Finance Act 1986

PART I Payments to Employers

1 (1) This paragraph applies where a payment is made to an employer out of funds which are or have been held for the purposes of a scheme which is or has at any time been an exempt approved scheme.

(2) An amount equal to 40 per cent, of the payment shall be recoverable by the Board from the employer.

(3) This paragraph applies whether or not the payment is made in pursuance of Part II of this Schedule.

(4) Paragraph 4 of Schedule 5 to the [1970 c. 24.] Finance Act 1970 (charge to tax on payments to employer) shall not apply to a payment to which this paragraph applies or would apply apart from sub-paragraph (5) or (6) below.

(5) This paragraph does not apply to a payment to the extent that, if this paragraph had not been enacted, the employer would have been exempt, or entitled to claim exemption, from income tax or corporation tax in respect of the payment.

(6) This paragraph does not apply where the employer is a charity; and "charity" here has the same meaning as in section 360 of the Taxes Act.

(7) This paragraph does not apply to any payment of any prescribed description.

(8) This paragraph does not apply to a payment made before the scheme became an exempt approved scheme.

(9) References in this paragraph to a payment include references to a transfer of assets or other transfer of money's worth.

(10) In this paragraph "exempt approved scheme" means an exempt approved scheme within the meaning given by section 21(1) of the [1970 c. 24.] Finance Act 1970.

(11) This paragraph applies to a payment made after 18th March 1986 unless made as mentioned in sub-paragraph (12) or (13) below.

(12) This paragraph does not apply to a payment made in pursuance of the winding-up of the scheme where the winding-up commenced on or before 18th March 1986.

(13) This paragraph does not apply to a payment made in pursuance of an application which—

(a) was made to the Board on or before 18th March 1986 and was not withdrawn before the making of the payment, and

(b) sought the Board's assurance that the payment would not lead to a withdrawal of approval under section 19(3) of the Finance Act 1970.

2 (1) In relation to an amount recoverable as mentioned in paragraph 1(2) above, regulations may make any of the provisions mentioned in sub-paragraph (2) below; and for this purpose the amount shall be treated as if it were—

(a) an amount of income tax chargeable on the employer under Case VI of Schedule D for the year of assessment in which the payment is made, or

(b) where the employer is a company, an amount of corporation tax chargeable on the company for the accounting period in which the payment is made.

(2) The provisions are—

(a) provision requiring the administrator of the scheme or the employer (or both) to furnish to the Board, in respect of the amount recoverable and of the payment concerned, information of a prescribed kind;

(b) provision enabling the Board to serve a notice or notices requiring the administrator or employer (or both) to furnish to the Board, in respect of the amount and payment, particulars of a prescribed kind;

(c) provision requiring the administrator to deduct out of the payment the amount recoverable and to account to the Board for it;

(d) provision as to circumstances in which the employer may be assessed in respect of the amount recoverable;

(e) provision that, in a case where the employer has been assessed in respect of the amount recoverable but has not paid it (or part of it) within a prescribed period, the administrator may be assessed and charged (in the employer's name) in respect of the amount (or part unpaid);

(f) provision that, in a case where the amount recoverable (or part of it) has been recovered from the administrator by virtue of an assessment in the employer's name, the administrator is entitled to recover from the employer a sum equal to the amount (or part);

(g) provision enabling the employer or administrator (as the case may be) to appeal against an assessment made on him in respect of the amount recoverable;

(h) provision as to when any sum in respect of the amount recoverable is payable to the Board by the administrator or employer and provision requiring interest to be paid on any sum so payable;

(i) provision that an amount paid to the Board by the administrator shall be treated as paid on account of the employer's liability under paragraph 1(2) above.

(3) For the purpose of giving effect to any provision mentioned in sub-paragraph (2)(a) or (b) above the words "Regulations under paragraph 2 of Schedule 12 to the Finance Act 1986" shall be added at the end of each column in the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to furnish information etc.).

(4) For the purpose of giving effect to any other provision mentioned in sub-paragraph (2) above, regulations under this paragraph may include provision applying (with or without modifications) provisions of the enactments relating to income tax and corporation tax.

(5) Subject to any provision of regulations under this paragraph—

(a) a payment to which paragraph 1 above applies shall not be treated as a profit or gain brought into charge to income tax or corporation tax and shall not be treated as part of the employer's income for any purpose of the Taxes Act, and

(b) the amount recoverable shall not be subject to any exemption or reduction (by way of relief, set-off or otherwise) or be available for set-off against other tax.

(6) If the employer is a company and a payment to which paragraph 1 above applies is made at a time not otherwise within an accounting period of the company, an accounting period of the company shall for the purposes of sub-paragraph (1)(b) above be treated as beginning immediately before the payment is made.

3 (1) In this Part of this Schedule "prescribed" means prescribed by regulations.

(2) The power to make regulations under this Part of this Schedule shall be exercisable by the Treasury by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.