of the change of control of a body corporate then a parity exchange shall be deemed to have occurred if the relative terms of the new right and equivalent original right correspond to the terms offered to the holders of shares in that body corporate (``control'' being construed in accordance with section 840 of the Income and Corporation Taxes Act 1988).
(5) Where prior to the coming into force of this Act payments have been made in respect of Class 1 contributions due on the exercise of any new right, then on a claim being made by the person who paid them all such repayments of those contributions shall be made, less any amount representing the special contributions which would be due under section 2 above.'.