Finance Act 1944

PART II Purchase Tax.

10 Amendment as to purchase tax in respect of imported chargeable goods.

(1) The following section shall be substituted for section eighteen of the [3 & 4 Geo. 6. c. 48.] Finance (No. 2) Act, 1940—

“18 (1) A tax, to be called purchase tax, shall be charged, subject to and in accordance with the provisions of this Part of this Act, on the wholesale value of all chargeable goods bought under chargeable purchases.

(2) A chargeable purchase is any purchase made from a wholesale merchant or manufacturer (other than one who is not required by this Part of this Act to be registered) selling by wholesale, so far as regards,—

(a) in the case of a purchase of ascertained goods, goods bought under the purchase which are in the United Kingdom at the time of the purchase,

(b) in the case of a purchase of unascertained goods, goods appropriated to the purchase which are in the United Kingdom at the time of the appropriation,

with the exception of a purchase made by a registered wholesale merchant or a registered manufacturer of goods as stock for his business in the case of a wholesale merchant or as materials in the case of a manufacturer.

(3) Tax chargeable in respect of any goods by virtue of a purchase shall become due on the delivery of the goods under the purchase, and the seller under the purchase shall be accountable therefor.

(4) The tax shall. also be charged, subject to and in accordance with the provisions of this Part of this Act, on the wholesale value of all chargeable goods imported into the United Kingdom, with the exception of goods imported for a registered wholesale merchant or a registered manufacturer as stock for his business or as materials.”

(2) Imported goods shall be deemed to be imported for a registered wholesale merchant or a registered manufacturer as stock for his business or as materials if the Commissioners are satisfied, on a representation to that effect made to them in the prescribed manner and at the prescribed time by a person claiming to be the holder of a certificate of registration, that he is the holder of such a certificate and that he intends to sell the goods or to use them as materials.

(3) The Commissioners may, as respects any imported chargeable goods deemed in consequence of such a representation as aforesaid to be imported as aforesaid, from time to time require the person by whom the representation was made to account for the goods, and, unless he proves that he has sold the goods under a chargeable purchase or to a registered wholesale merchant as stock for his business or to a registered manufacturer as materials, or has used them as materials, or has appropriated or applied them as mentioned in section twenty-five of the Finance (No. 2) Act, 1940, or the goods are otherwise accounted for to the satisfaction of the Commissioners, the exception which had effect in consequence of the representation from the tax that apart from the representation would have been chargeable by virtue of the importation of the goods shall be deemed to have ceased to have effect on the making of the requirement, and that tax shall be deemed to have become payable thereupon and shall be recoverable as a debt due to His Majesty from that person.

(4) In subsection (1) of section twenty-five of the Finance (No. 2) Act, 1940 (which provides for treating as chargeable purchases certain appropriations and applications by registered persons of goods acquired by them as stock or as materials) there shall be inserted, after the words " acquired under a purchase of goods as stock for his business or as materials " , the words " or which were imported for him as stock for his business or as materials ".

(5) The consequential and transitional provisions set out in Parts I and II respectively of the Second Schedule to this Act shall have effect in relation to the provisions of this section.

11 Application of customs enactments to imported chargeable goods.

(1) The Customs Consolidation Act, 1876, and enactments amending that Act and other enactments (including provisions of' regulations or other instruments having statutory effect) relating to Customs generally shall have effect, subject to the provisions of this section and with such exceptions and adaptations as may be prescribed, in relation to chargeable goods imported into the United Kingdom, whether liable to any duty of customs or not, as if all such goods were liable to duties of customs and as if those duties included tax chargeable by virtue of importation :

Provided that nothing in this subsection shall be construed as—

(a) applying the [3 & 4 Geo. 5. c. 3.] Provisional Collection of Taxes Act, 1913, to the tax ; or

(b) extending the meaning of the expression " the United Kingdom " in any of the enactments relating to the tax so as to include the Isle of Man.

(2) Subsection (1) of section twenty-one of the [25 & 26 Geo. 5. c. 24.] Finance (No. 2) Act, 1940 (which prescribes the basis on which the wholesale value of goods in respect of which tax is chargeable is to be determined) shall have effect in relation to tax chargeable by virtue of importation to the exclusion of section ten of the Finance Act, 1935, and subsections (2) and (3) of the said section twenty-one (which relate to the determination by arbitration of questions as to the wholesale value of goods and to the deposit of tax pending a reference to arbitration) shall have effect in relation to tax chargeable by virtue of importation to the exclusion, so far as regards any such question, of sections thirty and thirty-one of the Customs Consolidation Act, 1876.

(3) Where it is shown to the satisfaction of the Commissioners that any chargeable goods are being imported solely with a view to the re-exportation thereof—

(a) after undergoing a process in the United Kingdom which will not change the form or character of the goods; or

(b) after transit through the United Kingdom, or by way of transhipment;

the Commissioners may, subject to such conditions as they think fit to impose for securing the re-exportation of the goods, allow the goods to be imported without payment of any tax chargeable by virtue of the importation of the goods.

(4) Section six of the Customs and Inland Revenue Act, 1879 (which relates to re-importation) shall be excepted from the enactments which are to have effect as mentioned in subsection (1) of this section, but tax shall not be chargeable by virtue of an importation into the United Kingdom of chargeable goods where it is shown to the satisfaction of the Commissioners that the goods had been previously exported from the United Kingdom and are in substantially the same state as they were in at the time of their exportation, and—

(a) that before their exportation the goods had been the subject of a purchase being a chargeable purchase, or of such an appropriation or application as is mentioned in section twenty-five of the Finance (No. 2) Act, 1940, or of an importation effected after the passing of this Act and not being an importation of the goods for a registered person as stock for his business or as materials ; and

(b) if tax was chargeable by virtue of the goods being the subject of that purchase, appropriation or application or importation, and has become payable, that that tax has been duly paid, that subsection (1) of section twenty-nine of the said Act did not have effect in relation to the exportation and that no right to the payment of an allowance for any tax payable arose on the exportation ; and

(c) if tax was chargeable by virtue of that importation, that the goods whilst in the United Kingdom before their exportation were not there in any such circumstances as to render that tax not payable.

(5) Section sixteen of the Finance Act, 1934 (which relates to the prevention of smuggling in Northern Ireland) shall have effect, in its application by virtue of subsection (1) of this section, as if references to the importation of goods were references to the importation thereof in such circumstances that tax is chargeable by virtue of the importation.

(6) The following enactments shall be excepted from the enactments which are to have effect as mentioned in subsection (1) of this section, that is to say, section one hundred and fifty-six of the Customs Consolidation Act, 1876 (which relates to the importation of goods from the Channel Islands), and the provisions of the Schedule to the [39 & 40 Vict. c. 35.] Customs Tariff Act, 1876, and of subsection (1) of section seven of the [1 Edw. 7. c. 7.] Finance Act, 1901, as to parts and ingredients of imported goods.

(7) Regulations made under subsection (2) of section fourteen and section fifteen of the [45 & 46 Vict. c. 74.] Post Office (Parcels) Act, 1882 (which authorise the making of provision as to the application of customs enactments to certain postal packets, and otherwise in relation thereto) may make special provision in relation to chargeable goods and to tax chargeable by virtue of importation.

12 Power to except a person from registration where tax on his purchases would be not less than tax on his sales.

(1) Notwithstanding anything in subsection (1) of section twenty-three of the Finance (No. 2) Act, 1940 (which requires the registration of wholesale merchants and manufacturers whose businesses include the selling of chargeable goods), if the Commissioners are satisfied in the case of any such merchant or manufacturer, on a comparative estimate of—

(a) the amount of the tax which, apart from any exercise of the power conferred on the Commissioners by this section, will become chargeable by virtue of purchases from him as being a person required to be registered, and of appropriations and applications such as are mentioned in section twenty-five, of that Act made by him as being a person so required, and

(b) the amount of the tax which, if he is not registered, will become chargeable by reason of the fact that the provisions of the enactments relating to the tax as to purchases by, sales to and importations for, a registered person as stock for his business or as materials will not in that event apply to him,

that the latter amount will on the average be not less than the former, they may, if he is not already registered, refrain from registering him so long as they are so satisfied, or, if he is already registered, cancel his registration and thereafter refrain from registering him so long as they are so satisfied.

(2) As respects any period during which the Commissioners refrain under this section from registering a person who would otherwise be required by the said subsection (1) to be registered, he shall be treated for the purposes of the enactments relating to the tax, other than the provisions of subsection (2) of the said section twenty-three, as being a person not required by the said subsection (1) to be registered.

(3) The provisions of subsection (8) of the said section twenty-three as to service by the Commissioners of notice of their intention to cancel a registration shall have effect, as respects a cancellation under this section, only where such a cancellation is effected without the assent of the registered person.

13 Amendment as to exclusion from registration of small businesses.

(1) The Treasury shall have power by an order made under subsection (9) of section twenty-three of the Finance (No. 2) Act, 1940, to direct that the proviso to subsection (1) of that section (which excludes from registration wholesale merchants and manufacturers whose gross takings from sales of chargeable goods do not exceed the amount therein mentioned) shall be suspended during the continuance in force of the order, and to revoke an order made under that subsection.

(2) In subsection (3) of the said section twenty-three (which requires a person carrying on business in such circumstances that he is required to be registered to make an application for registration to the Commissioners), the following paragraphs shall be substituted for paragraphs (a) and (b) respectively, that is to say—

“(a) if he is carrying on business in such circumstances as aforesaid at the passing of the Finance Act, 1944, and is not then registered, before the expiration of fourteen days from the passing thereof ; or

(b) if he begins to carry on business in such circumstances as aforesaid, or if the circumstances become such as aforesaid (whether by reason of a change in the circumstances of his business or otherwise) after the passing of that Act, before the expiration of fourteen days from the date when he begins so to carry on business, or when the circumstances become such as aforesaid, as the case may be”.

14 Power to require security for tax as condition of holding a certificate of registration.

(1) The Commissioners may, where it appears to them to be requisite for the security of the revenue so to do, impose, as a condition of issuing a certificate of registration to a registered person or of the continuance in effect of such a certificate issued to such a person, or as a condition of a person's having the benefit of the proviso to subsection (1) of section twenty-four of the Finance (No. 2) Act, 1940 (which relates to treating certain purchases as purchases excepted from being chargeable purchases), a requirement that he shall give security up to an amount and in a manner approved by the Commissioners for the payment of tax for which he may be or become accountable.

(2) The fact that a person who is required to be registered is by virtue of this section not for the time being entitled to a certificate of registration shall not be treated as derogating in any respect from the effect of that requirement.

15 Relief against double charge of purchase tax.

(1) If a wholesale merchant or a manufacturer proves to the satisfaction of the Commissioners, in the case of any goods in respect of which tax has become chargeable by virtue of a purchase made from him or by virtue of such an appropriation or application as is mentioned in section twenty-five of the Finance (No. 2) Act, 1940, made by him, that tax also became chargeable in respect thereof on a previous occasion by virtue of a purchase thereof, or of such an appropriation or application thereof, made by him, or of an importation thereof effected by him at a time when he was not the holder of a certificate of registration, the Commissioners may remit payment of the first mentioned tax, or if it has been paid may repay it, up to an amount not exceeding the amount of the last mentioned tax.

(2) If a manufacturer proves to the satisfaction of the Commissioners that he has used as materials for goods in respect of which tax has become chargeable by virtue of a purchase made from him or by virtue of such an appropriation or application as is mentioned in section twenty-five of the Finance (No. 2) Act, 1940, made by him, goods in respect of which tax became chargeable on a previous occasion by virtue of a purchase thereof, or of such an appropriation or application thereof, made by him, or of an importation thereof effected by him at a time when he was not the holder of a certificate of registration, the Commissioners may remit payment of the first mentioned tax, or if it has been paid may repay it, up to an amount not exceeding the amount of the last mentioned tax.

16 Penalties for certain offences in relation to purchase tax.

The penalty for a failure to comply with any requirement imposed by or under regulations made under Part V of the Finance (No. 2) Act, 1940 (which relate to the ascertainment of chargeable purchases and the amounts of tax chargeable by virtue thereof, the furnishing of information affecting liability to registration, the keeping of accounts of the amounts of tax for which persons are accountable, and other matters), shall in lieu of fifty pounds be one hundred pounds, together, in the case of a failure to comply with a requirement so imposed that any act shall be done at a specified time, or within a specified period, with a further penalty of ten pounds for each day after that time or after the end of that period, as the case may be, during which failure to do the act in question continues.

17 Fraudulent evasion of purchase tax.

(1) If any person is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion, by him or any other person, of tax in respect of any goods, he shall be liable to a penalty of five hundred pounds or treble the amount of the tax, whichever is the greater, or to imprisonment for a term not exceeding two years, or to both such a penalty and such imprisonment.

(2) If any person acquires possession of or deals with any goods, having reason to believe that tax chargeable in respect thereof has been or will be evaded, he shall be liable to a penalty of five hundred pounds or treble the amount of the tax, whichever is the greater.

(3) Subsection (3) of section twelve of the [6 & 7 Geo. 6. c. 28.] Finance Act, 1943 (which, where in pursuance of subsection (1) or (2) of that section a person is ordered by a court of summary jurisdiction both to be imprisoned for a term and to pay a penalty, and is also ordered to be imprisoned for a further term in default of payment or satisfaction of the penalty, limits the aggregate of the two terms of imprisonment to two years) shall apply to orders of a court of summary jurisdiction made in pursuance of subsection (1) of this section as it applies to such orders made in pursuance of subsection (1) or (2) of the said section twelve.

(4) Section seventy-six of the [7 & 8 Geo. 4. c. 53.] Excise Management Act, 1827, as applied by paragraph 1 of the Ninth Schedule to the Finance (No. 2) Act, 1940, shall have effect as if purchase tax were a duty of excise.

18 Definition of " registered " and " holder of certificate of registration ".

In subsection (1) of section forty-one of the Finance (No. 2) Act, 1940 (which relates to interpretation) after the definition of " purchase " the following definitions shall be inserted, that is to say :—

• “' registered ' means registered under this Part of this Act, ' registration ' has a corresponding meaning, and ' holder of a certificate of registration ' means the holder of a certificate of registration which is in effect for the time being”.