Finance Act 1980

PART I Deferment of Recovery Charges

Right of deferment

1 (1) Where a person is liable to a charge under paragraph 2(1) or 10(1) of Schedule 5 to the [1976 c. 40.] Finance Act 1976 (charges by way of recovery of stock relief) in respect of any period of account (hereafter referred to as “ the period of charge ”) he may, subject to the provisions of this Part of this Schedule, elect that so much (if any) of the charge as is eligible for deferment under those provisions shall be deferred to the next period of account.

(2) Subject to sub-paragraph (3) below, the amount of a charge eligible for deferment is so much of it as exceeds 5 per cent, of the opening stock value in the period of charge.

(3) Where the amount that would be eligible for deferment under sub-paragraph (2) above exceeds £100,000 and at the relevant time the person in question was a net debtor in respect of trading stock—

(a) none of the excess shall be eligible for deferment unless the value of his trading stock at that time exceeded his net indebtedness; and

(b) the amount of the excess eligible for deferment shall be reduced by the proportion which his net indebtedness bore to that value.

(4) The relevant time referred to in sub-paragraph (3) above is—

(a) the beginning of the period or earliest period of account ending in the financial year 1979 (in the case of a company) or the year 1979-80 (in other cases); or

(b) if there is no such period of account, the beginning of the period of account current at the end of that financial year or year of assessment, as the case may be.

(5) For the purposes of sub-paragraph (3) above a person was at the time there mentioned a net debtor in respect of trading stock if—

(a) the amount owed by him at that time (whether or not payment had become due) in respect of the trading stock which he then held or had previously sold in the course of the trade or otherwise disposed of, exceeded

(b) the amount then owed to him (whether or not payment had become due) in respect of trading stock sold by him in the course of the trade or otherwise disposed of;

and references to his net indebtedness are to that excess.

(6) For the purposes of sub-paragraph (5) above there shall be left out of account—

(a) any amounts owed to the person in question which are allowable as deductions in respect of bad or doubtful debts in computing his profits or gains for the purposes of Case I of Schedule D ; and

(b) any amounts of value added tax owed by him to the Commissioners of Customs and Excise or by those Commissioners to him.

(7) Subject to sub-paragraph (8) below, no election shall be made by any person in respect of a charge for any period of account (and any election already made shall be treated as of no effect) if—

(a) he was liable to a charge under the said paragraph 2(1) or 10(1) in respect of the period of account preceding the period of charge; or

(b) the period of charge or the next period of account is longer or shorter than twelve months ; or

(c) during or at the end of the period of charge or of the preceding or the next period of account—

(i) the whole or part of the trade is transferred to or from another person ; or

(ii) there is a change in the persons engaged in carrying on the trade.

(8) Sub-paragraph (7)(b) above applies only where the period of charge or the next period of account ends in or after the financial year 1980 (in the case of a company) or the year 1980-81 (in other cases).

Elections

2 Any election under this Part of this Schedule shall be by notice in writing sent to the inspector, in the case of a company, within two years after the end of the period of charge and, in any other case within two years after the end of the year of assessment in which the period of charge ends; and paragraph 19(1) of the said Schedule 5 (partnerships) shall apply to any such election as it applies to a claim under that Schedule.

Effect of deferment

3 Where a charge under the provisions of paragraph 2(1) or 10(1) of the said Schedule 5 is deferred under this Part of this Schedule from one period to another, the other provisions of Schedule 5 shall have effect as if it were a charge under paragraph 2(1) or 10(1) in respect of the second period instead of the first but—

(a) the liability to the deferred charge in the second period shall not be excluded by paragraph 2(2) or 10(2) of that Schedule (final charge on cessation);

(b) the amount of unrecovered past relief in any period shall be determined under that Schedule as if the charge had been made in respect of the period from which it is deferred; and

(c) references in paragraph 1 above to a charge to which a person is liable in respect of a period of account do not include references to a charge which has been deferred to that period under this Part of this Schedule.

Revocation of election

4 (1) Where the profits or gains on which a person has been assessed to income tax for any year of assessment are adjusted under section 115, 117 or 118 of the Taxes Act, then, if the adjustment relates to a year of assessment—

(a) for which he has become liable to be assessed in respect of a charge deferred pursuant to an election under this Part of this Schedule ; or

(b) for which he would have been liable to be assessed in respect of the charge if it had not been so deferred,

he (or if he has died, his personal representatives) may revoke the election by notice in writing sent to the inspector within one year after the end of the year of assessment in which the adjustment is made.

(2) Where an election is revoked under this paragraph the said Schedule 5 shall have effect as if the election had not been made and all such assessments or alterations of assessments or repayments of tax may be made as are required to restore the position to what it would have been but for the election.

Interpretation

5 Paragraph 27(1) of the said Schedule 5 (application to professions etc.) has effect in relation to any reference in this Part of this Schedule to a trade; and any expression used in this Part of this Schedule which is also used in the said Schedule 5 has the same meaning as in that Schedule.

Commencement

6 This Part of this Schedule applies where the period of charge ends in or after the financial year 1979 (in the case of a company) or the year 1979-80 (in other cases).