Section 167 | Small and medium-sized enterprises: exceptions from exemption

(1)Subsections (2) and (3) set out exceptions to section 166(1).

(2)The first exception is if the small or medium-sized enterprise elects for section 166(1) not to apply in relation to the chargeable period.Any such election is irrevocable.

(3)The second exception is if—

(a)the other affected person, or

(b)a party to a relevant transaction,

is, at the time when the actual provision is or was made or imposed, a resident of a non-qualifying territory (whether or not that person is also a resident of a qualifying territory).

(4)For the purposes of subsection (3)—

(a)a “party to a relevant transaction” is a person who, if the actual provision is or was imposed by means of a series of transactions, is or was a party to one or more of those transactions, and

(b)“qualifying territory” and “non-qualifying territory” are defined in section 173.

(5)In subsection (3) “resident”, in relation to a territory—

(a)means a person who, under the law of that territory, is liable to tax there by reason of the person's domicile, residence or place of management, but

(b)does not include a person who is liable to tax in that territory in respect only of income from sources in that territory or capital situated there.