Finance Act 1989

1989 c. 26

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance.

X1C1X2Most Gracious Sovereign, WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—C53C52

Annotations:
Editorial Information
X1

The text of ss. 1-5, 8(2), 15-17, 28, 29, 187(1), 188, Sch.17 Pt. I was taken from SIF Group 40:1 (Customs and Excise: Customs and Excise Duties), the text of ss. 18-27, 29, 186(2), 187(1), 188, Sch. 3, Sch. 17 Pt. III was taken from SIF Group 40:2 (Customs and Excise: Value added Tax and Car Tax), the text of ss. 30-90, 91(1)(3), 92(1)(2)(4)-(7), 93-95, 96(1)(2)(4),97-121, 130, 138, 142-170, 178-180, 182, 186(1)(3), 187(1), 188, Schs. 4-13,Sch. 17 Pts IV-VI, VIII, X was taken from SIF Group 63:1 (Income, Corporation and Capital Gains Taxes: Income and Corporation Taxes), the text of ss. 91(2)(3), 92(3)-(7), 96(3), 107, 122-137, 139-141, 186(1)(3), 187, 188, Sch.12 para. 6, Schs. 14, 15, Sch. 17 Pts. VII, XIV was taken from SIF Group 63:2 (Income, Corporation and Capital Gains Taxes: Capital Gains Tax), the text of ss. 138(6)-(12), 171, 172, 178, 179(1)(d)(e)(3)(4), 180(4)(7), 186(1)(3),187(1), 188, Sch. 17 Pt. X was taken from SIF Group 65 (Inheritance Tax), the text of ss. 181, 187(1), 188, Sch. 16, Sch. 17 Pt. XI was taken from SIF Group96 (Posts and Telecommunications), the text of ss. 185, 187, 188, Sch. 17 Pt. XIV was taken from SIF Group 98:5 (Property, England and Wales: Tithe), the text of ss. 183, 187, 188, Sch. 17 Pts. XII, XIV was taken from SIF Group 99:3 (Public Finance and Economic Controls: National Debt), the text of ss. 6, 7,8(1), 9-14, 187(1), 188, Schs. 1, 2, Sch. 17 Pt. II was taken from SIF Group 107:2 (Road Traffic: Vehicle Excise Duty), the text of ss. 142(9)(10), 184,187(1), 188, Sch. 17 Pt. XIII was taken from SIF Group 110 (Savings Banks) andthe text of ss. 173-178, 179(1)(f)(4), 180(5)(7), 186(1), 187(1), 188, Sch.17 Pt. IX was taken from SIF Group 114 (Stamp Duty). This Act is presented basically in the form in which it appears in the 1990 Edition of The Taxes Acts edited by the Inland Revenue and published by HMSO (any references incommentary to volumes 1, 2, etc are to volumes of that edition). The style of editing differs from that applicable to most Acts published in Statutes in Force.

X2

General amendments to Tax Acts, Income Tax Acts, and/or Corporation Tax Acts made by legislation after 1.2.1991 are noted against Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) but not against each Act

Modifications etc. (not altering text)
C1

General amendments etc. to Tax Acts (or Income Tax Acts or Corporation Tax Acts as the case may be) made by Taxes Management Act 1970 (c. 9, SIF 63:1), s. 41A(7) (as added by Finance Act 1990 (c. 29, SIF 63:1), s. 95(1)(2)), British Telecommunications Act 1981 (c. 38, SIF 96), s. 82(2)(7);Telecommunications Act 1984 (c. 12, SIF 96), s. 72(3); Finance Act 1984 (c. 43, SIF 63:1), ss. 82(6), 85(2), 89(1)(7), 96(1)(7), 98(7), Sch. 9 para. 3(2)(9), Sch. 16 paras. 6, 12 and Finance Act 1985 (c. 54, SIF 63:1), ss. 72(1), 74(5), Sch. 23 para. 15(4), S.I. 1987/530, regs. 11(2), 13(1), 14, Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), ss. 4, 6, 7, 9, 32, 34, 78, 134, 135, 141, 142, 185, 191, 193, 194, 195, 200, 203, 209, 212, 213, 219, 247, 253, 272, 287, 314, 315, 317, 318, 325, 326, 327, 345, 350, 351, 368, 375, 381, 397, 414, 432, 440, 442, 446, 458, 460, 461, 463, 463(2)(3) (as added by Finance Act 1990 (c. 29, SIF 63:1), s. 50(2)), 468, 474, 475, 486, 490, 491,503, 511, 518, 524, 532, 544, 550, 556, 558, 569, 572, 582, 595, 601, 613, 617, 619, 621, 639, 656, 660, 663, 676, 689, 691, 694, 700, 701, 714, 716, 739, 743, 754, 763, 776, 780, 781, 782, 787, 789, 811, 828, 829, 832, 833, 834, 835, 837, 838, 839, 840, 841, 842, Sch. 2 para. 5, Sch. 4 para. 5, Sch. 13 para. 10, Sch. 16 para. 10, Sch. 21 para. 6, Sch. 26 para. 1, Sch. 27 para. 20, Finance Act 1988 (c. 39, SIF 63:1), ss. 66, 127(1)(6), Sch. 12 para. 6, Capital Allowances Act 1990 (c. 1, SIF 63:1), ss. 28(1), 68(8), 74, 82, 83(5),148(5), 163(4), 164(2), S.I. 1990/627 and Finance Act 1990 (c. 29, SIF 63:1), s. 25(10)

C53

Act modified (with effect in accordance with reg. 1 of the amending S.I.) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), regs. 19-26 (as amended by S.I. 2007/2146, regs. 14-18; S.I. 2007/3449, regs. 7, 8; S.I. 2008/1924, regs. 13-17)

C52

Act modified by 1988 c. 1, Sch. 19ABA paras. 12-25 (as inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Insurance Companies (Taxation of Reinsurance Business) (Corporation Tax Acts) (Amendment) Order 2007 (S.I. 2007/3430), arts. 1(1), 3(3))

Part I Customs and Excise, Value Added Tax and Car Tax

CHAPTER I Customs and Excise

Hydrocarbon oil duties

1 Rates.

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1

2

In section 13A of that Act (rebate on unleaded petrol), for “£0.0202” there shall be substituted “£0.0272”.

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1

4

This section shall be deemed to have come into force at 6 o’clock in the evening of 14th March 1989.

2 Reliefs.

1

The following section shall be inserted after section 20A of the M1Hydrocarbon Oil Duties Act 1979—

20AA Power to allow reliefs.

1

The Commissioners may make regulations allowing reliefs as regards—

a

any duty of excise which has been charged in respect of hydrocarbon oil, petrol substitute, spirits used for making power methylated spirits, or road fuel gas;

b

any amount which has been paid to the Commissioners under section 12(2)above;

c

any amount which would (apart from the regulations) be payable to the Commissioners under section 12(2) above.

2

The regulations may include such provision as the Commissioners think fit in connection with allowing reliefs, and in particular may—

a

provide for relief to take the form of a repayment or remission;

b

provide for relief to be allowed in cases or classes of case set out in the regulations;

c

provide for relief to be allowed to the extent set out in the regulations;

d

provide for relief to be allowed subject to conditions imposed by the regulations;

e

provide for relief to be allowed subject to such conditions as the Commissioners may impose on the person claiming relief;

f

provide for the taking of samples of hydrocarbon oil in order to as certain whether relief should be allowed or has been properly allowed;

g

make provision as to administration (which may include provision requiring the making of applications for relief);

h

make different provision in relation to different cases or classes of case;

i

include such supplementary, incidental, consequential or transitional provisions as appear to the Commissioners to be necessary or expedient.

3

The conditions which may be imposed as mentioned in subsection (2)(d) or(e) above may include conditions as to the physical security of premises, the provision (by bond or otherwise) of security for payment, or such other matters as the Commissioners think fit.

4

Where a person contravenes or fails to comply with any regulation made under this section or any condition imposed by or under such a regulation—

a

he shall be liable on summary conviction to a penalty of three times the value of any goods in respect of which the contravention or failure occurred or a penalty of an amount represented by level 3 on the standard scale, whichever is the greater, and

b

any goods in respect of which the contravention or failure occurred shall be liable to forfeiture.

5

A reference in this section to a duty of excise includes a reference to any addition to such duty by virtue of section 1 of the Excise Duties (Surcharges or Rebates) Act 1979.

6

Schedule 5 to this Act shall have effect with respect to any sample of hydrocarbon oil taken in pursuance of regulations made under this section.

2

In consequence of subsection (1) above, in paragraph 6 of Schedule 5 to the M2Hydrocarbon Oil Duties Act 1979 after “section” there shall be inserted “20AA or”.

Annotations:
Marginal Citations
M1

1979c. 5.

Alcoholic liquor duties

F23 Original gravity of beer.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 Blending made-wines etc.

1

Section 55 of the Alcoholic Liquor Duties Act 1979 (charge of excise duty on made-wine) shall be amended as follows.

2

In subsection (5) (which, where certain conditions are satisfied, lifts the requirement to hold a licence for premises where made-wine is produced),after paragraph (d) there shall be added

and

e

he does not blend or otherwise mix—

i

two or more made-wines, or

ii

one or more made-wines and one or more wines,

so as to produce made-wine the rate of duty applicable to which is higher than the rate applicable to at least one of the constituent liquors.

3

After subsection (5) there shall be inserted—

5A

For the purposes of subsection (5) above—

a

the rate of duty applicable to any made-wine is that which is or would be chargeable under subsection (1) above on its importation into the United Kingdom; and

b

the rate of duty applicable to any wine is that which is or would be chargeable under subsection (1) of section 54 above on its importation into the United Kingdom.

4

This section shall have effect in relation to the blending or other mixing of made-wines, or of made-wines and wines, on or after the day on which this Act is passed.

5 Description as beer.

Section 73 of the M3Alcoholic Liquor Duties Act 1979(which prohibits anyone from describing as beer any substance on which beer duty has not been paid) shall cease to have effect.

Vehicles excise duty

6 Rates.

F31

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

F35

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F56

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F37

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F89. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F910. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1213. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14 Dishonoured cheques.

F131

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F142

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F133

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F144

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F135

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F146

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F137

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

F1515. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 Time limits for proceedings.

1

After section 146 of the Customs and Excise Management Act 1979 there shall be inserted—

146A Time limit for proceedings.

1

Except as otherwise provided in the customs and excise Acts, and notwithstanding anything in any other enactment, the following provisions shall apply in relation to proceedings for an offence under those Acts.

2

Proceedings for an indictable offence shall not be commenced after the end of the period of 20 years beginning with the day on which the offence was committed.

3

Proceedings for a summary offence shall not be commenced after the end of the period of 3 years beginning with that day but, subject to that, may be commenced at any time within 6 months from the date on which sufficient evidence to warrant the proceedings came to the knowledge of the prosecuting authority.

4

For the purposes of subsection (3) above, a certificate of the prosecuting authority as to the date on which such evidence as is there mentioned came to that authority’s knowledge shall be conclusive evidence of that fact.

5

In the application of this section to Scotland—

a

in subsection (3), “proceedings for an indictable offence” means proceedings on indictment;

b

in subsection (3), “proceedings for a summary offence” means summary proceedings.

6

In the application of this section to Northern Ireland—

a

“indictable offence” means an offence which, if committed by an adult, is punishable on conviction on indictment (whether only on conviction on indictment, or either on conviction on indictment or on summary conviction);

b

“summary offence” means an offence which, if committed by an adult, is punishable only on summary conviction.

7

In this section, “prosecuting authority” means the Commissioners and includes, in Scotland, the procurator fiscal.

2

Section 147(1) of that Act shall cease to have effect.

F163

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

This section shall have effect in relation to offences committed on or after the day on which this Act is passed.

17 Disbursements in Port of London.

In section 17 of the M4Customs and Excise Management Act1979 (general rule that customs and excise receipts, after deduction of disbursements, are to be paid into the Commissioners’ General Account at the Bank of England) paragraph (a) of subsection (5) (special rule that disbursements in Port of London are to be paid out of that Account) shall cease to have effect.

CHAPTER II Value Added Tax

Zero-rating etc.

F1718. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1819. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1920. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2122. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2223. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions

F2324. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2425. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2526. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter III Miscellaneous

F27927 Relief from car tax where vehicle leased to the handicapped.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28 Reliefs from duties and taxes for persons enjoying certain immunities and privileges.

1

After section 13 of the M5 Customs and Excise Duties(General Reliefs) Act 1979 there shall be inserted the following sections—

13A Reliefs from duties and taxes for persons enjoying certain immunities and privileges.

1

The Commissioners may by order make provision for conferring in respect of any persons to whom this section applies reliefs, by way of remission or repayment, from payment by them or others of duties of customs or excise, value added tax or car tax.

2

An order under this section may make any relief for which it provides subject to such conditions binding the person in respect of whom the relief is conferred and, if different, the person liable apart from the relief for payment of the tax or duty (including conditions which are to be compiled with after the time when, apart from the relief, the duty or tax would become payable) as may be imposed by or under the order.

3

An order under this section may include any of the provisions mentioned in subsection (4) below for cases where—

a

relief from payment of any duty of customs or excise, value added tax or car tax chargeable on any goods, or on the supply of any goods or services or the importation of any goods has been conferred (whether by virtue of an order under this section or otherwise) in respect of any person to whom this section applies, and

b

in the case of goods, provision for forfeiture of the goods.

4

The provisions referred to in subsection (3) above are—

a

provision for payment to the Commissioners of the tax or duty by—

i

the person liable, apart from the relief, for its payment, or

ii

any person bound by the condition, or

iii

any person who is or has been in possession of the goods or has received the benefit of the services,

or for two or more of those persons to be jointly and severally liable for such payment, and

5

An order under this section—

a

may contain such incidental and supplementary provisions as the Commissioners think necessary or expedient, and

b

may make different provision for different cases.

6

In this section and section 13C of this Act—

“duty of customs” includes any agricultural levy within the meaning of section 6 of the European Communities Act 1972 chargeable on goods imported into the United Kingdom, and

“duty of excise” means any duty of excise chargeable on goods and includes any addition to excise duty by virtue of section 1 of the Excise Duties (Surcharges or Rebates) Act 1979.

7

For the purposes of this section and section 13C of this Act, where in respect of any person to whom this section applies relief is conferred (whether by virtue of an order under this section or otherwise) in relation to the use of goods by any persons or for any purposes, the relief is to be treated as conferred subject to a condition binding on him that the goods will be used only by those persons or for those purposes.

8

Nothing in any order under this section shall be construed as authorising a person to import any thing in contravention of any prohibition or restriction for the time being in force with respect to it under or by virtue of any enactment.

13B Persons to whom section 13A applies.

1

The persons to whom section 13A of this act applies are—

a

any person who, for the purposes of any provision of the Visiting Forces Act 1952 or the International Headquarters and Defence Organisations Act 1964 is—

i

a member of a visiting force or of a civilian component of such a force or a dependant of such a member, or

ii

a headquarters, a member of a headquarters or a dependant of such a member,

b

any person enjoying any privileges or immunities under or by virtue of—

i

the Diplomatic Privileges Act 1964,

ii

the Commonwealth Secretariat Act 1966,

iii

the Consular Relations Act 1968,

iv

the International Organisations Act 1968, or

v

the Overseas Development and Co-operation Act 1980,

c

any person enjoying, under or by virtue of section 2 of the European Communities Act 1972, any privileges or immunities similiar to those enjoyedunder or by virtue of the enactments referred to in paragraph (b) above.

2

The Secretary of State may by order amend subsection (1) above to include any persons enjoying any privileges or immunities similiar to those enjoyed under or by virtue of the enactments referred to in paragraph (b) of that subsection.

3

No order shall be made under this section unless a draft of the order has been laid before and approved by resolution of each House of Parliament.

13C Offence where relieved goods used, etc., in breach of condition.

1

Subsection (2) below applies where—

a

any relief from payment of any duty of customs or excise, value added tax or car tax chargeable on, or on the supply or importation of, any goods has been conferred (whether by virtue of an order under section 13A of this Actor otherwise) in respect of any person to whom that section applies subject to any condition as to the persons by whom or the purposes for which the goods may be used, and

b

if the tax or duty has subsequently become payable, it has not been paid.

2

If any person—

a

acquires the goods for his own use, where he is not permitted by the condition to use them, or for use for a purpose that is not permitted by the condition or uses them for such a purpose, or

b

acquires the goods for use, or causes or permits them to be used, by a person not permitted by the condition to use them or by a person for a purpose that is not permitted by the condition or disposes of them to a person not permitted by the condition to use them,

with intent to evade payment of any tax or duty that has become payable or that, by reason of the disposal, acquisition or use, becomes or will become payable, he is guilty of an offence.

3

For the purposes of this section—

a

in the case of a condition as to the persons by whom goods may be used, a person is not permitted by the condition to use them unless he is a person referred to in the condition as permitted to use them, and

b

in relation to a condition as to the purposes for which goods may be used, a purpose is not permitted by the condition unless it is a purpose referred to in the condition as a permitted purpose,

and in this section “dispose” includes “lend” and “let on hire”, and “acquire” shall be interpreted accordingly.

4

A person guilty of an offence under this section may be detained and shall be liable—

a

on summary conviction, to a penalty of the statutory maximum or of three times the value of the goods (whichever is the greater), or to imprisonment for a term not exceeding six months, or to both, or

b

on conviction on indictment, to a penalty of any amount, or to imprisonment for a term not exceeding seven years, or to both.

2

Section 13C of the M6 Customs and Excise Duties (General Reliefs) Act 1979 inserted by subsection (1) above shall have effect where relief is conferred on or after the day on which this Act is passed.

3

In section 17 of the Customs and Excise Duties (General Reliefs) Act 1979,in subsection (3), for “or 13” there shall be substituted “13 or13A” and, in subsection (4), for “or 13(1)” there shall be substituted “13(1) or 13A”.

29F26 Recovery of overpaid excise duty and car tax.

1

This section applies to proceedings for restitution of an amount paid to the Commissioners of Customs and Excise by way of excise duty or car tax.

2

Proceedings to which this section applies shall not be dismissed by reason only of the fact that the amount was paid by reason of a mistake of law.

3

In any proceedings to which this section applies it shall be a defence that repayment of an amount would unjustly enrich the claimant.

4

This section shall have effect in relation to proceedings commenced on or after the day on which this Act is passed.

Part II Income Tax, Corporation Tax and Capital Gains Tax

CHAPTER I General

Income tax rates and allowances

F32330 Charge and rates of income tax for 1989-90.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32331 Age allowance.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32332 Operative date for PAYE.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33 Married couples. C2

1

Sections 257 to 257F and 265 of the M7Taxes Act 1988,as inserted for the year 1990-91 and subsequent years by the Finance Act 1988,shall be amended as follows.

2

In section 257(1) for “£2,605” there shall be substituted “£2,785”.

3

In section 257(2) for “£3,180” there shall be substituted “£3,400”.

4

In section 257(3)—

F366a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

for “£3,310” there shall be substituted “£3,540”.

5

In section 257(5)—

a

for “£10,600” there shall be substituted “£11,400”,and

F367b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F276

In section 257A(1) for “£1,490” there shall be substituted “£1,590”.

7

In section 257A(2) for “£1,855” there shall be substituted “£1,985”.

8

In section 257A(3)—

F368a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

for “£1,895” there shall be substituted “£2,025”.

9

In section 257A(5)—

a

for “£10,600” there shall be substituted “£11,400”,and

F369b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

In sections F28. . . F29257D(8) and 265(3) after paragraph (b) there shall be inserted

or

c

on account of any payments to which section 593(2) or 639(3) applies,

F3011

In section 257E(1)(b) for “80” there shall be substituted “75”.

F3012

In section 257E(2)(a) for “£3,180” there shall be substituted “£3,400”.

F3013

In section 257E(2)(b) for “£3,310” there shall be substituted “£3,540”.

Corporation tax rates etc.

34 Charge and rate of corporation tax for financial year 1989. C3

Corporation tax shall be charged for the financial year 1989 at the rate of 35 per cent.

Annotations:
Modifications etc. (not altering text)
C3

For earlier years see Table K, Vol. 1

F37735 Corporation tax: small companies.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Receipts basis etc.

F24136 Schedule E: revised Cases.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24137 Schedule E: assessment on receipts basis.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24138 Schedule E: unpaid emoluments.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24139 Schedule E: unremitted emoluments.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24140 Schedule E: emoluments already paid.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F241C441 Schedule E: pensions etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations:
Modifications etc. (not altering text)
C4

S. 41 extended (3.5.1994) by 1994 c. 9, s. 139(3)

F24142 Schedule E: supplementary.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F347 43 Schedule D: computation

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F348 44 Companies with investment business and insurance companies: computation

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F25045PAYE: meaning of payment.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest

46 Relief for interest.

For the year 1989-90 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be£30,000.

F31747 Close company loans: business expansion scheme.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32248 Close company loans: material interest.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefits in kind

49 Car benefits.

1

In Schedule 6 to the Taxes Act 1988 (taxation of directors and others in respect of cars) for Part I (tables of flat rate cash equivalents) there shall be substituted—

Part I Tables of Flat Rate Cash Equivalents

table Acars with an original market value up to £19,250 and having a cylinder capacity

Cylinder capacity of car in cubic centimetres

Age of car at end of relevant year of assessment

Under 4 years

4 years or more

1400 or less

£1,400

£950

More than 1400 but not more than 2000

£1,850

£1,250

More than 2000

£2,950

£1,950

table BCars with an original market value up to £19,250 and not having a cylinder capacity

Original market value of car

Age of car at end of relevant year of assessment

Under 4 years

4 years or more

Less than £6,000

£1,400

£950

£6,000 or more but less than £8,500

£1,850

£1,250

£8,500 or more but not more than £19,250

£2,950

£1,950

table BCars with an original market value of more than £19,250

Original market value of car

Age of car at end of relevant year of assessment

Under 4 years

4 years or more

More than £19,250 but not more than £29,000

£3,850

£2,600

More than £29,000

£6,150

£4,100

2

This section shall have effect for the year 1989-90 and subsequent years of assessment.

F24250 Security assets and services.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24251 Assets used partly for security.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F24252 Security: supplementary.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53 Employees earning £8,500 or more and directors.

F2511

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2512

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F251a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F251b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F251c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F251d

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F251e

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f

the words “ employment to which Chapter II of Part V applies ”shall be substituted for the words from “director’s” to “section167)” in F252section 418(3)(a) of that Act;

F251g

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Medical insurance

C554F31 Relief.

1

This section applies where—

a

on or after 6th April 1990 an individual makes a payment in respect of a premium under a contract of private medical insurance (whenever issued),

b

the contract meets the requirement in subsection (2) below as to the person or persons insured,

c

at the time the payment is made the contract is an eligible contract,

d

the individual making the payment does not make it out of resources provided by another person for the purpose of enabling it to be made, and

e

the individual making the payment is not entitled to claim any relief or deduction in respect of it under any other provision of the Tax Acts.

2

The requirement mentioned in subsection (1)(b) above is that the contract insures—

a

an individual who at the time the payment is made is aged 60 or over and resident in the United Kingdom,

b

individuals each of whom at that time is aged 60 or over and resident in the United Kingdom, or

c

two individuals who are married to each other at that time, at least one of whom is aged 60 or over at that time, and each of whom is resident in the United Kingdom at that time.

F322A

In a case where—

a

a payment is made in respect of a premium under a contract at a time when the contract meets the requirement in subsection (2) above by virtue of paragraph (c) of that subsection, and

b

a payment is made under the same contract at a time after one of the individuals has died and when the contract does not (apart from this subsection) meet the requirement in subsection (2) above by virtue only of the fact that the surviving spouse is not aged 60 or over at the time,

for the purposes of subsection (2) above in its application to the contract the surviving spouse shall be deemed to be aged 60 or over at the time mentioned in paragraph (b) above.

3

If the payment is made by an individual who at the time it is made is resident in the United Kingdom (whether or not he is the individual or one of the individuals insured by the contract) F33the individual shall be entitled to relief under this subsection in respect of the payment; and (except where subsections (4) to (6) below apply) relief under this subsection shall be given—

a

in accordance with subsections (3A) to (3C) below, and

b

only on a claim made for the purpose.

F343A

Where an individual is entitled to relief under subsection (3) above in respect of one or more payments made in a given year of assessment, the amount of his liability for that year of assessment to income tax on his total income shall be the amount to which he would be liable apart from this section less whichever is the smaller of—

a

the amount found under subsection (3B) below, and

b

the amount which reduces his liability to nil.

3B

The amount referred to in subsection (3A)(a) above is an amount found by—

a

taking the amount of the payment referred to in subsection (3A) above or (as the case may be) the aggregate amount of the payments there referred to, and

b

finding an amount equal to tax on the amount taken under paragraph (a) above at the basic rate for the year of assessment concerned.

3C

In determining for the purposes of subsection (3A) above the amount of incomers on would be liable apart from this section, no account shall be taken of—

a

any income tax reduction under Chapter I of Part VII of the Taxes Act 1988 or under section 347B of that Act;

b

any income tax reduction under section 353(1A) of the Taxes Act 1988;

c

any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 of the Taxes Act 1988 or by way of a credit under section 790(1) of that Act;

d

any tax at the basic rate on so much of that person’s income as is income the income tax on which he is entitled to charge against any other person or to deduct, retain or satisfy out of any payment.

C64

In such cases and subject to such conditions as the Board may specify in regulations, relief under subsection (3) above shall be given in accordance with subsections (5) and (6) below.

5

An individual who is entitled to such relief in respect of a payment may deduct and retain out of it an amount equal to income tax on it at the basic rate for the year of assessment in which it is made.

6

The person to whom the payment is made—

a

shall accept the amount paid after deduction in discharge of the individual’s liability to the same extent as if the deduction had not been made, and

b

may, on making a claim F35in accordance with regulations, recover from the Board an amount equal to the amount deducted.

7

The Treasury may make regulations providing that in circumstances prescribed in the regulations—

a

an individual who has made a payment in respect of a premium under a contract of private medical insurance shall cease to be and be treated as not having been entitled to relief under subsection (3) above; and

C6b

he or the person to whom the payment was made (depending on the terms of the regulations) shall account to the Board for tax from which relief has been given on the basis that the individual was so entitled.

8

Regulations under subsection (7) above may include provision adapting or modifying the effect of any enactment relating to income tax in order to secure the performance of any obligation imposed under paragraph (b) of that subsection.

9

In this section—

a

references to a premium, in relation to a contract of insurance, are to any amount payable under the contract to the insurer, and

b

references to an individual who is resident in the United Kingdom at anytime include references to an individual who is at that time performing duties which are treated by virtue of section 132(4)(a) of the Taxes Act 1988 as performed in the United Kingdom.

55F36 Eligible contracts.

1

This section has effect to determine whether a contract is at a particular time (the relevant time) an eligible contract for the purposes of section 54 above.

2

A contract is an eligible contract at the relevant time if—

a

it was entered into by an insurer who at the time it was entered into was a qualifying insurer and was approved by the Board for the purposes of this section,

b

the period of insurance under the contract does not exceed one year(commencing with the date it was entered into),

F37ba

at the relevant time the contract satisfies the conditions set out in subsection (2A) below,

bb

the contract is not one in the case of which subsection (2D) below applies,

c

the contract is not connected with any other contract at the relevant time and has not been connected with any other contract at any time since it was entered into, F38and

d

no benefit has been provided by virtue of the contract other than an approved benefit, F39and

e

the contract meets one or more of the three conditions set out below.

F402A

The conditions referred to in subsection (2)(ba) above are that—

a

the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified,

b

the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,

c

the premium under the contract is reasonable, and

d

the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.

2B

In a case where—

a

at the relevant time the contract confers a material right, or more than one such right, but

b

the total cost to the insurer of providing benefits in pursuance of the material right or (as the case may be) in pursuance of all the material rights would not exceed the prescribed sum,

the contract shall not thereby be regarded as failing to satisfy at the relevant time the condition set out in subsection (2A)(b) above.

2C

For the purposes of subsection (2B) above a material right is a right which—

a

is not a right such as is mentioned in subsection (2A)(a) above or such as is for the time being specified in regulations made under subsection (2A)(b) above, and

b

is not a right to a cash benefit.

2D

This subsection applies in the case of a contract (the main contract) if—

a

at least one other contract is entered into which is a contract (a collateral contract) under which a benefit is provided in consideration of the insured’s entering into the main contract, and

b

the cost to the insurer of fulfilling his obligations under the collateral contract (or, if there is more than one collateral contract, of fulfilling his obligations under all of them) exceeds the prescribed sum.

F413

The first condition is that the contract is certified by the Board under section 56 below at the relevant time.

F414

The second condition is that, at the time the contract was entered into, it conformed with a standard form certified by the Board as a standard form of eligible contract.

F415

The third condition is that, at the time the contract was entered into, it conformed with a form varying from a standard form so certified in no other respect than by making additions—

a

which were (at the time the contract was entered into) certified by the Board as compatible with an eligible contract when made to that standard form, and

b

which (at that time) satisfied any conditions subject to which the additions were so certified.

F416

Where a contract is varied, and the relevant time falls after the time the variation takes effect, subsections (1) to (5) above shall have effect as if “entered into” read “varied” in each place where it occurs in subsections (4) and (5) above.

7

For the purposes of this section a contract is connected with another contract at any time if—

a

they are simultaneously in force at that time,

b

either of them was entered into with reference to the other, or with a view to enabling the other to be entered into on particular terms, or with a view to facilitating the other being entered into on particular terms, and

c

the terms on which either of them was entered into would have been significantly less favourable to the insured if the other had not been entered into.

8

For the purposes of this section each of the following is a qualifying insurer—

a

an insurer lawfully carrying on in the United Kingdom business of any of the classes specified in Part I of Schedule 2 to the M8Insurance Companies Act 1982;

b

an insurer not carrying on business in the United Kingdom but carrying on business in another member State and being either a national of a member State or a company or partnership formed under the law of any part of the United Kingdom or another member State and having its registered office, central administration or principal place of business in a member State.

9

For the purposes of this section a benefit is an approved benefit if it is provided in pursuance of a right of a description

F42a

mentioned in subsection (2A)(a) above, or

b

for the time being specified in regulations made under subsection (2A)(b) above.

F4310

For the purposes of this section a benefit is also an approved benefit if it is not a cash benefit and—

a

it is a single benefit provided otherwise than as mentioned in subsection (9) above and the cost to the insurer of providing it does not exceed the prescribed sum, or

b

it is one of a number of benefits provided otherwise than as mentioned in subsection (9) above and the total cost to the insurer of providing the benefits does not exceed the prescribed sum.

11

In this section the reference to a premium, in relation to a contract of insurance, is to any amount payable under the contract to the insurer.

12

For the purposes of this section the prescribed sum is £30.

13

The Treasury may by order substitute for the sum for the time being specified in subsection (12) above such sum as may be specified in the order; and any such substitution shall have effect in relation to cases where the relevant time falls on or after such date as is specified in the order.

56F44 Certification of contracts.

1

The Board shall certify a contract under this section if it satisfies the conditions set out in subsection (3) below; and the certification shall be expressed to take effect from the time the conditions are satisfied, and shall take effect accordingly.

2

The Board shall revoke a certification of a contract under this section if it comes to their notice that the contract has ceased to satisfy the conditions set out in subsection (3) below; and the revocation shall be expressed to take effect from the time the conditions ceased to be satisfied, and shall take effect accordingly.

3

The conditions referred to above are that—

C7a

the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified,

b

the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,

c

the premium under the contract is in the Board’s opinion reasonable, and

d

the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.

4

The certification of a contract by the Board under this section shall cease to have effect if the contract is varied; but this is without prejudice to the application of the preceding provisions of this section to the contract as varied.

5

Where the Board refuse to certify a contract under this section, or they revoke a certification, an appeal may be made to the Special Commissioners by—

a

the insurer, or

b

any person who (if the policy were certified) would be entitled to relief under section 54 above.

6

Where a contract is certified under this section, or a certification is revoked or otherwise ceases to have effect, any adjustments resulting from the certification or from its revocation or ceasing to have effect shall be made.

7

Subsection (6) above applies where a certification or revocation takes place on appeal as it applies in the case of any other certification or revocation.

8

In this section the reference to a premium, in relation to a contract of insurance, is to any amount payable under the contract to the insurer.

Annotations:
Amendments (Textual)
F44

Ss. 54-57 repealed (31.1.1997 with effect as mentioned in Sch. 8 Pt. II(2), note of the amending Act) by 1997 c. 58, s. 52, Sch. 8 Pt. II(2) (with s. 3(3))

Modifications etc. (not altering text)
C7

For regulations seeS.I. 1989/2389 (inPart III Vol. 5under “Private medical insurance”

)

57F45 Medical insurance: supplementary.

C81

The Board may by regulations—

a

provide that a claim under section 54(3) or (6)(b) above shall be made in such form and manner, shall be made at such time, and shall be accompanied by such documents, as may be prescribed;

F46aa

make provision for and with respect to appeals against a decision of an officer of the Board or the Board with respect to a claim under section 54(6)(b) above;

b

make provision, in relation to payments in respect of which a person is entitled to relief under section 54 above, for the giving by insurers in such circumstances as may be prescribed of certificates of payment in such form as may be prescribed to such persons as may be prescribed;

c

provide that a person who provides (or has at any time provided) insurance under contracts of private medical insurance shall comply with any notice which is served on him by the Board and which requires him within a prescribed period to make available for the Board’s inspection documents (of a prescribed kind) relating to such contracts;

d

provide that persons of such a description as may be prescribed shall, within a prescribed period of being required to do so by the Board, furnish to the Board information (of a prescribed kind) about contracts of private medical insurance;

e

make provision with respect to the approval of insurers for the purposes of section 55 above and the withdrawal of approval for the purposes of that section;

f

make provision for and with respect to appeals against decisions of the Board with respect to the giving or withdrawal of approval of insurers for the purposes of section 55 above;

g

make provision with respect to the certification by the Board of standard forms of eligible contract and variations from standard forms of eligible contract certified by them;

h

make provision for and with respect to appeals against decisions of the Board with respect to the certification of standard forms of eligible contractor variations from standard forms of eligible contract certified by them;

i

provide that certification, or the revocation of a certification, under section 56 above shall be carried out in such form and manner as may be prescribed;

j

make provision with respect to appeals against decisions of the Board with respect to certification or the revocation of certification under section 56 above;

C8k

make provision generally as to administration in connection with sections 54 to 56 above.

F3732

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

The following provisions of the Taxes Management Act 1970, namely—

F47a

section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act;

b

section 30 (tax repaid in error etc.) F48apart from subsection (1B),

c

F49section 86 (interest), and

d

section 95 (incorrect return or accounts),

F50shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable by virtue of section 54(6)(b) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.

F513A

In the application of section 86 of the Taxes Management Act 1970 by virtue of subsection (3) above in relation to sums due and payable by virtue of an assessment made under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—

a

in a case where the person falling within section 54(6) above has made any interim claim, within the meaning of regulations made under subsection (1) and section 54(4) above, as respects some part of the year of assessment for which the assessment is made, is 1st January in that year of assessment; and

b

in any other case, is the later of the following dates, that is to say—

i

1st January in the year of assessment for which the assessment is made; or

ii

the date of the making of the payment by the Board which gives rise to the assessment.

4

In sections F52. . . 257D(8) and 265(3) of the Taxes Act 1988 after paragraph (c) there shall be inserted

or

d

on account of any payments to which section 54(5) of the Finance Act 1989 applies

5

In subsection (1) above—

  • “eligible contract” has the meaning given by section 55 above, and

  • “prescribed” means prescribed by or, in relation to form, under the regulations.

Charities

58 Payroll deduction scheme.

1

In section 202(7) of the Taxes Act 1988 (which limits to £240 the deductions attracting relief) for “£240” there shall be substituted “£480”.

2

This section shall have effect for the year 1989-90 and subsequent years of assessment.

F5359. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60 British Museum and Natural History Museum.

F3781

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3782

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F543

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3794

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Profit-related pay, share schemes etc.

61F55 Profit-related pay.

Schedule 4 to this Act (which amends the provisions of the Taxes Act 1988 relating to profit-related pay) shall have effect.

F25362 Savings-related share option schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5663 Profit sharing schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F25464 Share option and profit sharing schemes: shares of consortium member.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65 Employee share schemes: material interest.

In Schedule 9 to the Taxes Act 1988 the following paragraph shall be inserted after paragraph 39—

40 Shares subject to an employee benefit trust

1

Where an individual has an interest in shares or obligations of the company as a beneficiary of an employee benefit trust, the trustees shall not be regarded as associates of his by reason only of that interest unless sub-paragraph (3) below applies in relation to him.

2

In this paragraph “employee benefit trust” has the same meaning as in paragraph 7 of Schedule 8.

3

This sub-paragraph applies in relation to an individual if at any time on or after 14th March 1989—

a

the individual, either on his own or with any one or more of his associates, or

b

any associate of his, with or without other such associates,

has been the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control, more than 25per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the ordinary share capital of the company.

4

Sub-paragraphs (9) to (12) of paragraph 7 of Schedule 8 shall apply for the purposes of this paragraph in relation to an individual as they apply for the purposes of that paragraph in relation to an employee.

F25566 Priority share allocations for employees etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Employee share ownership trusts

C4467 Tax relief. C9

1

This section applies where—

a

a company expends a sum in making a payment by way of contribution to the trustees of a trust which is a qualifying employee share ownership trust at the time the sum is expended,

b

at that time, the company or a company which it then controls has employees who are eligible to benefit under the terms of the trust deed,

c

at that time the company is resident in the United Kingdom,

d

before the expiry of the expenditure period the sum is expended by the trustees for one or more of the qualifying purposes, and

e

before the end of the claim period a claim for relief under this section is made.

2

In such a case the sum—

a

shall be deducted in computing for the purposes of Schedule D the F57profits of a trade carried on by the company,

F409b

if the company is an investment company, shall be treated as expenses of management, or

c

if the company is a company in relation to which the I - E rules apply and the sum is referable, in accordance with Chapter 4 of Part 2 of the Finance Act 2012, to the company's basic life assurance and general annuity business, shall be treated for the purposes of section 76 of that Act as ordinary BLAGAB management expenses of the company.

3

For the purposes of subsection (1)(b) above, the question whether one company is controlled by another shall be construed in accordance with section840 of the Taxes Act 1988.

4

For the purposes of subsection (1)(d) above each of the following is a qualifying purpose—

a

the acquisition of shares in the company which established the trust;

b

the repayment of sums borrowed;

c

the payment of interest on sums borrowed;

d

the payment of any sum to a person who is a beneficiary under the terms of the trust deed;

e

the meeting of expenses.

5

For the purposes of subsection (1)(d) above the expenditure period is the period of nine months beginning with the day following the end of the period of account in which the sum is charged as an expense of the company, or such longer period as the Board may allow by notice given to the company.

6

For the purposes of subsection (1)(e) above the claim period is the period of two years beginning with the day following the end of the period of account in which the sum is charged as an expense of the company.

7

For the purposes of this section the trustees of an employee share ownership trust shall be taken to expend sums paid to them in the order in which the sums are received by them (irrespective of the number of companies making payments).

68 Principal charges to tax. C10

1

This section applies where a chargeable event (within the meaning of section 69 below) occurs in relation to the trustees of an employee share ownership trust.

2

In such a case—

a

the trustees shall be treated as receiving, when the event occurs, F288income of an amount that is equal to the chargeable amount (within the meaning of section 70 below),

F289b

that income shall be chargeable to income tax for the year of assessment in which the event occurs,

ba

the tax so chargeable shall be charged on the full amount of the income the trustees are treated as receiving in the year of assessment F302, and

bb

the trustees are liable for any tax so chargeable, F303...

F309c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

If the whole or any part of the tax assessed on the trustees is not paid before the expiry of the period of six months beginning with the day on which the assessment becomes final and conclusive, a notice of liability to tax under this subsection may be served on a qualifying company and the tax or the part unpaid (as the case may be) shall be payable by the company on service of the notice.

4

Where a notice of liability is served under subsection (3) above—

a

any interest which is due on the tax or the part (as the case may be) and has not been paid by the trustees, and

b

any interest accruing due on the tax or the part (as the case may be)after the date of service,

shall be payable by the company.

5

Where a notice of liability is served under subsection (3) above and any amount payable by the company (whether on account of tax or interest) is not paid by the company before the expiry of the period of three months beginning with the date of service, the amount unpaid may be recovered from the trustees(without prejudice to the right to recover it instead from the company).

6

For the purposes of this section each of the following is a qualifying company—

a

the company which established the employee share ownership trust;

b

any company falling within subsection (7) below.

7

A company falls within this subsection if, before it is sought to serve a notice of liability on it under subsection (3) above—

a

it has paid a sum to the trustees, and

b

the sum has been deducted as mentioned in section 67(2)(a) above or treated as mentioned in section 67(2)(b) above.

C4569 Chargeable events. C11

C121

For the purposes of section 68 above each of the following is a chargeable event in relation to the trustees of an employee share ownership trust—

a

the transfer of securities by the trustees, if the transfer is not a qualifying transfer;

b

the transfer of securities by the trustees to persons who are at the time of the transfer beneficiaries under the terms of the trust deed, if the terms on which the transfer is made are not qualifying terms;

c

the retention of securities by the trustees at the expiry of the F58qualifying period beginning with the date on which they acquired them;

d

the expenditure of a sum by the trustees for a purpose other than a qualifying purpose.

F59e

where—

i

the trustees make a qualifying transfer within subsection (3AA) below for a consideration, and

ii

they do not, during the period specified in subsection (5A) below, expend a sum of not less than the amount of that consideration for one or more qualifying purposes,

the expiry of that period.

2

For the purposes of subsection (1)(a) above a transfer is a qualifying transfer if it is made to a person who at the time of the transfer is a beneficiary under the terms of the trust deed.

3

For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if—

a

it is made to the trustees of a scheme which at the time of the transfer is a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988, and

b

it is made for a consideration which is not less than the price the securities might reasonably be expected to fetch on a sale in the open market.

F603AA

For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if—

a

it is a transfer of relevant shares made to the trustees of the plan trust of F259a share incentive plan,

b

the plan is approved under F260Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 when the transfer is made, and

c

the consideration (if any) for which the transfer is made does not exceed the market value of the shares.

3AB

For the purpose of determining whether a transfer by the trustees is a qualifying transfer within subsection (3AA) above, where on or after 21st March 2000—

a

the trustees transfer or dispose of part of a holding of shares (whether by way of a qualifying transfer or otherwise), and

b

the holding includes any relevant shares,

the relevant shares shall be treated as transferred or disposed of before any other shares included in that holding.

For this purpose “ holding ” means any number of shares of the same class held by the trustees, growing or diminishing as shares of that class are acquired or disposed of.

3AC

For the purposes of subsections (3AA) and (3AB) above—

  • “ market value ” has the same meaning as F256it has for the purposes of the SIP code (see paragraph 92 of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003); and

  • “ relevant shares ” means—

    1. i

      shares that are held by the trustees of the employee share ownership trust at midnight on 20th March 2000, and

    2. ii

      shares purchased by those trustees with original funds after that time.

3AD

For the purposes of subsection (3AC) above—

a

“ original funds ” means any money held by the trustees of the employee share ownership trust in a bank or building society account at midnight on 20th March 2000, and

b

any payment made by the trustees after that time (whether to acquire shares or otherwise) shall be treated as made out of original funds (and not out of money received after that time) until those funds are exhausted.

F613A

For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if it is made by way of exchange in circumstances mentioned in section 85(1) of the Capital Gains Tax Act 1979 or section 135(1) of the Taxation of Chargeable Gains Act 1992.

4

For the purposes of subsection (1)(b) above a transfer of securities is made on qualifying terms if—

a

all the securities transferred at the same time F62other than those transferred on a transfer such as is mentioned in subsection (4ZA) below are transferred on similar terms,

b

securities have been offered to all the persons who are beneficiaries under the terms of the trust deed F63by virtue of a rule which conforms with paragraph 4(2), (3) or (4) of Schedule 5 to this Act when the transfer is made, and

c

securities are transferred to all such F64persons who have accepted.

F654ZA

For the purposes of subsection (1)(b) above a transfer of securities is also made on qualifying terms if—

a

it is made to a person exercising a right to acquire shares, and

b

that right was obtained in accordance with the provisions of F257an SAYE option scheme within the meaning of the SAYE code (see section 516(4) of the Income Tax (Earnings and Pensions) Act 2003)—

i

which was established by, or by a company controlled by, the company which established the trust, and

ii

which is approved under F258Schedule 3 to that Act, and

c

that right is being exercised in accordance with the provisions of that scheme, and

d

the consideration for the transfer is payable to the trustees.

F664A

For the purposes of subsection (1)(c) above the qualifying period is—

a

seven years, in the case of trusts established on or before the day on which the Finance Act 1994 was passed;

b

twenty years, in the case of other trusts;

and for this purpose a trust is established when the deed under which it is established is executed.

5

For the purposes of subsection (1)(d) F67or (e) above each of the following is a qualifying purpose—

a

the acquisition of shares in the company which established the trust;

b

the repayment of sums borrowed;

c

the payment of interest on sums borrowed;

d

the payment of any sum to a person who is a beneficiary under the terms of the trust deed;

e

the meeting of expenses.

F685A

The period referred to in paragraph (e) of subsection (1) above is the period—

a

beginning with the qualifying transfer mentioned in that paragraph, and

b

ending nine months after the end of the period of account in which that qualifying transfer took place.

For this purpose the period of account means the period of account of the company that established the employee share ownership trust.

6

For the purposes of subsection (4) above, the fact that terms vary according to the levels of remuneration of beneficiaries, the length of their service, or similar factors, shall not be regarded as meaning that the terms are not similar.

7

In ascertaining for the purposes of this section whether particular securities are retained, securities acquired earlier by the trustees shall be treated as transferred by them before securities acquired by them later.

8

For the purposes of this section trustees—

a

acquire securities when they become entitled to them (subject to the exceptions in subsection (9) below);

b

transfer securities to another person when that other becomes entitled to them;

c

retain securities if they remain entitled to them.

9

The exceptions are these—

a

if securities are issued to trustees in exchange in circumstances mentioned in section F69135(1) of the Taxation of Chargeable Gains Act 1992, they shall be treated as having acquired them when they became entitled to the securities for which they are exchanged;

b

if trustees become entitled to securities as a result of a reorganisation, they shall be treated as having acquired them when they became entitled to the original shares which those securities represent (construing “reorganisation” and “original shares” in accordance with section F69126 of that Act).

10

If trustees agree to take a transfer of securities, for the purposes of this section they shall be treated as becoming entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement.

11

If trustees agree to transfer securities to another person, for the purposes of this section the other person shall be treated as becoming entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement.

12

For the purposes of this section the following are securities—

a

shares;

b

debentures.

70 Chargeable amounts. C13

1

This section has effect to determine the chargeable amount for the purposes of section 68 above.

2

If the chargeable event falls within section 69(1)(a), (b) or (c) above the following rules shall apply—

a

if the event constitutes a disposal of the securities by the trustees for the purposes of the F70Taxation of Chargeable Gains Act 1992, the chargeable amount is an amount equal to the sums allowable under section F7038(1)(a) and (b) of that Act;

b

if the event does not constitute such a disposal, the chargeable amount is an amount equal to the sums which would be so allowable had the trustees made a disposal of the securities for the purposes of that Act at the time the chargeable event occurs.

3

If the chargeable event falls within section 69(1)(d) above the chargeable amount is an amount equal to the sum concerned.

F714

If the chargeable event falls within section 69(1)(e) above the chargeable amount is an amount equal to—

a

the amount of the consideration received for the qualifying transfer mentioned in section 69(1)(e) above, less

b

the amount of any expenditure by the trustees for a qualifying purpose during the period mentioned in section 69(5A) above.

71 Further charges to tax: borrowing. C14

1

This section applies where—

a

a chargeable event (within the meaning of section 69 above) occurs in relation to the trustees of an employee share ownership trust,

b

at the time the event occurs anything is outstanding in respect of the principal of an amount or amounts borrowed at any time by the trustees, and

c

the chargeable event is one as regards which section 72(2)(b) below applies.

2

In the following provisions of this section—

a

“the initial chargeable event” means the event referred to in subsection (1)(a) above, and

b

“the total outstanding amount” means the total amount outstanding, at the time the initial chargeable event occurs, in respect of the principal of an amount or amounts borrowed at any time by the trustees.

3

If any of the total outstanding amount is repaid after the initial chargeable event occurs, a further chargeable event shall occur in relatio nto the trustees at the end of the year of assessment in which the repayment is made.

4

In such a case—

a

the trustees shall be treated as receiving, when the further event occurs, F290income of an amount that is equal to the chargeable amount,

F291b

that income shall be chargeable to income tax for the year of assessment at the end of which the further event occurs,

ba

the tax so chargeable shall be charged on the full amount of the income the trustees are treated as receiving in the year of assessment F304, and

bb

the trustees are liable for any tax so chargeable, F305...

F310c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

Subject to subsection (6) below, for the purposes of subsection (4) above the chargeable amount is an amount equal to the aggregate of the total outstanding amount repaid in the year of assessment.

6

In a case where section 72(2)(b) below had effect in the case of the initial chargeable event, for the purposes of subsection (4) above the chargeable amount is an amount equal to the smaller of—

a

the aggregate of the total outstanding amount repaid in the year of assessment, and

b

an amount found by applying the formula A-B-C.

7

For the purposes of subsection (6) above—

a

A is the amount which would be the chargeable amount for the initial chargeable event apart from section 72(2) below,

b

B is the chargeable amount for the initial chargeable event, and

c

C is the amount (if any) found under subsection (8) below.

8

If, before the further chargeable event occurs, one or more prior chargeable events have occurred in relation to the trustees by virtue of the prior repayment of any of the total outstanding amount found for the time the initial chargeable event occurs, the amount found under this subsection is an amount equal to the chargeable amount for the prior chargeable event or to the aggregate of the chargeable amounts for the prior chargeable events (as the case may be).

9

In a case where—

a

a chargeable event (within the meaning of section 69 above) occurs in relation to the trustees in circumstances mentioned in subsection (1) above,

b

a sum falls to be included in the total outstanding amount found for the time the event occurs,

c

another chargeable event (within the meaning of that section) occurs in relation to the trustees in circumstances mentioned in subsection (1) above, and

d

the same sum or a part of it would (apart from this subsection) fall to be included in the total outstanding amount found for the time the event occurs,

the sum or part (as the case may be) shall not be included in the total outstanding amount found for the time the other chargeable event occurs.

10

In ascertaining for the purposes of this section whether a repayment is in respect of a particular amount, amounts borrowed earlier shall be taken to be repaid before amounts borrowed later.

11

Subsections (3) to (7) of section 68 above shall apply where tax is assessed by virtue of this section as they apply where tax is assessed by virtue of that section.

72 Limit on chargeable amount. C15

1

For the purposes of this section each of the following is a chargeable event in relation to the trustees of an employee share ownership trust—

a

an event which is a chargeable event by virtue of section 69 above;

b

an event which is a chargeable event by virtue of section 71 above.

2

If a chargeable event (the event in question) occurs in relation to the trustees of an employee share ownership trust, the following rules shall apply—

a

the amount which would (apart from this subsection) be the chargeable amount for the event in question shall be aggregated, for the purposes of paragraph (b) below, with the chargeable amounts for other chargeable events(if any) occurring in relation to the trustees before the event in question,

b

if the amount which would (apart from this subsection) be the chargeable amount for the event in question (or the aggregate found under paragraph (a)above, if there is one) exceeds the deductible amount, the chargeable amount for the event in question shall be the amount it would be apart from this subsection less an amount equal to the excess, and

c

section 70(2) and (3) and section 71(5) above shall have effect subject to paragraph (b) above.

3

For the purposes of subsection (2) above the deductible amount (as regards the event in question) is an amount equal to the total of the sums falling within subsection (4) below.

4

A sum falls within this subsection if it has been received by the trustees before the occurrence of the event in question and—

a

it has been deducted as mentioned in section 67(2)(a) above, or treated as mentioned in section 67(2)(b) above, before the occurrence of that event, or

b

it would fall to be so deducted or treated if a claim for relief under section 67 above had been made immediately before the occurrence of that event.

Annotations:
Modifications etc. (not altering text)
C15

SeeFinance Act 1990 (c. 29) ss.31–40—.roll-over relief for disposal of assets to employeeshare ownership trusts

73 Information. C16

1

An inspector may by notice in writing require a return to be made by the trustees of an employee share ownership trust if they have at any time received a sum which has been deducted as mentioned in section 67(2)(a) above or treated as mentioned in section 67(2)(b) above.

2

Where he requires such a return to be made the inspector shall specify the information to be contained in it.

3

The information which may be specified is information the inspector needs for the purposes of sections 68 to 72 above, and may include information about—

a

sums received (including sums borrowed) by the trustees;

b

expenditure incurred by them;

c

assets acquired by them;

d

transfers of assets made by them.

4

The information which may be required under subsection (3)(a) above may include the persons from whom the sums were received.

5

The information which may be required under subsection (3)(b) above may include the purpose of the expenditure and the persons receiving any sums.

6

The information which may be specified under subsection (3)(c) above may include the persons from whom the assets were acquired and the consideration furnished by the trustees.

7

The information which may be included under subsection (3)(d) above may include the persons to whom assets were transferred and the consideration furnished by them.

8

In a case where a sum has been deducted as mentioned in section 67(2)(a)above, or treated as mentioned in section 67(2)(b) above, the inspector shall send to the trustees to whom the payment was made a certificate stating—

a

that a sum has been so deducted or so treated, and

b

what sum has been so deducted or so treated.

9

In the Table in section 98 of the M9Taxes Management Act1970 (penalties for failure to comply with notices etc.) at the end of the first column there shall be inserted— “ Section 73 of the Finance Act 1989 ”.

Annotations:
Modifications etc. (not altering text)
C16

SeeFinance Act 1990 (c. 29) ss.31–40—.roll-over relief for disposal of assets to employeeshare ownership trusts

Marginal Citations

74 Interpretation. C17

Schedule 5 to this Act shall have effect to determine whether, for the purposes of sections 67 to 73 above, a trust is at a particular time—

a

an employee share ownership trust;

b

a qualifying employee share ownership trust.

Annotations:
Modifications etc. (not altering text)
C17

SeeFinance Act 1990 (c. 29) ss.31–40—.roll-over relief for disposal of assets to employeeshare ownership trusts

Pensions etc.

F30175 Retirement benefits schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30176 Non-approved retirement benefits schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30177 Personal pension schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unit trusts etc.

78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F72

F7380. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

81 Offshore funds operating equalisation arrangements.

1

In section 758 of the Taxes Act 1988 (offshore funds operating equalisation arrangements) in subsection (6) (reference to section 78 of the M10 Capital Gains Tax Act 1979 not to include reference to it as applied by section 82) for the words “but not” there shall be substituted the words “and a reference to section 78”.

2

This section shall apply where a conversion of securities occurs on or after 14th March 1989; and “conversion of securities” here has the same meaning as in section 82 of the Capital Gains Tax Act 1979.

Life assurance

F41082 Calculation of profits: bonuses etc

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41182ACalculation of profits: policy holders' tax

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41282BUnappropriated surplus on valuation

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34182CRelevant financial reinsurance contracts

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42682DTreatment of profits: life assurance — adjustment consequent on change in Insurance Prudential Sourcebook

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42682ESection 82D: treatment of transferors under insurance business transfer schemes

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42682FSection 82D: treatment of transferees under insurance business transfer schemes

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F413 83 Receipts to be F269taken into account.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41683XAStructural assets

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41783YAChanges in value of assets brought into account: non-profit companies

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41883YBMeaning of “appropriate line 51 amount” for purposes of s.83YA

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42783YCFAFTS: charge in relevant period of account

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42783YDFAFTS: deduction in subsequent periods of account

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42783YERegulations: apportionment and redefining “financial reinsurance arrangement”

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42783YFFinancial reinsurance arrangements: further provision

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34483ZAContingent loans

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F414 83A Meaning of “brought into account”.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41583BChanges in recognised accounts: attribution of amounts carried forward under s.432F of Taxes Act 1988

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34283AA Amounts added to long term insurance fund of a company in excess of that company’s loss.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34383AB Treatment of surplus where there is a subsequent transfer of business from the company etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84 Interpretation of sections 85 to 89 and further provisions about insurance companies.

F2701

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3292

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3303

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4194

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3315

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3326

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42085 Charge of certain receipts of basic life assurance business.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42185AExcess adjusted F349life assurance trade profits

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42286 Spreading of relief for acquisition expenses.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F33487 Management expenses.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42388 Corporation tax: policy holders’ F333share of profits.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F27188A Lower corporation tax rate on certain insurance company profits.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F424 89 Policy holders’ share of profits.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F31389A Modification of sections 82 to 83A, 88 and 89 in relation to overseas life insurance companies.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34590 Life policies etc. held by companies.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F33590AInterpretation

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Underwriters

91 Premiums trust funds: stock lending.

1

In section 725 of the Taxes Act 1988 (Lloyd’s underwriters) the following subsections shall be inserted after subsection (9)—

10

Subsection (11) below applies where the following state of affairs exists at the beginning of 1st January of any year or the end of 31st December of any year—

a

securities have been transferred by the trustees of a premiums trust fund in pursuance of an arrangement mentioned in section 129(1) or (2),

b

the transfer was made to enable another person to fulfil a contract or to make a transfer,

c

securities have not been transferred in return, and

d

section 129(3) applies to the transfer made by the trustees.

11

The securities transferred by the trustees shall be treated for the purposes of subsections (1) to (6) above as if they formed part of the premiums trust fund at the beginning of 1st January concerned or the end of 31st December concerned (as the case may be).

F742

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

This section applies where the transfer by the trustees of a premiums trust fund is made after the date specified as mentioned in section 129(6) of the Taxes Act 1988.

92 Regulations about underwriters etc.

1

In section 451(1A) of the Taxes Act 1988 (regulations about underwriters)for the words from “with respect to” to the end there shall be substituted the words “with respect to any year or years of assessment; and the year (or any of the years) may be the one in which the regulations are made or any year falling before or after that year.”

2

The following subsection shall be inserted after section 451(1A) of that Act—

1B

But the regulations may not make provision with respect to any year of assessment which precedes the next but one preceding the year of assessment in which the regulations are made.

F753

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F764

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F765

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F766

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F767

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Securities

F7793. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7894. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

96 Securities: miscellaneous.

1

In section 452(8) of the Taxes Act 1988 (special reserve funds) for the words from “In paragraph (a) above” to the end there shall be substituted—

In paragraph (a) above “income” includes—

a

annual profits or gains chargeable to tax by virtue of section 714(2) or716(3),

b

amounts treated as income chargeable to tax by virtue of paragraph 4 of Schedule 4, and

c

amounts treated as income chargeable to tax by virtue of paragraph 5 of Schedule 11 to the Finance Act 1989.

F3182

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F803

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

The new paragraphs (b) and (c) inserted by subsection (1) above, F319... shall apply—

a

in the case of a deep discount security, where there is a disposal (within the meaning of Schedule 4 to the Taxes Act 1988) on or after 14th March 1989;

b

in the case of a deep gain security, where there is a transfer within the meaning of Schedule 11 to this Act, or a redemption, on or after 14th March1989.

Groups of companies

97F81 Set-off of ACT where companies remain in the same group.

1

In section 240 of the Taxes Act 1988 (set-off of company’s ACT against subsidiary’s liability to corporation tax) at the end of subsection (5)(set-off not to be made against subsidiary’s liability to corporation tax for any accounting period in which, or in any part of which, it was not a subsidiary of the surrendering company) there shall be added the words “unless throughout that period or part both companies were subsidiaries of a third company”.

2

This section shall have effect in relation to accounting periods ending on or after 14th March 1989.

98F82 Restriction on set-off of ACT.

1

After section 245 of the Taxes Act 1988 there shall be inserted—

245A Restriction on application of section 240 in certain circumstances.

1

This section applies if—

a

there is a change in the ownership of a company (“the relevant company”);

b

by virtue of section 240 the relevant company is treated as having paid an amount of advance corporation tax in respect of a distribution made by it at any time before the change; and

c

within the period of six years beginning three years before the change, there is a major change in the nature or conduct of a trade or business of the company which is for the purposes of section 240 the surrendering company in relation to that amount.

2

No advance corporation tax which the relevant company is treated by virtue of section 240 as having paid in respect of a distribution made by it in anaccounting period beginning before the change of ownership shall be treatedunder section 239(4) as paid by it in respect of distributions made in an accounting period ending after the change of ownership; and this subsection shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods.

3

Subsections (4) and (5) of section 245 shall apply also for the purposes of this section and as if the reference in subsection (4) of section 245 to the period of three years mentioned in subsection (1)(a) of that section were a reference to the period mentioned in subsection (1)(c) above.

4

Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax.

245B Restriction on set-off where asset transferred after change in ownership of company.

1

Subsection (4) below applies if—

a

there is a change in the ownership of a company (“the relevant company”);

b

any advance corporation tax paid by the relevant company in respect of distributions made by it in an accounting period beginning before the change is treated under section 239(4) as paid by it in respect of distributions made by it in an accounting period ending after the change;

c

after the change the relevant company acquires an asset from another company in such circumstances that section 273(1) of the Taxes Act 1970applies to the acquisition; and

d

a chargeable gain accrues to the relevant company on the disposal of the asset within the period of three years beginning with the change of ownership.

2

Subsection (1)(b) above shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods.

3

For the purposes of subsection (1)(d) above an asset acquired by the relevant company as mentioned in subsection (1)(c) above shall be treated as the same as an asset owned at a later time by that company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion.

4

In relation to the accounting period in which the chargeable gain accrues to the relevant company (“the relevant period”), section 239 shall have effect as if the limit imposed by subsection (2) of that section on the amount of advance corporation tax to be set against the relevant company’s liability to corporation tax were reduced by whichever is the lesser of—

a

the amount of advance corporation tax that would have been payable (apart from section 241) in respect of a distribution made at the end of the relevant period of an amount which, together with the advance corporation tax so payable in respect of it, is equal to the chargeable gain, and

b

the amount of surplus advance corporation tax in relation to the accounting period which by virtue of subsection (2) above is treated for the purposes of subsection (1)(b) above as ending with the change of ownership.

5

Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax.

2

This section shall have effect where the change in the ownership of the relevant company occurs on or after 14th March 1989.

F8399. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F380100 Change in ownership of company.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F381101 Treatment of convertible shares or securities for purposes relating togroup relief etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F382102 Surrender of company tax refund etc. within group.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Close companies

103 Repeal of apportionment provisions.

1

Except as provided by subsection (2) below, Chapter III of Part XI of theTaxes Act 1988 (apportionment of undistributed income etc. of close companies)shall not have effect in relation to accounting periods beginning after 31stMarch 1989.

2

Section 427(4) of the Taxes Act 1988 (which gives relief to an individualwhere income apportioned to him in an earlier accounting period of a closecompany is included in a distribution received by him in a later accountingperiod), and section 427(5) of, and Part I of Schedule 19 to, that Act so faras they relate to section 427(4), shall continue to have effect in any casewhere the subsequent distribution referred to in section 427(4) is made before1st April 1992.

F383104 Meaning of “close company”.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F384105 Small companies’ rate not available to certain close companies.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

106F84 Restriction on payment of tax credits.

1

In section 231 of the Taxes Act 1988 (tax credits for certain recipientsof qualifying distributions) in subsection (3) after the words “made and”there shall be inserted the words “subject to subsections (3A) to (3D)below” and after that subsection there shall be inserted—

3A

Subject to subsection (3B) below, where it appears to the inspector that,in any accounting period of a company at the end of which it is a closeinvestment-holding company—

a

arrangements relating to the distribution of the profits of the companyexist or have existed the main purpose of which or one of the main purposesof which is to enable payments, or payments of a greater amount, to be madeto any one or more individuals under subsection (3) above in respect of suchan excess as is mentioned in that subsection, and

b

by virtue of those arrangements, any eligible person—

i

receives a qualifying distribution consisting of a payment made by thecompany on the redemption, repayment or purchase of its own shares, or

ii

receives any other qualifying distribution in respect of shares in orsecurities of the company, where the amount or value of the distribution isgreater than might in all the circumstances have been expected but for thearrangements,

the entitlement of the eligible person to have paid to him undersubsection (3) above all or part of a tax credit in respect of anydistribution made by the company in the period shall be restricted to suchextent as appears to the inspector to be just and reasonable.

3B

Subsection (3A) above does not apply in relation to a tax credit inrespect of a dividend paid by a company in any accounting period in respectof its ordinary share capital if—

a

throughout the period, the company’s ordinary share capital consisted ofonly one class of shares, and

b

no person waived his entitlement to any dividend which would have becomepayable by the company in the period or failed to receive any dividend whichhad become due and payable to him by the company in the period.

3C

In subsection (3A) above—

  • “arrangements” means arrangements of any kind whether inwriting or not,

  • “close investment-holding company” has the meaning given bysection 13A, and

  • “eligible person”, in relation to a qualifying distribution,means an individual resident in the United Kingdom who would (apart fromsubsection (3A) above) be entitled to have paid to him under subsection (3)above all or part of a tax credit in respect of the distribution.

3D

In determining under subsection (3) above whether a person is entitled tohave any excess of tax credit paid to him in a case where subsection (3A)above applies, tax credits shall be set against income tax in the order thatresults in the greatest payment in respect of the excess.

2

This section shall have effect in relation to distributions made bycompanies in accounting periods beginning after 31st March 1989.

107 Close companies: consequential amendments.

Schedule 12 to this Act (in which Part I contains administrativeprovisions relating to close companies and Part II makes amendments connectedwith section 103 above) shall have effect.

Settlements etc.

F85108. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

109 Settlements where settlor retains interest in settled property.

F861

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F862

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F863

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2924

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F311110 Residence of trustees.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111 Residence of personal representatives.

F3141

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3142

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3143

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In section 824(9) of the Taxes Act 1988 (repayment supplements), for the words from “or, in” to “section 701)” there shall be substituted the words “or personal representatives (within the meaning of section 111 of the Finance Act 1989)”.

5

F316... this section shall apply for the year 1989-90 and subsequent years of assessment.

F3156

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3157

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3158

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

F293112 Security: trades etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F294113 Security: trades etc. (supplementary).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F350114 Relief for pre-trading expenditure.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115 Double taxation: tax credits.

1

Where any arrangements F385which have effect under section 2(1) of the Taxation (International and Other Provisions) Act 2010 provide —

a

for persons who are resident outside the United Kingdom and who receive distributions from companies resident in the United Kingdom to be entitled totax credits, and

b

for the amount paid to such a person by way of tax credit to be determined by reference to the amount to which an individual resident in the United Kingdom would have been entitled, subject to a deduction calculated by reference to the aggregate of the amount or value of the distribution and the amount of the tax credit paid,

the arrangements shall be construed as providing for that deduction to be calculated by reference to the gross amount or value of the distribution and tax credit, without any allowance for the deduction itself.

2

This section shall have effect in relation to payments made before the passing of this Act as well as those made after that time, except that it shall not affect—

a

the judgment of any court given before 25th October 1988, or

b

the law to be applied in proceedings on appeal to the Court of Appeal or the House of Lords where the judgment of the High Court or the Court of Session which is in issue was given before that date.

F87116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II Capital Allowances

117–120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F88

F89121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III Capital Gains

Exemptions

F90122. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123 Increase of chattel exemption.

1

In the following enactments, namely—

F91a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F374b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c

section 25(7) of that Act (information about assets disposed of),

for “£3,000”, in each place where it occurs, there shall besubstituted “£6,000”.

2

This section applies to disposals on or after 6th April 1989 andaccordingly, in relation to subsection (1)(b) above, to assets acquired on orafter that date.

Gifts

F92124. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F93125. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-residents etc.

F94126. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F95127. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F96128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F98130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F99131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F100132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F101133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F102134. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value shifting and groups of companies

F103135. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F104136. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F105137. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F106138. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

F107139. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F108140. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F109141. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV Management

Information

142 Power to call for documents and information.

1

Section 20 of the M11 Taxes Management Act 1970 (power tocall for documents of taxpayer and others) shall be amended in accordance withsubsections (2) to (8) below.

F3512

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3523

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3534

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

Subsections (4) and (5) shall be omitted.

6

In subsection (6)—

F354a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

the words “and in relation” onwards shall be omitted.

F3557

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3568

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3579

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

This section shall apply with respect to notices given on or after the day on which this Act is passed.

143 Power to call for papers of tax accountant.

1

In section 20A of the M12 Taxes Management Act 1970 (powerto call for papers of tax accountant) for the lasr sentence of subsection (1)there shall be substituted—

1A

The reference to documents in subsection (1) above does not include—

a

personal records (as defined in section 12 of the Police and Criminal Evidence Act 1984), or

b

journalistic material (as defined in section 13 of that Act).

1B

Subject to subsection (1A) above, the reference to documents in subsection(1) above is to those specified or described in the notice in question;and—

a

the notice shall require documents to be delivered within such time (whichshall not be less than thirty days after the date of the notice) as may bespecified in the notice; and

b

the inspector may take copies of them or of extracts from them.

2

This section shall apply with respect to notices given on or after the dayon which this Act is passed.

144 Restrictions on powers under TMA ss.20 and 20A.

1

Section 20B of the M13 Taxes Management Act 1970(restrictions on powers under sections 20 and 20A) shall be amended as follows.

2

In subsection (1), after the word “question” there shall be inserted the words “, or to furnish the particulars in question”.

F3583

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In subsection (2), after the words “deliver documents”, in the first place where they occur, there shall be inserted the words “or furnish particulars”.

F3595

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

In subsection (7), the words from “to a person” to “daughter”shall be omitted.

F3607

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

This section shall apply with respect to notices given on or after the day on which this Act is passed.

145 Falsification etc. of documents.

1

After section 20B of the M14Taxes Management Act 1970there shall be inserted—

20BB Falsification etc. of documents.

1

Subject to subsections (2) to (4) below, a person shall be guilty of anoffence if he intentionally falsifies, conceals, destroys or otherwisedisposes of, or causes or permits the falsification, concealment, destructionor disposal of, a document which—

a

he has been required by a notice under section 20 or 20A above, or

b

he has been given an opportunity in accordance with section 20B(1) above,

to deliver, or to deliver or make available for inspection.

2

A person does not commit an offence under subsection (1) above if heacts—

a

with the written permission of a General or Special Commissioner, theinspector or an officer of the Board,

b

after the document has been delivered or, in a case within section 20(3)or (8A) above, inspected, or

c

after a copy has been delivered in accordance with section 20B(4) or (14)above and the original has been inspected.

3

A person does not commit an offence under subsection (1)(a) above if heacts after the end of the period of two years beginning with the date on whichthe notice is given, unless before the end of that period the inspector or anofficer of the Board has notified the person in writing that the notice hasnot been complied with to his satisfaction.

4

A person does not commit an offence under subsection (1) (b) above if heacts—

a

after the end of the period of six months beginning with the date on whichan opportunity to deliver the document was given, or

b

after an application for consent to a notice being given in relation tothe document has been refused.

5

A person guilty of an offence under subsection (1) above shall beliable—

a

on summary conviction, to a fine not exceeding the statutory maximum;

b

on conviction on indictment, to imprisonment for a term not exceeding twoyears or to a fine or to both.

2

This section shall apply to any falsification, concealment, destructionor disposal of a document occurring on or after the day on which this Act ispassed.

F338146 Entry with warrant to obtain documents.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F339147 Procedure where documents etc. are removed.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

148 Interpretation.

1

Section 20D of the M15Taxes Management Act 1970 shall beamended as follows.

2

In subsection (2), for the words “of returns or accounts to be made ordelivered by the other” there shall be substituted the words “or deliveryof any information, return, accounts or other document which he knows will be,or is or are likely to be, used”.

3

For subsection (3) there shall be substituted—

3

Without prejudice to section 127 of the Finance Act1988, in sections 20 to 20CC above “document” has, subject to sections 20(8C) and 20A(1A), thesame meaning as it has—

a

in relation to England and Wales, in Part I of the Civil Evidence Act 1968,

b

in relation to Scotland, in Part III of the Law Reform(Miscellaneous Provisions) (Scotland) Act 1968, and

c

in relation to Northern Ireland, in Part I of the Civil Evidence Act (Northern Ireland) 1971.

F3404

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assessments, claims etc.

149 Assessments founded on fraudulent or negligent conduct.

1

The following section shall be substituted for section 36 of the Taxes Management Act 1970—

36 Fraudulent or negligent conduct.

1

An assessment on any person (in this section referred to as “the person in default”) for the purpose of making good to the Crown a loss of tax attributable to his fraudulent or negligent conduct or the fraudulent or negligent conduct of a person acting on his behalf may be made at any time not later than twenty years after the end of the chargeable period to which the assessment relates.

2

Where the person in default is an individual who carried on a trade or profession in partnership with another individual, or with other persons at least one of whom is an individual, at any time in the year for which the assessment is made, an assessment in respect of the profits or gains of the trade or profession for the purpose mentioned in subsection (1) above may be made not only on the person in default but also on his partner or, as the case may be, on any of his partners who is an individual.

3

If the person on whom the assessment is made so requires, in determining the amount of the tax to be charged for any chargeable period in any assessment made for the purpose mentioned in subsection (1) above, effect shall be given to any relief or allowance to which he would have been entitled for that chargeable period on a claim or application made within the time allowed by the Taxes Acts.

2

Sections 37 to 39 (special provisions as to “neglect”) and section41 (leave required for certain assessments) of the Taxes Management Act 1970shall cease to have effect.

3

The words “section 36” shall be substituted—

a

for the words “sections 36, 37 and 39” in section 30(6) of the M16Taxes Management Act 1970 (tax repaid in error etc.),

b

for the words “sections 37 to 39” in section 118(3) of that Act (effect under law of Scotland of assessment in partnership name),

F110c

for the words “sections 36 and 39” in paragraph 10(1) of Schedule 13to the Taxes Act 1988 (assessments to advance corporation tax), and

F320d

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

The words “ fraudulent or negligent conduct ” shall be substituted—

a

for the words “fraud, wilful default or neglect” in—

F386i

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387ii

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

iii

paragraph 9 of Schedule 16A to the M17Finance Act 1973and of Schedule 19A to the Taxes Act 1988 (Lloyd’s), and

F321b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

In section 105 of the Taxes Management Act 1970 (admissibility of evidence), for the words “fraud or default” and the words “fraud or wilful default” there shall be substituted the words “fraudulent conduct”.

6

In paragraph 9 of Schedule 16A to the Finance Act 1973 and of Schedule 19Ato the Taxes Act 1988, for “37, 40 and 41” there shall be substituted “and 40”.

7

Nothing in this section shall affect the making of assessments—

a

for years of assessment before the year 1983-84, or

b

for accounting periods which ended before 1st April 1983.

150 Further assessments: claims etc.

1

The following sections shall be inserted after section 43 of the TaxesManagement Act 1970—

43A Further assessments: claims etc.

1

This section applies where—

a

by virtue of section 29(3) of this Act an assessment is made on any personfor a chargeable period, and

b

the assessment is not made for the purpose of making good to the Crown anyloss of tax attributable to his fraudulent or negligent conduct or thefraudulent or negligent conduct of a person acting on his behalf.

2

Without prejudice to section 43(2) above but subject to section 43B below,where this section applies—

a

any relevant claim, election, application or notice which could have beenmade or given within the time allowed by the Taxes Acts may be made or givenat any time within one year from the end of the chargeable period in which theassessment is made, and

b

any relevant claim, election, application or notice previously made orgiven may at any such time be revoked or varied—

i

in the same manner as it was made or given, and

ii

by or with the consent of the same person or persons who made, gave orconsented to it (or, in the case of any such person who has died, by or withthe consent of his personal representatives),

except where by virtue of any enactment it is irrevocable.

3

For the purposes of this section and section 43B below, a claim, election,application or notice is relevant in relation to an assessment for achargeable period if—

a

it relates to that chargeable period or is made or given by reference toan event occurring in that chargeable period, and

b

it or, as the case may be, its revocation or variation has or could havethe effect of reducing any of the liabilities mentioned in subsection (4)below.

4

The liabilities referred to in subsection (3) above are—

a

the increased liability to tax resulting from the assessment,

b

any other liability to tax of the person concerned for—

i

the chargeable period to which the assessment relates, or

ii

any chargeable period which follows that chargeable period and ends notlater than one year after the end of the chargeable period in which theassessment is made.

5

Where a claim, election, application or notice is made, given, revoked orvaried by virtue of subsection (2) above, all such adjustments shall be made,whether by way of discharge or repayment of tax or the making of assessmentsor otherwise, as are required to take account of the effect of the taking ofthat action on any person’s liability to tax for any chargeable period.

6

The provisions of this Act relating to appeals against decisions on claimsshall apply with any necessary modifications to a decision on the revocationor variation of a claim by virtue of subsection (2) above.

43B Limits on application of section 43A.

1

If the effect of the exercise by any person of a power conferred bysection 43A(2) above—

a

to make or give a claim, election, application or notice, or

b

to revoke or vary a claim, election, application or notice previously madeor given,

would be to alter the liability to tax of another person, that power maynot be exercised except with the consent in writing of that other person or,where he has died, his personal representatives.

2

Where—

a

a power conferred by subsection (2) of section 43A above is exercised inconsequence of an assessment made on a person, and

b

the exercise of the power increases the liability to tax of anotherperson,

that section shall not apply by reason of any assessment made because ofthat increased liability.

3

In any case where—

a

one or more relevant claims, elections, applications or notices are made,given, revoked or varied by virtue of the application of section 43A above inthe case of an assessment, and

b

the total of the reductions in liability to tax which, apart from thissubsection, would result from the action mentioned in paragraph (a) abovewould exceed the additional liability to tax resulting from the assessment,

the excess shall not be available to reduce any liability to tax.

4

Where subsection (3) above has the effect of limiting either the reductionin a person’s liability to tax for more than one period or the reduction inthe liability to tax of more than one person, the limited amount shall beapportioned between the periods or persons concerned—

a

except where paragraph (b) below applies, in such manner as may bespecified by the inspector by notice in writing to the person or personsconcerned, or

b

where the person concerned gives (or the persons concerned jointly give)notice in writing to the inspector within the relevant period, in such manneras may be specified in the notice given by the person or persons concerned.

5

For the purposes of paragraph (b) of subsection (4) above the relevantperiod is the period of 30 days beginning with the day on which notice underparagraph (a) of that subsection is given to the person concerned or, wheremore than one person is concerned, the latest date on which such notice isgiven to any of them.

2

This section shall apply in relation to any assessment notice of which isissued on or after the day on which this Act is passed.

F388151 Assessment of trustees etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Distress and poinding etc.

152 Distress for non-payment of tax.

1

Section 61 of the M18Taxes Management Act 1970 (distress)shall be amended as follows.

2

In subsection (1), for the words “the collector shall” onwards thereshall be substituted the words “the collector may distrain upon the goods and chattels of the personcharged (in this section referred to as “the person indefault”).”

3

In subsection (2), for the words from “a collector” to “Commissioners” there shall be substituted the words “a justice of thepeace, on being satisfied by information on oath that there is reasonableground for believing that a person is neglecting or refusing to pay a sumcharged, may issue a warrant in writing authorising a collector to”.

4

In subsection (4), for the words “neglecting or refusing to pay”there shall be substituted the words “in default”.

5

In subsection (5)—

a

for the word “aforesaid” there shall be substituted the words “indefault”,

b

the words “within the said five days” shall be omitted,

c

for the words from “two or more inhabitants of the parish” to “sufficient persons” there shall be substituted the words “one or moreindependent persons appointed by the collector”, and

d

the words from “The costs” to “the collector, and” shall beomitted.

6

The following subsection shall be added after that subsection—

6

The Treasury may by regulations make provision with respect to—

a

the fees chargeable on or in connection with the levying of distress, and

b

the costs and charges recoverable where distress has been levied;

and any such regulations shall be made by statutory instrument whichshall be subject to annulment in pursuance of a resolution of the House ofCommons.

7

This section shall come into force on such day as the Treasury may byorder made by statutory instrument appoint.

153 Priority in cases of distraint by others.

1

Section 62 of the M19Taxes Management Act 1970 (priorityof claim for tax) shall be amended as follows.

2

In subsection (1)—

a

for the words from the beginning to “shall be” there shall besubstituted the words “If at any time at which any goods or chattelsbelonging to any person (in this section referred to as “the personin default”) are”,

b

for the word “unless” there shall be substituted the words “theperson in default is in arrears in respect of any such sums as are referredto in subsection (1A) below, the goods or chattels may not be so taken unlesson demand made by the collector”, and

c

for the words “arrears of tax” onwards there shall be substituted thewords “such sums as have fallen due at or before the date of seizure.”

3

The following subsection shall be inserted after that subsection—

1A

The sums referred to in subsection (1) above are—

a

sums due from the person in default on account of deductions of income taxfrom emoluments paid during the period of twelve months next before the dateof seizure, being deductions which the person in default was liable to makeunder section 203 of the principal Act (pay as you earn) less the amount ofthe repayments of income tax which he was liable to make during that period;and

b

sums due from the person in default in respect of deductions required tobe made by him for that period under section 559 of the principal Act(sub-contractors in the construction industry).

4

In subsection (2)—

a

for the words from the beginning to “the collector shall” there shallbe substituted the words “If the sums referred to in subsection (1) aboveare not paid within ten days of the date of the demand referred to in thatsubsection, the collector may”,

b

for the words “shall proceed” there shall be substituted the words “may proceed”, and

c

for the words “the tax charged and claimed” there shall besubstituted the words “those sums”.

154 Recovery of tax from debtor in Scotland.

1

Section 63 of the M20Taxes Management Act 1970 (recoveryof tax in Scotland) shall be amended as follows.

2

In subsection (3), for the words “which relates to” onwards thereshall be substituted the words

insofar as it relates to sums due in respect of—

a

deductions of income tax which any person specified in the application wasliable to make under section 203 of the principal Act (pay as you earn); or

b

deductions required to be made under section 559 of the principal Act(sub-contractors in the construction industry) by any person specified in theapplication.

3

The following subsection shall be added after that subsection—

4

In this section references to amounts of tax due and references to sumsdue in respect of deductions include references to amounts which are deemedto be—

a

amounts of tax which the person is liable to pay by virtue of the Income Tax (Employments) Regulations 1973; or

b

amounts which the person is liable to pay by virtue of the Income Tax(Sub-Contractors in the Construction Industry)Regulations 1975.

155 Priority in cases of poinding etc. by others in Scotland.

1

Section 64 of the Taxes Management Act 1970 (priority of claim for tax inScotland) shall be amended as follows.

2

In subsection (1)—

a

for the words from the beginning to “shall be” there shall besubstituted the words “If at any time at which any moveable goods andeffects belonging to any person (in this section referred to as “theperson in default”) are”,

b

for the word “unless” there shall be substituted the words “theperson in default is in arrears in respect of any such sums as are referredto in subsection (1A) below, the goods and effects may not be so taken unlesson demand made by the collector”, and

c

for the words “the tax so in arrear” onwards there shall besubstituted the words “such sums as have fallen due at or before the dateof poinding or, as the case may be, other diligence or assignation.”

3

The following subsection shall be inserted after that subsection—

1A

The sums referred to in subsection (1) above are—

a

sums due from the person in default on account of deductions of income taxfrom emoluments paid during the period of twelve months next before the dateof poinding, being deductions which the person in default was liable to makeunder section 203 of the principal Act (pay as you earn) less the amount ofthe repayments of income tax which he was liable to make during that period;and

b

sums due from the person in default in respect of deductions required tobe made by him for that period under section 559 of the principal Act(sub-contractors in the construction industry).

4

In subsection (2)—

a

for the words from the beginning to “the tax claimed shall” thereshall be substituted the words “If the sums referred to in subsection (1)above are not paid within ten days of the date of the demand referred to inthat subsection, the sums shall”, and

b

for the words “proceeding at his instance” there shall be substitutedthe word “proceedings”.

Interest etc.

156 Interest on overdue tax.

1

In section 86 of the M21Taxes Management Act 1970, forsubsection (3) and the words in subsection (4) preceding the Table there shallbe substituted—

3

For the purposes of this section—

a

the reckonable date in relation to any tax charged by an assessment toincome tax under Schedule E, and

b

subject to subsection (3A) below, the reckonable date in relation to taxcharged by any other assessment to which this section applies,

is the date on which the tax becomes due and payable.

3A

Where an appeal has been made against an assessment and any of the taxcharged by the assessment is due and payable on a date later than the dategiven by the Table in subsection (4) below, the reckonable date in relationto the tax so due and payable is the later of—

a

the date given by that Table, and

b

the date on which the tax would have been due and payable if there hadbeen no appeal against the assessment (assuming in a case where the tax wouldnot have been charged by the assessment if there had been no appeal that itwas so charged).

4

The Table referred to in subsection (3A) above is asfollows—

2

In section 55 of that Act—

a

in subsection (2), for the words “it were” onwards there shall besubstituted the words “there had been no appeal.”,

b

in subsection (6), for paragraphs (a) and (b) there shall besubstituted—

a

in the case of a determination made on an application under subsection (3)above, other than an application made by virtue of subsection (3A) above, thedate on which any tax the payment of which is not so postponed is due andpayable shall be determined as if the tax were charged by an assessment noticeof which was issued on the date of that determination and against which therehad been no appeal; and

b

in the case of a determination made on an application under subsection (4)above—

i

the date on which any tax the payment of which ceases to be so postponedis due and payable shall be determined as if the tax were charged by anassessment notice of which was issued on the date of that determination andagainst which there had been no appeal; and

ii

any tax overpaid shall be repaid.

c

for subsection (9) there shall be substituted—

9

On the determination of the appeal—

a

the date on which any tax payable in accordance with that determinationis due and payable shall, so far as it is tax the payment of which had beenpostponed, or which would not have been charged by the assessment if there hadbeen no appeal, be determined as if the tax were charged by anassessment—

i

notice of which was issued on the date on which the inspector issues tothe appellant a notice of the total amount payable in accordance with thedetermination, and

ii

against which there had been no appeal; and

b

any tax overpaid shall be repaid.

3

In section 56(9) of that Act, for the words “amount of” there shallbe substituted the words “amount charged by”.

4

This section shall apply to tax charged by any assessment notice of whichis issued after 30th July 1982.

157 Effect of certain claims on interest.

1

In relation to any tax charged by an assessment made under section 252(1)of the Taxes Act 1988 to recover corporation tax that becomes payable as aresult of the making of a claim under section 240 of that Act, the reckonabledate for the purposes of section 86 of the M22Taxes ManagementAct 1970 (in this section referred to as “section 86”) is the date which is given by paragraph 5 ofthe Table in subsection (4) of that section.

2

Subsections (3) and (4) below apply in any case where—

a

there is in any accounting period of a company (in this section referredto as “the later period”) an amount of surplus advance corporationtax, as defined in subsection (3) of section 239 of the Taxes Act 1988, and

b

pursuant to a claim under the said subsection (3), the whole or any partof that amount is treated for the purposes of the said section 239 asdischarging liability for an amount of corporation tax for an earlieraccounting period (in this section referred to as “the earlier period”), and

c

if the claim under the said subsection (3) had not been made—

i

an amount of corporation tax assessed for the earlier period would carryinterest in accordance with section 86, or

ii

an assessment could have been made under section 252(1) of that Act torecover corporation tax for the earlier period.

3

In determining the amount of interest payable under section 86 oncorporation tax unpaid for the earlier period, no account shall be taken ofany reduction in the amount of that tax which results from section 239(3) ofthe Taxes Act 1988 except so far as concerns interest for any time after theday following the expiry of nine months from the end of the later period.

4

Where, but for the claim under section 239(3) of the Taxes Act 1988, anassessment could have been made under section 252(1) of that Act to recovercorporation tax for the earlier period, interest under section 86 shall bechargeable, in relation to any time not later than the day referred to insubsection (3) above, as if the claim had not been made and such an assessmenthad been made.

5

In relation to interest charged under section 86 by virtue of subsection(4) above, section 69 of the M23Taxes Management Act 1970shall have effect with the substitution for the words following paragraph (c)of the words “as if it were tax charged and due and payable under anassessment”.

6

In this section—

a

subsection (1) above shall have effect where the claim under 240 of theTaxes Act 1988 is made on or after 14th March 1989, and

b

subsections (2) to (5) above shall have effect where the claim undersection 239(3) of that Act is made on or after that date,

but this section shall not have effect in relation to corporation tax forany accounting period ending after the day which is the appointed day for thepurposes of section 85 of the M24Finance (No.2) Act 1987.

158 Small amounts of interest.

1

In the Taxes Management Act 1970—

a

section 86(6) (remission of interest payable on overdue income tax,capital gains tax or corporation tax where interest would not exceed£30), and

b

section 87(4) (no interest payable on overdue advance corporation tax orincome tax on company payments where interest would not exceed £30),

shall cease to have effect.

2

The words “of not less than £25” in—

a

[F111section 283(1) of the M25Taxation of Chargeable Gains Act 1992] (norepayment supplement where overdue repayment of capital gains tax less than£25), and

b

section 824(1)(a) and (b) and (5) of the Taxes Act 1988 (no repaymentsupplement where overdue repayment of income tax etc. less than £25),

and the words “of not less than £100” in section 825(2) of theTaxes Act 1988 (no repayment supplement where overdue repayment of company taxless than £100) shall cease to have effect.

3

Paragraph (a) of subsection (1) above shall have effect—

a

in relation to income tax under Schedule E, where the demand for the taxis made on or after the appointed day, and

b

in any other case, where the tax is charged by an assessment notice ofwhich is issued on or after the appointed day.

4

Paragraph (b) of that subsection shall have effect where the tax ischarged by an assessment relating to an accounting period beginning on orafter the appointed day.

5

Subsection (2) above shall have effect in relation to repayments of taxmade on or after the appointed day.

6

In this section “the appointed day” means such day as theTreasury may by order made by statutory instrument appoint; and different daysmay be appointed for different enactments or for different purposes of thesame enactment.

159F112 Interest on tax in case of failure or error.

1

Section 88 of the M26Taxes Management Act 1970 (intereston tax recovered to make good loss due to taxpayer’s fault) shall be amendedas follows.

2

In subsection (1), for the words “the fraud, wilful default or neglectof any person” there shall be substituted the words—

a

a failure to give a notice, make a return or produce or furnish a documentor other information required by or under the Taxes Acts, or

b

an error in any information, return, accounts or other document deliveredto an inspector or other officer of the Board,

3

The following subsection shall be added at the end—

7

In paragraph (a) of subsection (1) above the reference to a failure to dosomething includes, in relation to anything required to be done at aparticular time or within a particular period, a reference to a failure to doit at that time or within that period; and, accordingly, section 118(2) ofthis Act shall not apply for the purposes of that paragraph.

4

This section shall have effect in relation to failures occurring, anderrors in any information or documents delivered, on or after the day on whichthis Act is passed.

160 Determinations under TMA s. 88.

F1131

In subsection (1) of section 88 of the Taxes Management Act 1970, for thewords “shall carry” there shall be substituted the words “shall, if aninspector or the Board so determine, carry”.

F1132

The following section shall be inserted after that section—

88A Determinations under section 88.

1

Notice of a determination under section 88 above shall be served on theperson liable to pay the interest to which it relates and shall specify—

a

the date on which it is issued,

b

the amount of the tax which carries interest and the assessment by whichthat tax was charged,

c

the date when for the purposes of section 88 above that tax ought to havebeen paid, and

d

the time within which an appeal against the determination may be made.

2

After the notice of a determination under section 88 above has been servedthe determination shall not be altered except in accordance with this section.

3

A determination under section 88 above may be made at any time—

a

within six years after the end of the chargeable period for which the taxcarrying the interest is charged (or, in the case of development land tax, ofthe financial year in which the liability for that tax arose), or

b

within three years after the date of the final determination of the amountof that tax.

4

An appeal may be brought against a determination under section 88 aboveand, subject to the following provisions of this section, the provisions ofthis Act relating to appeals shall have effect in relation to an appealagainst such a determination as they have effect in relation to an appealagainst an assessment to tax.

5

On an appeal against a determination under section 88 above section 50(6)to (8) of this Act shall not apply but the Commissioners may—

a

if it appears to them that the tax carries no interest under that section,set the determination aside,

b

if the determination appears to them to be correct, confirm thedetermination, or

c

if the determination appears to them to be incorrect as to the amount oftax or the date on which the tax ought to have been paid, revise thedetermination accordingly.

3

In section 70 (certificates) of the M27Taxes ManagementAct 1970, for subsection (3) there shall be substituted—

3

A certificate of the inspector or any other officer of the Board that ithas been determined that tax carries interest under section 88 of this Act,together with a certificate of the collector that payment of the interest hasnot been made to him, or, to the best of his knowledge and belief, to anyother collector, or to any person acting on his behalf or on behalf of anothercollector, shall be sufficient evidence—

a

that interest is chargeable on the tax from the date when for the purposesof section 88 of this Act the tax ought to have been paid, and

b

that the sum mentioned in the certificate is unpaid and is due to theCrown;

and any document purporting to be such a certificate as is mentioned inthis subsection shall be deemed to be such a certificate unless the contraryis proved.

F1134

In section 113 of that Act (form of documents), the following subsectionshall be inserted after subsection (1B)—

1C

Where an officer of the Board has decided that an amount of tax carriesinterest under section 88 of this Act and has taken the decisions needed forarriving at the date when for the purposes of that section that tax ought tohave been paid, he may entrust to any other officer of the Boardresponsibility for completing the determination procedure, whether by meansinvolving the use of a computer or otherwise, including responsibility forserving notice of the determination on the person liable to the interest.

5

In section 114 of that Act (want of form not to invalidate), after theword “assessment”, in each place where it occurs, there shall be insertedthe words “or determination”.

F1146

In paragraph 5 of Schedule 3 to that Act (rules for assigning proceedingsto Commissioners), the following entry shall be inserted in the first columnafter the entry relating to an appeal against an assessment to capital gainstax— “ An appeal against a determination under section 88 of this Act. ”

161F115 Tax carrying interest under TMA ss. 86 and 88.

The following subsection shall be substituted for section 88(3) of the M28Taxes Management Act 1970—

3

Where it is finally determined that any tax carries interest under thissection, the tax shall carry no interest under section 86 or 86A above (and,accordingly, any interest under either of those sections which has been paidbefore the final determination shall be set off against the amount of theinterest under this section); and for the purposes of this subsection adetermination that tax carries interest is not final until it can no longerbe varied, whether by any Commissioners on appeal or by the order of anycourt.

Penalties

162 Failure to make return.

1

Section 93 of the Taxes Management Act 1970 (failure to comply with noticeto make return for income tax or capital gains tax) shall be amended asfollows.

2

In subsection (1) (initial and daily penalties), for paragraphs (a) and(b) there shall be substituted—

a

to a penalty not exceeding £300, and

b

if the failure continues after a penalty is imposed under paragraph (a)above, to a further penalty or penalties not exceeding £60 for each dayon which the failure continues after the day on which the penalty underparagraph (a) above was imposed (but excluding any day for which a penaltyunder this paragraph has already been imposed).

3

The following subsection shall be substituted for subsection (2)—

2

If a failure by a person to comply with a notice such as is referred toin subsection (1) above continues after the end of the year of assessmentfollowing that during which it was served then, without prejudice to anypenalty under subsection (1) above, he shall be liable to a penalty of anamount not exceeding so much of the tax with which he is charged (whether forone or for more than one year of assessment) in assessments—

a

based wholly or partly on any income or chargeable gains that ought tohave been included in the return required by the notice, and

b

made after the end of the year next following the year of assessment inwhich the notice was served,

as is attributable to the income or chargeable gains that ought to havebeen so included.

4

The following subsection shall be substituted for subsection (5)—

5

No penalty shall be imposed under subsection (1) above in respect of afailure at any time after the failure has been remedied.

5

The following subsection shall be substituted for subsection (7)—

7

If the person on whom a notice is served proves that there was no incomeor chargeable gain to be included in the return, the penalty under thissection shall not exceed £100.

6

This section shall apply in relation to any failure to comply with anotice served on or after 6th April 1989.

163 Incorrect return, accounts etc.

1

In—

F336a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

section 96(1) of that Act (incorrect return etc. for corporation tax),

for the words “the aggregate” onwards there shall be substituted thewords “the amount of the difference specified in subsection (2) below.”

2

This section shall apply in relation to returns, statements, declarationsor accounts delivered, made or submitted on or after the day on which this Actis passed.

164 Special returns, information etc.

1

Section 98 of the Taxes Management Act 1970 (special returns, information etc.) shall be amended as follows.

2

In subsection (1) (initial and daily penalties)—

a

for the word “Where” there shall be substituted the words “Subject to section 98A below, where”, and

b

for the words “subsection (3)” onwards there shall be substituted the words

subsections (3) and (4) below—

i

to a penalty not exceeding £300, and

ii

if the failure continues after a penalty is imposed under paragraph (i)above, to a further penalty or penalties not exceeding £60 for each dayon which the failure continues after the day on which the penalty under paragraph (i) above was imposed (but excluding any day for which a penalty under this paragraph has already been imposed).

3

In subsection (2) (maximum penalty for information given fraudulently or negligently)—

a

for the word “Where” there shall be substituted the words “Subject to section 98A below, where”, and

b

for the words “ £250, or, in the case of fraud, £500”there shall be substituted “ £3,000”.

4

The following subsections shall be substituted for subsection (3)—

3

No penalty shall be imposed under subsection (1) above in respect of a failure within paragraph (a) of that subsection at any time after the failure has been remedied.

4

No penalty shall be imposed under paragraph (ii) of subsection (1) above in respect of a failure within paragraph (b) of that subsection at any time after the failure has been remedied.

5

In the Table—

a

in the first column, in the entry relating to Part III of the M29Taxes Management Act 1970, the words “, except sections 16 and 24(2)” shall be omitted;

F389b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c

the entry relating to section 481(5)(k) of that Act shall be omitted from the first column and an entry relating to section 482(2) of that Act shall be inserted at the appropriate place in the second column.

6

In consequence of the amendment made by subsection (5)(a) above section16(6) of the Taxes Management Act 1970 shall cease to have effect.

7

This section shall apply in relation to—

a

any failure to comply with a notice or to furnish information, give a certificate or produce a document or record beginning on or after the day on which this Act is passed, and

b

the furnishing, giving, producing or making of any incorrect information, certificate, document, record or declaration on or after that day.

165 Special penalties in the case of certain returns.

1

The following section shall be inserted after section 98 of the TaxesManagement Act 1970—

98A Special penalties in the case of certain returns.

1

Regulations under section 203(2) (PAYE) or 566(1) (sub-contractors) of theprincipal Act may provide that this section shall apply in relation to anyspecified provision of the regulations.

2

Where this section applies in relation to a provision of regulations, anyperson who fails to make a return in accordance with the provision shall beliable—

a

to a penalty or penalties of the relevant monthly amount for each month(or part of a month) during which the failure continues, but excluding anymonth after the twelfth or for which a penalty under this paragraph hasalready been imposed, and

b

if the failure continues beyond twelve months, without prejudice to anypenalty under paragraph (a) above, to a penalty not exceeding so much of theamount payable by him in accordance with the regulations for the year ofassessment to which the return relates as remained unpaid at the end of 19thApril after the end of that year.

3

For the purposes of subsection (2)(a) above, the relevant monthly amountin the case of a failure to make a return—

a

where the number of persons in respect of whom particulars should beincluded in the return is fifty or less, is £100, and

b

where that number is greater than fifty, is £100 for each fifty suchpersons and an additional £100 where that number is not a multiple offifty.

4

Where this section applies in relation to a provision of regulations, anyperson who fraudulently or negligently makes an incorrect return of a kindmentioned in the provision shall be liable to a penalty not exceeding thedifference between—

a

the amount payable by him in accordance with the regulations for the yearof assessment to which the return relates, and

b

the amount which would have been so payable if the return had beencorrect.

F1162

In relation to a failure to make a return beginning before such day as theTreasury may by order made by statutory instrument appoint, section 98A(2)shall have effect with the substitution of the following paragraph forparagraph (a)—

a

to—

i

a penalty not exceeding twelve times the relevant monthly amount, and

ii

if the failure continues after a penalty is imposed under sub-paragraph(i) above, a further penalty or penalties of the relevant monthly amount foreach month (or part of a month) during which the failure continues, butexcluding any month after the twelfth or for which a penalty under thissub-paragraph has already been imposed,

166 Assisting in preparation of incorrect return etc.

1

The following section shall be substituted for section 99 of the M30Taxes Management Act 1970—

99 Assisting in preparation of incorrect return etc.

Any person who assists in or induces the preparation or delivery of anyinformation, return, accounts or other document which—

a

he knows will be, or is or are likely to be, used for any purpose of tax,and

b

he knows to be incorrect,

shall be liable to a penalty not exceeding £3,000.

2

This section shall apply in relation to assistance and inducementsoccurring on or after the day on which this Act is passed.

Annotations:
Marginal Citations
M30

1970c. 9.

167 Determination of penalties.

The following sections shall be substituted for section 100 of the M31Taxes Management Act 1970—

100 Determination of penalties by officer of Board.

1

Subject to subsection (2) below and except where proceedings for a penaltyhave been instituted under section 100D below or a penalty has been imposedby the Commissioners under section 53 of this Act, an officer of the Boardauthorised by the Board for the purposes of this section may make adetermination imposing a penalty under any provision of the Taxes Acts andsetting it at such amount as, in his opinion, is correct or appropriate.

2

Subsection (1) above does not apply where the penalty is a penaltyunder—

a

section 93(1) above as it has effect before the amendments made by section162 of the Finance Act 1989 or section 93(1)(a) above as it has effect afterthose amendments,

b

section 94(1) above as it has effect before the substitution made bysection 83 of the Finance (No.2) Act 1987,

c

section 98(1) above as it has effect before the amendments made by section164 of the Finance Act 1989 or section 98(1)(i) above as it has effect afterthose amendments, or

d

paragraph (a)(i) of section 98A(2) above as it has effect by virtue ofsection 165(2) of the Finance Act 1989.

3

Notice of a determination of a penalty under this section shall be servedon the person liable to the penalty and shall state the date on which it isissued and the time within which an appeal against the determination may bemade.

4

After the notice of a determination under this section has been served thedetermination shall not be altered except in accordance with this section oron appeal.

5

If it is discovered by an officer of the Board authorised by the Board forthe purposes of this section that the amount of a penalty determined underthis section is or has become insufficient the officer may make adetermination in a further amount so that the penalty is set at the amountwhich, in his opinion, is correct or appropriate.

6

In any case where—

a

a determination under this section is of a penalty under section 94(6)above, and

b

after the determination has been made it is discovered by an officer ofthe Board authorised by the Board for the purposes of this section that theamount which was taken into account as the relevant amount of tax is or hasbecome excessive,

the determination shall be revised so that the penalty is set at theamount which is correct; and, where more than the correct amount has alreadybeen paid, the appropriate amount shall be repaid.

100A Provisions supplementary to section 100.

1

Where a person who has incurred a penalty has died, a determination undersection 100 above which could have been made in relation to him may be madein relation to his personal representatives, and any penalty imposed onpersonal representatives by virtue of this subsection shall be a debt due fromand payable out of his estate.

2

A penalty determined under section 100 above shall be due and payable atthe end of the period of thirty days beginning with the date of the issue ofthe notice of determination.

3

A penalty determined under section 100 above shall for all purposes betreated as if it were tax charged in an assessment and due and payable.

100B Appeals against penalty determinations.

1

An appeal may be brought against the determination of a penalty undersection 100 above and, subject to the following provisions of this section,the provisions of this Act relating to appeals shall have effect in relationto an appeal against such a determination as they have effect in relation toan appeal against an assessment to tax.

2

On an appeal against the determination of a penalty under section 100above section 50(6) to (8) of this Act shall not apply but—

a

in the case of a penalty which is required to be of a particular amount,the Commissioners may—

i

if it appears to them that no penalty has been incurred, set thedetermination aside,

ii

if the amount determined appears to them to be correct, confirm thedetermination, or

iii

if the amount determined appears to them to be incorrect, increase orreduce it to the correct amount,

b

in the case of any other penalty, the Commissioners may—

i

if it appears to them that no penalty has been incurred, set thedetermination aside,

ii

if the amount determined appears to them to be appropriate, confirm thedetermination,

iii

if the amount determined appears to them to be excessive, reduce it tosuch other amount (including nil) as they consider appropriate, or

iv

if the amount determined appears to them to be insufficient, increase itto such amount not exceeding the permitted maximum as they considerappropriate.

3

Without prejudice to section 56 of this Act, an appeal from a decision ofthe Commissioners against the amount of a penalty which has been determinedunder section 100 above or this section shall lie, at the instance of theperson liable to the penalty, to the High Court or, in Scotland, to the Courtof Session as the Court of Exchequer in Scotland; and on that appeal the courtshall have the like jurisdiction as is conferred on the Commissioners byvirtue of this section.

100C Penalty proceedings before Commissioners.

1

An officer of the Board authorised by the Board for the purposes of thissection may commence proceedings before the General or Special Commissionersfor any penalty to which subsection (1) of section 100 above does not applyby virtue of subsection (2) of that section.

2

Proceedings under this section shall be by way of information in writing,made to the Commissioners, and upon summons issued by them to the defendant(or defender) to appear before them at a time and place stated in the summons;and they shall hear and decide each case in a summary way.

3

Any penalty determined by the Commissioners in proceedings under thissection shall for all purposes be treated as if it were tax charged in anassessment and due and payable.

4

An appeal against the determination of a penalty in proceedings under thissection shall lie to the High Court or, in Scotland, the Court of Session asthe Court of Exchequer in Scotland—

a

by any party on a question of law, and

b

by the defendant (or, in Scotland, the defender) against the amount of thepenalty.

5

On any such appeal the court may—

a

if it appears that no penalty has been incurred, set the determinationaside,

b

if the amount determined appears to be appropriate, confirm thedetermination,

c

if the amount determined appears to be excessive, reduce it to such otheramount (including nil) as the court considers appropriate, or

d

if the amount determined appears to be insufficient, increase it to suchamount not exceeding the permitted maximum as the court considers appropriate.

100D Penalty proceedings before court.

1

Where in the opinion of the Board the liability of any person for apenalty arises by reason of the fraud of that or any other person, proceedingsfor the penalty may be instituted before the High Court or, in Scotland, theCourt of Session as the Court of Exchequer in Scotland.

2

Proceedings under this section which are not instituted (in England, Walesor Northern Ireland) under the Crown Proceedings Act 1947by and in the name of the Board as an authorised department for the purposesof that Act shall be instituted—

a

in England and Wales, in the name of the Attorney General,

b

in Scotland, in the name of the Lord Advocate, and

c

in Northern Ireland, in the name of the Attorney General for NorthernIreland.

3

Any proceedings under this section instituted in England and Wales shallbe deemed to be civil proceedings by the Crown within the meaning of Part IIof the Crown Proceedings Act 1947 and any such proceedings instituted inNorthern Ireland shall be deemed to be civil proceedings within the meaningof that Part of that Act as for the time being in force in Northern Ireland.

4

If in proceedings under this section the court does not find that fraudis proved but consider that the person concerned is nevertheless liable to apenalty, the court may determine a penalty notwithstanding that, but for theopinion of the Board as to fraud, the penalty would not have been a matter forthe court.

168 Amendments consequential on section 167.

1

In consequence of the amendment made by section 167 above the M32Taxes Management Act 1970 shall be amended in accordance withsubsections (2) to (8) below.

2

In section 20A (power to call for papers of tax accountant)—

a

in subsection (1), for the words “awarded against him a penalty incurredby” there shall be substituted the words “a penalty imposed on”,

b

in subsection (2), for the word “award” in the first place where itoccurs there shall be substituted the word “penalty” and for that wordin the second place where it occurs there shall be substituted the word “imposition”, and

c

in subsection (4), for the words “award against” there shall besubstituted the words “imposition on” and for the word “award” thereshall be substituted the word “penalty”.

F1173

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In section 102 (mitigation of penalties), for the words “recoverythereof” there shall be substituted the words “a penalty”.

5

In section 105 (evidence)—

a

the following paragraph shall be substituted for paragraph (a) ofsubsection (1)—

a

pecuniary settlements may be accepted instead of a penalty beingdetermined, or proceedings being instituted, in relation to any tax,

b

in paragraph (b) of subsection (2), for the words “sum” onwards thereshall be substituted the words “tax due from him”, and

c

after that paragraph there shall be inserted the words

and

c

any proceedings for a penalty or on appeal against the determination ofa penalty.

6

In section 112 (loss of documents etc.), the following subsection shallbe added at the end—

3

The references in subsection (1) above to assessments to tax includereferences to determinations of penalties; and in its application to suchdeterminations the proviso to that subsection shall have effect with theappropriate modifications.

7

In section 113 (form of documents)—

a

the following subsection shall be inserted after subsection (1C)—

1D

Where an officer of the Board has decided to impose a penalty undersection 100 of this Act and has taken all other decisions needed for arrivingat the amount of the penalty, he may entrust to any other officer of the Boardresponsibility for completing the determination procedure, whether by meansinvolving the use of a computer or otherwise, including responsibility forserving notice of the determination on the person liable to the penalty.

b

in subsection (3)—

i

after the words “Every assessment,” there shall be inserted the words “determination of a penalty,”,

ii

after the words “notice of assessment” there shall be inserted thewords “, of determination”, and

iii

after the words “levying tax” there shall be inserted the words “ordetermining a penalty”.

F1188

In paragraph 5 of Schedule 3 (rules for assigning proceedings toCommissioners), for the words “section 100(4)” there shall be substitutedthe words “section 100C or an appeal under section 100B against thedetermination of a penalty”.

9

In section 41 of the M33Development Land Tax Act 1976(administration of development land tax) the following subsection shall beinserted after subsection (1)—

1A

Nothing in sections 167 to 169 of the Finance Act 1989 shall apply topenalties relating to development land tax.

169 Time limits.

1

The following section shall be substituted for section 103 of the M34Taxes Management Act 1970—

103 Time limits for penalties.

1

Subject to subsection (2) below, where the amount of a penalty is to beascertained by reference to tax payable by a person for any period, thepenalty may be determined by an officer of the Board, or proceedings for thepenalty may be commenced before the Commissioners or a court—

a

at any time within six years after the date on which the penalty wasincurred, or

b

at any later time within three years after the final determination of theamount of tax by reference to which the amount of the penalty is to beascertained.

2

Where the tax was payable by a person who has died, and the determinationwould be made in relation to his personal representatives, subsection (1)(b)above does not apply if the tax was charged in an assessment made later thansix years after the end of the chargeable period for which it was charged.

3

A penalty under section 99 of this Act may be determined by an officer ofthe Board, or proceedings for such a penalty may be commenced before a court,at any time within twenty years after the date on which the penalty wasincurred.

4

A penalty to which neither subsection (1) nor subsection (3) above appliesmay be so determined, or proceedings for such a penalty may be commencedbefore the Commissioners or a court, at any time within six years after thedate on which the penalty was incurred or began to be incurred.

2

The amendment made by subsection (1) above shall not affect theapplication of section 103(4) of the M35Taxes Management Act1970 to proceedings under section 100 of that Act as it has effect before theamendment made by section 167 above.

Annotations:
Marginal Citations
M34

1970c. 9.

170 Up-rating of certain penalties.

F1191

In section 23(8) of the Taxes Act 1988 (maximum penalty for agents failing to make certain payments on behalf of principals), for “£50” there shall be substituted “£300”.

F1202

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3253

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In—

F306a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F306b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c

section 658(5) of that Act (maximum penalty for false statements or representations relating to purchased life annuities),

for “£500” there shall be substituted “£3,000”.

5

In paragraph 2(4) of Schedule 19A to that Act and Schedule 16A to the M36Finance Act 1973 (maximum penalty for incorrect return byLloyd’s agent), for the words “£500 in the case of fraud and £250 in the case of negligence” there shall be substituted “£3,000”.

6

This section shall apply in relation to things done or omitted on or after the day on which this Act is passed.

Part III Miscellaneous and General

Inheritance tax

171 Gifts to housing associations.

1

The following section shall be inserted in the M37Inheritance Tax Act 1984 after section 24—

24A Gifts to housing associations.

1

A transfer of value is exempt to the extent that the value transferred byit is attributable to land in the United Kingdom given to a registered housingassociation.

2

In subsection (1) above “registered housing association”means a registered housing association within the meaning of the Housing Associations Act 1985 or Part VII of the Housing (Northern Ireland) Order 1981.

3

Subsections (2) to (5) of section 23 and subsection (4) of section 24above shall apply in relation to subsection (1) above as they apply inrelation to section 24(1).

2

In section 23(5) of the Inheritance Tax Act 1984 the words “or, where it is land, of a body mentioned in section 24Abelow” shall be added at the end.

3

In section 29(5) of that Act—

a

the words “or, where it is land, of a body mentioned in section24A” shall be inserted at the end of paragraph (b), and

b

after “24(3) and (4),” there shall be inserted “24A(3),”.

4

In section 161(2)(b)(ii) of that Act after “24,” there shall beinserted “24A,”.

5

In section 102(5) of the M38Finance Act 1986 afterparagraph (e) there shall be inserted—

ee

section 24A (gifts to housing associations);

6

This section shall apply to transfers of value made on or after 14th March1989.

172 Abatement of exemption where claim settled out of beneficiary’s ownresources.

1

The following section shall be inserted after section 29 of the M39Inheritance Tax Act 1984—

29A Abatement of exemption where claim settled out of beneficiary’s ownresources.

1

This section applies where—

a

apart from this section the transfer of value made on the death of anyperson is an exempt transfer to the extent that the value transferred by itis attributable to an exempt gift, and

b

the exempt beneficiary, in settlement of the whole or part of any claimagainst the deceased’s estate, effects a disposition of property not derivedfrom the transfer.

2

The provisions of this Act shall have effect in relation to the transferas if—

a

so much of the relevant value as is equal to the following amount, namelythe amount by which the value of the exempt beneficiary’s estate immediatelyafter the disposition is less than it would be but for the disposition, or

b

where that amount exceeds the relevant value, the whole of the relevantvalue,

were attributable to such a gift to the exempt beneficiary as ismentioned in subsection (3) below (instead of being attributable to a giftwith respect to which the transfer is exempt).

3

The gift referred to in subsection (2) above is a specific gift withrespect to which the transfer is chargeable, being a gift which satisfies theconditions set out in paragraphs (a) and (b) of section 38(1) below.

4

In determining the value of the exempt beneficiary’s estate for thepurposes of subsection (2) above—

a

no deduction shall be made in respect of the claim referred to insubsection (1)(b) above, and

b

where the disposition referred to in that provision constitutes a transferof value—

i

no account shall be taken of any liability of the beneficiary for any taxon the value transferred, and

ii

sections 104 and 116 below shall be disregarded.

5

Subsection (1)(b) above does not apply in relation to any claim againstthe deceased’s estate in respect of so much of any liability as is, inaccordance with this Act, to be taken into account in determining the valueof the estate.

6

In this section—

  • “exempt gift”, in relation to a transfer of value fallingwithin subsection (1)(a) above, means—

a

a gift with respect to which the transfer is (apart from this section)exempt by virtue of the provisions of any of sections 18 and 23 to 28 above,or

b

where (apart from this section) the transfer is so exempt with respect toa gift up to a limit, so much of the gift as is within that limit;

  • “the exempt beneficiary”, in relation to an exempt gift,means any of the following, namely—

a

where the gift is exempt by virtue of section 18 above, the deceased’sspouse,

b

where the gift is exempt by virtue of section 23 above, any person orbody—

i

whose property the property falling within subsection (1) of that sectionbecomes, or

ii

by whom that property is held on trust for charitable purposes,

c

where the gift is exempt by virtue of section 24, 25 or 26 above, any bodywhose property the property falling within subsection (1) of that sectionbecomes,

d

where the gift is exempt by virtue of section 24A above, any body to whomthe land falling within subsection (1) of that section is given, and

e

where the gift is exempt by virtue of section 27 or 28 above, the trusteesof any settlement in which the property falling within subsection (1) of thatsection becomes comprised;

  • “gift” and “specific gift” have the samemeaning as in Chapter III of this Part; and

  • “the relevant value”, in relation to a transfer of valuefalling within subsection (1)(a) above, means so much of the value transferredby the transfer as is attributable to the gift referred to in that provision.

2

This section shall have effect in relation to deaths occurring on or afterthe day on which this Act is passed.

Annotations:
Marginal Citations
M39

1984c. 51.

Stamp duty etc.

173F121 Insurance: abolition of certain duties.

1

Stamp duty shall not be chargeable under—

a

the heading “Policy of Life Insurance” in Schedule 1 tothe M40Stamp Act 1891, or

b

paragraph (3) of the heading “Bond, Covenant, or Instrument of any kindwhatsoever” in that Schedule (superannuation annuities).

2

Subject to section 4 of the Stamp Act 1891 (separate charges oninstruments containing or relating to several distinct matters) an instrumentwhich, but for subsection (1) above, would be chargeable with stamp duty underparagraph (3) of the heading mentioned in paragraph (b) of that subsectionshall not be chargeable with stamp duty under any other provision of the StampAct 1891.

3

Section 100 of the Stamp Act 1891 (penalty for not making out policy ormaking policy not duly stamped) shall cease to have effect.

4

Section 118 of the Stamp Act 1891 (assignment of life insurance policy tobe stamped before payment of money assured) shall cease to have effect.

5

Section 47(3) of the M41Finance Act 1966 (enhanced dutywhere policy not exceeding 2 years is varied so as to exceed 2 years) andsection 5(3) of the M42Finance Act (Northern Ireland)1966 (equivalent provision for Northern Ireland) shall cease to have effect.

6

Subsections (1) and (2) above apply to instruments made after 31stDecember 1989.

7

So far as it relates to section 100(1) of the 1891 Act, subsection (3)above applies where a person receives, or takes credit for, a premium orconsideration for insurance after 30th November 1989.

8

So far as it relates to section 100(2) of the 1891 Act, subsection (3)above applies where the policy is made after 31st December 1989.

9

Subsection (4) above applies to instruments of assignment made after 31stDecember 1989.

10

Subsection (5) above applies where the policy is varied after 31stDecember 1989 (whenever it was made).

174Unit trusts.

F122. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations:
Amendments (Textual)
F122

S. 174 repealed (with effect as mentioned in Sch. 20 Pt. V(5) notes 1, 2 of the amending Act) by Finance Act 1999 (c. 16) s. 139, {Sch. 20 Pt. V(5)}

175Stamp duty: stock exchange nominees

1

The Treasury may by regulations provide that where —

a

circumstances would (apart from the regulations) give rise to a charge to stamp duty under F123Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) and to a charge to stamp duty reserve tax,

b

the circumstances involve a stock exchange nominee, and

c

the circumstances are such as are prescribed,

the charge to stamp duty shall be treated as not arising.

2

The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

3

In this section —

a

“prescribed” means prescribed by the regulations, and

b

“stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 [1976 c. 40.] as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section.

176Stamp duty reserve tax: stock exchange nominees

1

The Treasury may by regulations provide that where —

a

circumstances would (apart from the regulations) give rise to two charges to stamp duty reserve tax,

b

the circumstances involve a stock exchange nominee, and

c

the circumstances are such as are prescribed,

such one of the charges as may be prescribed shall be treated as not arising.

2

The Treasury may by regulations provide that where —

a

circumstances would (apart from the regulations) give rise to a charge to stamp duty reserve tax and a charge to stamp duty,

b

the circumstances involve a stock exchange nominee, and

c

the circumstances are such as are prescribed,

the charge to stamp duty reserve tax shall be treated as not arising.

3

The Treasury may by regulations provide that a provision of an Act by virtue of which there is no charge to stamp duty reserve tax shall also apply in circumstances which involve a stock exchange nominee and are such as are prescribed.

4

The Treasury may by regulations provide that a provision of an Act by virtue of which the rate at which stamp duty reserve tax is charged is less than it would be apart from the provision shall also apply in circumstances which involve a stock exchange nominee and are such as are prescribed.

5

The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

6

In this section —

a

“prescribed” means prescribed by the regulations, and

b

“stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 [1976 c. 40.] as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section.

177Stamp duty reserve tax: information.

— Regulations under section 98(1) of the Finance Act 1986 [1986 c. 41.] (administration etc. of stamp duty reserve tax) may include —

a

provision that notice which the regulations require to be given to the Commissioners of Inland Revenue shall be given in a manner or form specified by the Commissioners;

b

provision that information which the regulations require to be supplied to the Commissioners shall be supplied in a manner or form specified by the Commissioners.

Interest etc.

C18C51C50C55C54178 Setting of rates of interest.

C191

The rate of interest applicable for the purposes of an enactment to which this section applies shall be the rate which for the purposes of that enactment is provided for by regulations made by the Treasury under this section.

2

This section applies to—

F124aa

section 15A of the Stamp Act 1891;

a

section 8(9) of the M43Finance Act 1894,

b

section 18 of the M44Finance Act 1896,

c

section 61(5) of the M45Finance (1909-10) Act 1910,

d

section 17(3) of the M46Law of Property Act 1925,

F272e

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f

F125sections F402... 86, 86A, 87, 87A, F12688, 103A of the M47Taxes Management Act 1970,

g

paragraph 3 of Schedule 16A to the M48Finance Act 1973,

F370ga

section 48(1) of the Finance Act 1975,

F127gg

F128paragraph 6 of Schedule 1 to the Social Security Contributions and Benefits Act 1992,

F129gh

section 71(8A) of the M49 Social Security Administration Act 1992, and section 69(8A) of the M50 Social Security Administration (Northern Ireland) Act 1992, as they have effect in any case where the overpayment was made in respect of working families’ tax credit or disabled person’s tax credit;

h

paragraphs 15 and 16 of Schedule 2, and paragraph 8 of Schedule 5, to the M51Oil Taxation Act 1975,

F130i

section 283 of the M52Taxation of Chargeable Gains Act 1992;

j

paragraph 59 of Schedule 8 to the M53Development Land Tax Act 1976,

k

sections 233F371, 235(1) and 236(3) and (4) of the M54Inheritance Tax Act 1984,

l

section 92 of the Finance Act 1986, and

m

sections F131. . . F246... 824, 825 and 826 of, F132and paragraph 6B of Schedule 3 to and paragraph 3 of Schedule 19A to, the M55Taxes Act 1988. F133and

F134n

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F135and

o

section 14(4) of the Ports Act 1991.

F136p

paragraph 8 of Schedule 4 to the Tax Credits Act 1999., F247...

F137F245q

section 110 of the Finance Act 1999.

F138q

paragraph 8 of Schedule 1 to the Employment Act 2002.

F139r

paragraph 8 of Schedule I to the Employment (Northern Ireland) Order 2002.F244, and

s

Chapter 7 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003.

F268t

sections 87, 88 and 89 of the Finance Act 2003.

3

Regulations under this section may—

a

make different provision for different enactments or for different purposes of the same enactment,

b

either themselves specify a rate of interest for the purposes of an enactment or make provision for any such rate to be determined by reference to such rate or the average of such rates as may be referred to in the regulations,

c

provide for rates to be reduced below, or increased above, what they otherwise would be by specified amounts or by reference to specified formulae,

d

provide for rates arrived at by reference to averages to be rounded up or down,

e

provide for circumstances in which alteration of a rate of interest is or is not to take place, and

f

provide that alterations of rates are to have effect for periods beginning on or after a day determined in accordance with the regulations in relation to interest running from before that day as well as from or from after that day.

4

The power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

F3725

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3906

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C207

Subsection (1) shall have effect for periods beginning on or after such day as the Treasury may by order made by statutory instrument appoint and shall have effect in relation to interest running from before that day as well as from or from after that day; and different days may be appointed for different enactments.

179 Provisions consequential on section 178.

1

The words “rate applicable under section 178 of the Finance Act 1989”shall be substituted—

a

for the words from “rate” to “annum” in—

i

section 18(1) of the M56 Finance Act 1896,

ii

section 61(5) of the M57 Finance (1909-10) Act 1910,

iii

section 17(3) of the M58 Law of Property Act 1925,

F273iv

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

v

paragraphs 15(1) and 16 of Schedule 2, and paragraph 8(4) of Schedule 5,to the M59 Oil Taxation Act 1975,

F140vi

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

vii

sections 824(1) and 825(2) of the Taxes Act 1988,

b

for the words“ prescribed rate” in—

i

sections 86(1), 86A(1), 87(1), 87A(1) and (5) F141and 88(1) of the M60 Taxes Management Act 1970,

ii

paragraph 3(4) of Schedule 16A to the M61 Finance Act1973, and

iii

paragraph 3(4) of Schedule 19A to the Taxes Act 1988,

c

for the words “rate which” onwards in—

i

paragraph 59(1) of Schedule 8 to the M62 Development LandTax Act 1976, and

ii

section 826(1) of the Taxes Act 1988,

d

for the words “rate applicable under subsection (2) below” in section233(1) of the M63 Inheritance Tax Act 1984,

e

for the words “rate for the time being applicable under section233(2)(b) above” in subsection (3), and the words “rate for the timebeing applicable under section 233(2)(a) above” in subsection (4), ofsection 236 of that Act,

f

for the words “appropriate rate” in section 92(2) of the M64 Finance Act 1986, and

F248g

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

In section 8(9) of the M65 Finance Act 1894, for thewords from “such interest” to “per cent.” there shall be substitutedthe words “interest at such rate not exceeding that applicable under section178 of the Finance Act 1989”.

3

In section 236(4) of the Inheritance Tax Act 1984, for the words “as ifsection 233(1)(b) above had applied” there shall be substituted the words “from the end of the period mentioned in section 233(1)(b) above”.

4

Any amendment made by subsection (1), (2) or (3) above shall have effect in relation to any period for which section 178(1) above has effect for thepurposes of the enactment concerned.

F2495

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

180 Repayment interest: period of accrual.

1

In section 48(1) of the M66 Finance Act 1975, after thewords “carry interest” there shall be inserted the words “from the dateon which the sums were paid until the order for repayment is issued”.

2

In—

a

paragraph 16 of Schedule 2 to the M67 Oil Taxation Act1975,

b

section 105(7) of the M68 Finance Act 1980,

c

paragraph 13(4) and (5) of Schedule 16 to the M69 FinanceAct 1981, and

d

paragraph 10(4) of Schedule 19 to the M70 Finance Act1982,

for the word “repayment” there shall be substituted the words “theorder for repayment is issued”.

3

In paragraph 59(1) of Schedule 8 to the M71 DevelopmentLand Tax Act 1976, after the word “later,” there shall be inserted thewords “until the order for repayment is issued”.

4

In section 235(1) of the M72 Inheritance Tax Act 1984(and paragraph 19(3) of Schedule 4 to the M73 Finance Act1975), after the word “made” there shall be inserted the words “untilthe order for repayment is issued”.

5

In section 92(2) of the M74 Finance Act 1986, for thewords “the time it was paid” there shall be substituted the words “thedate on which the payment was made until the order for repayment isissued”.

6

In section 826(1) of the Taxes Act 1988, for the words “that repaymentor payment is made” there shall be substituted the words “the order forrepayment or payment is issued”.

7

The amendments made by this section shall be deemed always to have hadeffect.

Miscellaneous

F142181 Broadcasting: additional payments by programme contractors.

1

M75The Broadcasting Act 1981 shall have effect withrespect to additional payments payable by programme contractors under that Actsubject to the amendments made by Part I, and with the substitution, forSchedule 4 to that Act, of the provisions contained in Part II, of Schedule16 to this Act.

2

The transitional provisions made by Part III of that Schedule shall haveeffect.

3

This section shall come into force on 1st January 1990.

C21C47C46182 Disclosure of information.

1

A person who discloses any information which he holds or has held in the exercise of tax functionsF233, tax credit functionsF281, child trust fund functionsF143or social security functions is guilty of an offence if it is information about any matter relevant, for the purposes of F144any of those functions—.

a

to tax or duty in the case of any identifiable person,

F234aa

to a tax credit in respect of any identifiable person,

F282ab

to a child trust fund of any identifiable person,

b

to contributions payable by or in respect of any identifiable person, or

c

to statutory sick payF145, statutory maternity pay, F397ordinary statutory paternity pay, additional statutory paternity pay or statutory adoption pay in respect of any identifiable person.

2

In this section “tax functions” means functions relating to tax or duty—

a

of the Commissioners, the Board and their officers,

b

of any person carrying out the administrative work of F361the First-tier Tribunal or Upper Tribunal, and

c

of any other person providing, or employed in the provision of, services to any person mentioned in paragraph (a) or (b) above.

F2352ZA

In this section “tax credit functions” means the functions relating to tax credits—

a

of the Board,

b

of any person carrying out the administrative work of the F362the First-tier Tribunal or Upper Tribunal, and

c

of any other person providing, or employed in the provision of, services to the Board or to any person mentioned in paragraph (b) above.

C49C48F2802ZB

In this section “child trust fund functions” means the functions relating to child trust funds—

a

of the Board and their officers,

b

of any person carrying out the administrative work of the F363First-tier Tribunal or an appeal tribunal constituted under Chapter 1 of Part 2 of the Social Security (Northern Ireland) Order 1998, or

c

of any person providing, or employed in the provision of, services to the Board or any person mentioned in paragraph (b) above.

F1462A

In this section “social security functions” means—

a

the functions relating to contributions, F236child benefit, guardian’s allowance, statutory sick payF147 , statutory maternity pay, F398ordinary statutory paternity pay, additional statutory paternity pay or statutory adoption pay—

i

of the Board and their officers,

ii

of any person carrying out the administrative work of the F364the First-tier Tribunal or Upper Tribunal, and

iii

of any other person providing, or employed in the provision of, services to any person mentioned in sub-paragraph (i) or (ii) above, and

b

the functions under Part III of the Pension Schemes Act 1993 or Part III of the Pension Schemes (Northern Ireland) Act 1993 of the Board and their officers and any other person providing, or employed in the provision of, services to the Board or their officers.

F3653

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

A person who discloses any information which—

a

he holds or has held in the exercise of functions—

i

of the Comptroller Auditor General F406, of the National Audit Office and any member or employee of that Office or of any member of the staff of the National Audit Office that was established by section 3 of the National Audit Act 1983 , F148. . .

F404ia

of the Comptroller and Auditor General for Northern Ireland and any member of the staff of the Northern Ireland Audit Office,

ii

of the Parliamentary Commissioner for Administration and his officers,

F149iii

of the Auditor General for Wales and any member of his staff, F274...

F298iv

of the Public Services Ombudsman for Wales and any member of his staff, or

v

F275of the Scottish Public Services Ombudsman and any member of his staff,

b

is, or is derived from, information which was held by any person in the exercise of tax functionsF237, tax credit functionsF283, child trust fund functionsF150or social security functions, and

c

is information about any matter relevant, for the purposes of F151tax functionsF238, tax credit functionsF285, child trust fund functions or social security functions—

i

to tax or duty in the case of any identifiable person,

F239ia

to a tax credit in respect of any identifiable person,

F284ib

to a child trust fund of any identifiable person,

ii

to contributions payable by or in respect of any identifiable person, or

iii

toF240child benefit, guardian’s allowance, statutory sick pay F152, statutory maternity pay, F399ordinary statutory paternity pay, additional statutory paternity pay or statutory adoption pay in respect of any identifiable person

is guilty of an offence.

5

Subsections (1) and (4) above do not apply to any disclosure of information—

a

with lawful authority,

b

with the consent of any person in whose case the information is about a matter relevant to tax or duty F286, to a tax credit or to a child trust fundF153or to contributions, statutory sick payF154, statutory maternity pay, F400ordinary statutory paternity pay, additional statutory paternity pay or statutory adoption pay, or

c

which has been lawfully made available to the public before the disclosure is made.

6

For the purposes of this section a disclosure of any information is made with lawful authority if, and only if, it is made—

a

by a Crown servant in accordance with his official duty,

b

by any other person for the purposes of the function in the exercise of which he holds the information and without contravening any restriction dulyimposed by the person responsible,

c

to, or in accordance with an authorisation duly given by, the person responsible,

d

in pursuance of any enactment or of any order of a court, or

e

in connection with the institution of or otherwise for the purposes of any proceedings relating to any matter within the general responsibility of the Commissioners or, as the case requires, the Board,

and in this subsection “the person responsible” means the Commissioners, the Board, the Comptroller F405and Auditor General, the Comptroller and Auditor General for Northern IrelandF155, the Parliamentary Commissioner, the Auditor General for Wales F276, F296the Public Services Ombudsman for Wales or the Scottish Public Services Ombudsman, as the case requires.

7

It is a defence for a person charged with an offence under this section to prove that at the time of the alleged offence—

a

he believed that he had lawful authority to make the disclosure in question and had no reasonable cause to believe otherwise, or

b

he believed that the information in question had been lawfully made available to the public before the disclosure was made and had no reasonablecause to believe otherwise.

8

A person guilty of an offence under this section is liable—

a

on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both, and

b

on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum or both.

9

No prosecution for an offence under this section shall be instituted in England and Wales or in Northern Ireland except—

a

by the Commissioners or the Board, as the case requires, or

b

by or with the consent of the Director of Public Prosecutions or, in Northern Ireland, the Director of Public Prosecutions for Northern Ireland.

10

In this section—

  • “the Board” means the Commissioners of Inland Revenue,

  • F287“child trust fund” has the same meaning as in the Child Trust Funds Act 2004,

  • “the Commissioners” means the Commissioners of Customs and Excise,

  • F156“contributions” means contributions under Part I of the Social Security Contributions and Benefits Act 1992 or Part I of the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

  • “Crown servant” has the same meaning as in the M76 Official Secrets Act 1989,

  • F337“tax credit” means a tax credit under the Tax Credits Act 2002, and

  • “tax or duty” means any tax or duty within the general responsibility of the Commissioners or the Board.

F29510A

In this section, in relation to the disclosure of information “identifiable person” means a person whose identity is specified in the disclosure or can be deduced from it.

11

In this section—

F407a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F407b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c

references to the Parliamentary Commissioner for Administration include the Health Service Commissioner for EnglandF297... , F277... the F157Assembly Ombudsman for Northern Ireland and the Northern Ireland Commissioner for Complaints.

F15811A

In this section, references to F401ordinary statutory paternity pay, additional statutory paternity pay or statutory adoption pay include statutory pay under Northern Ireland legislation corresponding to Part 12ZA or Part 12ZB of the Social Security Contributions and Benefits Act 1992 (c. 4).

12

This section shall come into force on the repeal of section 2 of the M77 Official Secrets Act 1911.

182AF159Double taxation: disclosure of information.

1

A person who discloses any information acquired by him in the exercise of his functions as a member of an advisory commission set up under the Arbitration Convention is guilty of an offence.

2

Subsection (1) above does not apply to any disclosure of information—

a

with the consent of the person who supplied the information to the commission, or

b

which has been lawfully made available to the public before the disclosure is made.

3

It is a defence for a person charged with an offence under this section to prove that at the time of the alleged offence he believed that the information in question had been lawfully made available to the public before the disclosure was made and had no reasonable cause to believe otherwise.

4

A person guilty of an offence under this section is liable—

a

on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both;

b

on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum or both.

5

No prosecution for an offence under this section shall be instituted in England and Wales or in Northern Ireland except—

a

by the Board, or

b

by or with the consent of the Director of Public Prosecutions or, in Northern Ireland, the Director of Public Prosecutions for Northern Ireland.

6

In this section—

  • “the Arbitration Convention” has the meaning given by F391section 126 of the Taxation (International and Other Provisions) Act 2010;

  • “the Board” means the Commissioners of Inland Revenue.

183 Government securities: redemption and transfer.

1

In section 47 of the M78 Finance Act 1942 (power to makeregulations about transfer and registration of Government stock)—

a

the following paragraph shall be inserted after paragraph (b) ofsubsection (1)—

bb

for the redemption of such stock and bonds;

b

the following subsection shall be inserted after that subsection—

1A

Regulations under subsection (1) of this section may make provisionauthorising the Bank of England, in such circumstances and subject to suchconditions as may be prescribed in the regulations, to transfer stock andbonds standing in their books in the name of a deceased person into the nameof another person without requiring the production of probate, confirmationor letters of administration.

2

In section 3(1) of the M79 National Debt Act 1972 (powerto make regulations about stock on the National Savings Stock Register) thefollowing paragraph shall be inserted after paragraph (b)—

bb

the redemption of stock registered in the register,

3

After section 14 of the M80 National Loans Act 1968 thereshall be inserted—

14A Redemption of securities held in Issue Department of Bank of England.

1

Any securities of Her Majesty’s Government in the United Kingdom which arefor the time being held in the Issue Department of the Bank of England may beredeemed by the Treasury before maturity at market prices determined in suchmanner as may be agreed between the Treasury and the Bank.

2

Any expensess incurred by the Treasury in connection with the redemptionof securities under subsection (1) above shall be paid out of the NationalLoans Fund.

184 National savings accounts.

1

In section 2 of the M81National Savings Bank Act 1971(general power to make regulations) after subsection (1) there shall beinserted—

1A

Regulations under this section may restrict the classes of persons who mayopen accounts with the National Savings Bank, but any such restriction shallnot apply to any account opened before the coming into force of theregulations imposing the restriction.

2

In section 5 of that Act (interest on ordinary deposits) in subsection (1)for the words from the beginning to “in any ordinary deposit account”there shall be substituted “The Director of Savings may, with the consentof the Treasury, from time to time determine the rate or rates at whichinterest is to be payable on amounts deposited in ordinary accounts or thatno interest is to be payable on such amounts, and any such determination inrelation to amounts deposited in any ordinary deposit account may be made”.

3

After subsection (1) of section 5 of that Act there shall beinserted—

1A

The Director of Savings shall give notice in the London, Edinburgh andBelfast Gazettes of any determination under subsection (1) above; and any suchdetermination may affect deposits received at or before, as well as after, thetime the determination is made.

4

Subsection (5) of section 5 of that Act (rate of interest on ordinarydeposits to be not less than 2.5 per cent per annum) shall cease to haveeffect.

5

Subsections (2) and (3) above shall come into force on 1st October 1989.

F278185 Winding up of Redemption Annuities Account.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

186 Interpretation etc.

1

In this Act “the Taxes Act 1970” means the M82Income and Corporation Taxes Act 1970 and “the Taxes Act1988” means the M83Income and Corporation Taxes Act1988.

2

Chapter II of Part I of this Act shall be construed as one with the M84Value Added Tax Act 1983.

3

Part II of this Act, so far as it relates to capital gains tax, shall beconstrued as one with the M85Capital Gains Tax Act 1979.

187 Repeals.

1

The enactments specified in Schedule 17 to this Act (which includeunnecessary enactments) are hereby repealed to the extent specified in thethird column of that Schedule, but subject to any provision at the end of anyPart of that Schedule.

C222

The repeal of the enactments specified in Part XIV of Schedule 17 shallcome into force on such day as the Treasury may appoint by order made bystatutory instrument; and different days may be appointed for differentenactments.

Annotations:
Modifications etc. (not altering text)
C22

Power of appointment conferred by s. 187(2) partly exercised:30.9.1989 appointed by S.I. 1989/1788, art. 2 for the repeal of the enactmentsspecified in Part XIV of Schedule 17 other than section 27 in Part II of theTithe Act 1936 (c. 43)

188 Short title.

This Act may be cited as the Finance Act 1989.

SCHEDULES

SCHEDULE 1 Vehicles Excise Duty: Rates

Section 6.

F160Part I

Annotations:
Amendments (Textual)
F160

Sch. 1 Pt. I repealed (1.9.1994) by 1994 c. 22, ss. 65, 66(1), Sch. 5 Pt. I (with s. 57(4))

Part II F161

Annotations:
Amendments (Textual)

SCHEDULE 2 Vehicles Excise Duty: Special Machines

Section 8.

F1621

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1632

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3F164

F1654

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F166SCHEDULE 3

Annotations:
Amendments (Textual)
F166

Sch. 3 repealed (1.9.1994) by 1994 c. 23, ss. 100(2), 101(1), Sch. 15

Zero-rating

1

For Group 8 (construction of buildings etc.) of Schedule 5 (zero-rating)to the M93Value Added Tax Act 1983 there shall besubstituted—

Group 8—Construction of Dwellings, Etc.

Item No.

1

The grant by a person constructing a building—

a

designed as a dwelling or number of dwellings; or

b

intended for use solely for a relevant residential purpose or a relevantcharitable purpose,

of a major interest in, or in any part of, the building or its site.

2

The supply in the course of the construction of—

a

a building designed as a dwelling or number of dwellings or intended foruse solely for a relevant residential purpose or a relevant charitablepurpose; or

b

any civil engineering work necessary for the development of a permanentpark for residential caravans,

of any services other than the services of an architect, surveyor or anyperson acting as consultant or in a supervisory capacity.

3

The supply to a person of—

a

materials; or

b

builders’ hardware, sanitary ware or other articles of a kind ordinarilyinstalled by builders as fixtures,

by a supplier who also makes to the same person supplies within item 2 ofthis Group or Group 8A below of services which include the use of thematerials or the installation of the articles.

Notes:

1

“Grant” includes assignment.

2

“Dwelling” includes a garage constructed at the same time asa dwelling for occupation together with it.

3

Use for a relevant residential purpose means use as—

a

a home or other institution providing residential accommodation forchildren;

b

a home or other institution providing residential accommodation withpersonal care for persons in need of personal care by reason of old age,disablement, past or present dependence on alcohol or drugs or past or presentmental disorder;

c

a hospice;

d

residential accommodation for students or school pupils;

e

residential accommodation for members of any of the armed forces;

f

a monastery, nunnery or similar establishment; or

g

an institution which is the sole or main residence of at least 90 percent. of its residents,

except use as a hospital, a prison or similar institution or an hotel,inn or similar establishment.

4

Use for a relevant charitable purpose means use by a charity in either orboth of the following ways, namely—

a

otherwise than in the course or furtherance of a business;

b

as a village hall or similarly in providing social or recreationalfacilities for a local community.

5

Where part of a building is designed as a dwelling or number of dwellingsor intended for use solely for a relevant residential purpose or a relevantcharitable purpose (and part is not)—

a

a grant or other supply relating only to the part so designed or intendedfor such use (or its site) shall be treated as relating to a building sodesigned or intended for such use;

b

a grant or other supply relating only to the part neither so designed norintended for such use (or its site) shall not be so treated; and

c

in the case of any other grant or other supply relating to, or to any partof, the building (or its site), an apportionment shall be made to determinethe extent to which it is to be so treated.

6

Where all or part of a building is intended for use solely for a relevantresidential purpose or a relevant charitable purpose—

a

a supply relating to the building (or any part of it) shall not be takenfor the purposes of item 2 or 3 as relating to a building intended for suchuse unless it is made to a person who intends to use the building (or part)for such a purpose; and

b

a grant or other supply relating to the building (or any part of it) shallnot be taken as relating to a building intended for such use unless before itis made the person to whom it is made has given to the person making it acertificate in such form as may be specified in a notice published by theCommissioners stating that the grant or other supply (or a specified part ofit) so relates.

7

The grant of an interest in, or in part of, a building designed as adwelling or number of dwellings is not within item 1 if—

a

the interest granted is such that the grantee will not be entitled toreside in the building, or part, throughout the year; or

b

residence there throughout the year will be prevented by the terms of acovenant, statutory planning consent or similar permission.

8

Where the major interest referred to in item 1 is a tenancy orlease—

a

if a premium is payable, the grant falls within that item only to theextent that it is made for consideration in the form of the premium; and

b

if a premium is not payable, the grant falls within that item only to theextent that it is made for consideration in the form of the first payment ofrent due under the tenancy or lease.

9

The reference in item 2 to the construction of a building or work does notinclude a reference to—

a

the conversion, reconstruction, alteration or enlargement of an existingbuilding or work; or

b

any extension or annexation to an existing building which provides forinternal access to the existing building or of which the separate use, lettingor disposal is prevented by the terms of any covenant, statutory planningconsent or similar permission;

and the reference in item 1 to a person constructing a building shall beconstrued accordingly.

10

A caravan is not a residential caravan if residence in it throughout theyear is prevented by the terms of a covenant, statutory planning consent orsimilar permission.

11

Item 2 does not include the supply of services described in paragraph 1(1)or 5(3) of Schedule 2 to this Act.

12

The goods referred to in item 3 do not include—

a

finished or prefabricated furniture, other than furniture designed to befitted in kitchens;

b

materials for the construction of fitted furniture, other than kitchenfurniture;

c

domestic electrical or gas appliances, other than those designed toprovide space heating or water heating or both; or

d

carpets or carpeting material.

13

Section 16(3) of this Act does not apply to goods forming part of adescription of supply in this Group.

2

1

Group 8A (protected buildings) of that Schedule shall be amended asfollows.

2

In item 1, for the word “granting” there shall be substituted theword “grant”.

3

In Note (1), for the words “a building which” there shall besubstituted the words “a building which is designed to remain as or becomea dwelling or number of dwellings or is intended for use solely for a relevantresidential purpose or a relevant charitable purpose after the reconstructionor alteration and which, in either case,”.

4

After that Note there shall be inserted—

1A

Notes (1) to (8) to Group 8 above apply in relation to this Group as theyapply in relation to that Group.

5

Note (5) shall be omitted.

6

After Note (6) there shall be inserted—

6A

For the purposes of item 2 the construction of a building separate from,but in the curtilage of, a protected building does not constitute analteration of the protected building.

7

The following Note shall be substituted for Note (7)—

7

Item 2 does not include the supply of services described in paragraph 1(1)or 5(3) of Schedule 2 to this Act.

3

In Group 11 (caravans and houseboats) of that Schedule, for paragraph (b)of the Note there shall be substituted—

b

the supply of accommodation in a caravan or houseboat.

Exemptions

4

1

For Group 1 (land) of Schedule 6 (exemptions) to the M94Value Added Tax Act 1983 there shall be substituted—

Group 1 – Land

Item No.

1

The grant of any interest in or right over land or of any licence tooccupy land, other than—

a

the grant of the fee simple in—

i

a building which has not been completed and which is neither designed asa dwelling or number of dwellings nor intended for use solely for a relevantresidential purpose or a relevant charitable purpose;

ii

a new building which is neither designed as a dwelling or number ofdwellings nor intended for use solely for a relevant residential purpose ora relevant charitable purpose after the grant;

iii

a civil engineering work which has not been completed;

iv

a new civil engineering work;

b

the grant of any interest, right or licence consisting of a right to takegame or fish;

c

the provision in an hotel, inn, boarding house or similar establishmentof sleeping accommodation or of accommodation in rooms which are provided inconjunction with sleeping accommodation or for the purpose of a supply ofcatering;

d

the provision of holiday accommodation in a house, flat, caravan,houseboat or tent;

e

the provision of seasonal pitches for caravans, and the grant offacilities at caravan parks to persons for whom such pitches are provided;

f

the provision of pitches for tents or of camping facilities;

g

the grant of facilities for parking a vehicle;

h

the grant of any right to fell and remove standing timber;

i

the grant of facilities for housing, or storage of, an aircraft or formooring, or storage of, a ship, boat or other vessel;

j

the grant of any right to occupy a box, seat or other accommodation at asports ground, theatre, concert hall or other place of entertainment; and

k

the grant of facilities for playing any sport or participating in anyphysical recreation.

Notes:

1

“Grant” includes an assignment, other than an assignment ofan interest made to the person to whom a surrender of the interest could bemade.

2

A building shall be taken to be completed when an architect issues acertificate of practical completion in relation to it or it is first fullyoccupied, whichever happens first; and a civil engineering work shall be takento be completed when an engineer issues a certificate of completion inrelation to it or it is first fully used, whichever happens first.

3

Notes (2) to (6) to Group 8 of Schedule 5 to this Act apply in relationto this Group as they apply in relation to that Group.

4

A building or civil engineering work is new if it was completed less thanthree years before the grant.

5

Subject to Note (6), the grant of the fee simple in a building or workcompleted before 1st April 1989 is not excluded from this Group by paragraph(a)(ii) or (iv).

6

Note (5) does not apply where the grant is the first grant of the feesimple made on or after 1st April 1989 and the building was not fullyoccupied, or the work not fully used, before that date.

7

Where a grant of an interest in, right over or licence to occupy landincludes a valuable right to take game or fish, an apportionment shall be madeto determine the supply falling outside this Group by virtue of paragraph (b).

8

“Similar establishment” includes premises in which there isprovided furnished sleeping accommodation, whether with or without theprovision of board or facilities for the preparation of food, which are usedby or held out as being suitable for use by visitors or travellers.

9

“Houseboat” includes a houseboat within the meaning of Group11 of Schedule 5 to this Act.

10

“Holiday accommodation” includes any accommodation advertisedor held out as such.

11

A seasonal pitch is a pitch—

a

which is provided for a period of less than a year; or

b

which is provided for a year or a period longer than a year but which theperson to whom it is provided is prevented by the terms of any covenant,statutory planning consent or similar permission from occupying by living ina caravan at all times throughout the period for which the pitch is provided.

12

“Mooring” includes anchoring or berthing.

13

Paragraph (k) shall not apply where the grant of the facilities isfor—

a

a continuous period of use exceeding twenty-four hours; or

b

a series of ten or more periods, whether or not exceeding twenty-fourhours in total, where the following conditions are satisfied—

i

each period is in respect of the same activity carried on at the sameplace;

ii

the interval between each period is not less than one day and not morethan fourteen days;

iii

consideration is payable by reference to the whole series and is evidencedby written agreement;

iv

the grantee has exclusive use of the facilities; and

v

the grantee is a school, a club, an association or an organisationrepresenting affiliated clubs or constituent associations.

2

In consequence of the amendment made by sub-paragraph (1) above, inparagraph 9(1) of Schedule 4 to the M95Value Added Tax Act1983 for “(a)” there shall be substituted “(c)”.

Other provisions

5

The following section shall be substituted for section 21 (refund of taxto person constructing dwelling) of the Value Added Tax Act 1983—

21 Refund of tax to persons constructing certain buildings.

1

Subject to subsection (2) below, where tax is chargeable on the supply ofgoods to, or the importation of goods by, a person constructing a buildinglawfully and otherwise than in the course or furtherance of any business,and—

a

the goods are incorporated in the building or its site; and

b

the supply of the goods would have been zero-rated by virtue of item 3 ofGroup 8 of Schedule 5 to this Act if they had been supplied by a suppliermaking to the same person supplies within item 2 of that Group of servicesincluding their use or installation, and any required certificate had beengiven,

the Commissioners shall, on a claim made in that behalf, refund to theperson the amount of the tax so chargeable.

2

The Commissioners shall not be required to entertain a claim for a refundof tax under this section unless the claim—

a

is made within such time and in such form and manner;

b

contains such information; and

c

is accompanied by such documents, whether by way of evidence or otherwise,

as the Commissioners may by regulations prescribe.

6

1

The following section shall be inserted in the M96ValueAdded Tax Act 1983 after section 35—

35A Buildings and land.

1

Schedule 6A to this Act shall have effect with respect to buildings andland.

2

The Treasury may by order amend Schedule 6A to this Act.

2

The following Schedule shall be inserted in the Value Added Tax Act 1983after Schedule 6—

Schedule 6A Buildings and Land

Section 35A.

Residential and charitable buildings: change of use etc.

1

1

In this paragraph “relevant zero-rated supply” means a grant or other supplytaking place on or after 1st April 1989 which—

a

relates to a building intended for use solely for a relevant residentialpurpose or a relevant charitable purpose or part of such a building; and

b

is zero-rated, in whole or in part, by virtue of Group 8 of Schedule 5 tothis Act.

2

Sub-paragraph (3) below applies where—

a

one or more relevant zero-rated supplies relating to a building (or partof a building) have been made to any person;

b

within the period of ten years beginning with the day on which thebuilding is completed, the person grants an interest in, right over or licenceto occupy the building or any part of it (or the building or any part of itincluding, consisting of or forming part of the part to which the relevantzero-rated supply or supplies related); and

c

after the grant the whole or any part of the building, or of the part towhich the grant relates, (or the whole of the building or of the part to whichthe grant relates, or any part of it including, consisting of or forming partof the part to which the relevant zero-rated supply or supplies related) isnot intended for use solely for a relevant residential purpose or a relevantcharitable purpose.

3

Where this sub-paragraph applies, to the extent that the grant relates toso much of the building as—

a

by reason of its intended use gave rise to the relevant zero-rated supplyor supplies; and

b

is not intended for use solely for a relevant residential purpose or arelevant charitable purpose after the grant,

it shall be taken to be a taxable supply in the course or furtherance ofa business which is not zero-rated by virtue of Group 8 of Schedule 5 to thisAct (if it would not otherwise be such a supply).

4

Sub-paragraph (5) below applies where—

a

one or more relevant zero-rated supplies relating to a building (or partof a building) have been made to any person; and

b

within the period of ten years beginning with the day on which thebuilding is completed, the person uses the building or any part of it (or thebuilding or any part of it including, consisting of or forming part of thepart to which the relevant zero-rated supply or supplies related) for apurpose which is neither a relevant residential purpose nor a relevantcharitable purpose.

5

Where this sub-paragraph applies, his interest in, right over or licenceto occupy so much of the building as—

a

by reason of its intended use gave rise to the relevant zero-rated supplyor supplies; and

b

is used otherwise than for a relevant residential purpose or a relevantcharitable purpose,

shall be treated for the purposes of this Act as supplied to him for thepurpose of a business carried on by him and supplied by him in the course orfurtherance of the business when he first uses it for a purpose which isneither a relevant residential purpose nor a relevant charitable purpose.

6

Where sub-paragraph (5) above applies—

a

the supply shall be taken to be a taxable supply which is not zero-ratedby virtue of Group 8 of Schedule 5 to this Act (if it would not otherwise besuch a supply); and

b

the value of the supply shall be such that the amount of tax chargeableon it is equal to the amount of the tax which would have been chargeable onthe relevant zero-rated supply (or, where there was more than one such supply,the aggregate amount which would have been chargeable on them) had so much ofthe building as is mentioned in sub-paragraph (5) above not been intended foruse solely for a relevant residential purpose or a relevant charitablepurpose.

Election to waive exemption

2

1

Subject to sub-paragraphs (2) and (3) and paragraph 3 below, where anelection under this paragraph has effect in relation to any land, if and tothe extent that any grant made in relation to it at a time when the electionhas effect by the person who made the election, or where that person is a bodycorporate by that person or a relevant associate, would (apart from thissub-paragraph) fall within Group 1 of Schedule 6 to this Act, the grant shallnot fall within that Group.

2

Sub-paragraph (1) above shall not apply in relation to a grant if thegrant is made in relation to—

a

a building or part of a building intended for use as a dwelling or numberof dwellings or solely for a relevant residential purpose; or

b

a building or part of a building intended for use solely for a relevantcharitable purpose, other than as an office.

3

Sub-paragraph (1) above shall not apply in relation to a grant if—

a

the grant is made to a registered housing association and the associationhas given to the grantor a certificate stating that the land is to be used(after any necessary demolition work) for the construction of a building orbuildings intended for use as a dwelling or number of dwellings or solely fora relevant residential purpose; or

b

the grant is made to an individual and the land is to be used for theconstruction, otherwise than in the course or furtherance of a businesscarried on by him, of a building intended for use by him as a dwelling.

4

Subject to the following provisions of this paragraph, no input tax on anysupply or importation which, apart from this sub-paragraph, would be allowableby virtue of the operation of this paragraph shall be allowed if the supplyor importation took place before the first day for which the election inquestion has effect.

5

Subject to sub-paragraph (6) below, sub-paragraph (4) above shall notapply where the person by whom the election was made—

a

has not, before the first day for which the election has effect, made inrelation to the land in relation to which the election has effect any grantfalling within Group 1 of Schedule 6 to this Act; or

b

has before that day made in relation to that land a grant or grants sofalling but the grant, or all the grants,—

i

were made in the period beginning with 1st April 1989 and ending with 31stJuly 1989; and

ii

would have been taxable supplies but for the amendments made by Schedule3 to the Finance Act 1989.

6

Sub-paragraph (5) above does not make allowable any input tax on suppliesor importations taking place before 1st August 1989 unless—

a

it is attributable by or under regulations to grants made by the personon or after 1st April 1989 which would have been taxable supplies but for theamendments made by Schedule 3 to the Finance Act 1989; and

b

the election has effect from 1st August 1989.

7

Sub-paragraph (4) above shall not apply in relation to input tax on grantsor other supplies which are made in the period beginning with 1st April 1989and ending with 31st July 1989 if—

a

they would have been zero-rated by virtue of item 1 or 2 of Group 8 ofSchedule 5 to this Act or exempt by virtue of item 1 of Group 1 of Schedule6 to this Act but for the amendments made by Schedule 3 to the Finance Act1989; and

b

the election has effect from 1st August 1989.

3

1

An election under paragraph 2 above shall have effect—

a

from the beginning of the day on which the election is made or of anylater day specified in the election; or

b

where the election is made before 1st November 1989, from the beginningof 1st August 1989 or of any later day so specified.

2

An election under paragraph 2 above shall have effect in relation to anyland specified, or of a description specified, in the election.

3

Where such an election is made in relation to, or to part of, a building(or planned building), it shall have effect in relation to the whole of thebuilding and all the land within its curtilage; and for the purposes of thissub-paragraph buildings linked internally or by a covered walkway, andparades, precincts and complexes divided into separate units, shall be takento be a single building (if they otherwise would not be).

4

Where such an election is made in relation to agricultural land (includinga building on agricultural land), it shall have effect in relation to anyother agricultural land if that other land is not separated from it by—

a

land which is not agricultural land; or

b

agricultural land in separate ownership.

5

For the purposes of sub-paragraph (4) above—

a

land shall be taken not to be separated from other land if it is separatedfrom it only by a road, railway, river or something similar; and

b

land is in separate ownership from land in relation to which an electionis made if the person by whom the election is made has no interest in, rightover or licence to occupy it and, where that person is a body corporate, norelevant associate has any such interest, right or licence.

6

An election under paragraph 2 above shall be irrevocable and, except whereit is an election of a description specified in a notice published by theCommissioners, shall not have effect unless written notification of it isgiven to the Commissioners together with such information as the Commissionersmay require.

7

Except where the Commissioners otherwise allow, a notification requiredunder sub-paragraph (6) above shall be given not later than the end of theperiod of thirty days beginning with the day on which the election is made.

8

In paragraph 2 above and this paragraph “relevantassociate”, in relation to a body corporate by which an electionunder paragraph 2 above has been made in relation to any building or land,means a body corporate which under section 29 of this Act—

a

was treated as a member of the same group as the body corporate by whichthe election was made at the time when the election first had effect;

b

has been so treated at any later time when the body corporate by which theelection was made had an interest in, right over or licence to occupy thebuilding or land (or any part of it); or

c

has been treated as a member of the same group as a body corporate withinparagraph (a) or (b) above or this paragraph at a time when that bodycorporate had an interest in, right over or licence to occupy the building orland (or any part of it).

9

In paragraph 2 above “registered housing association”means a registered housing association within the meaning of the Housing Associations Act 1985 or Part VII of the Housing (Northern Ireland) Order 1981.

4

1

This paragraph has effect where rent is payable in consideration of thegrant of an interest in, right over, or licence to occupy any building or landto which an election under paragraph 2 above relates (or any part of any suchbuilding or land).

2

If—

a

the rent relates to a period beginning before and ending on or after thefirst day for which the election has effect; and

b

the grant for which the rent is consideration would, apart from thissub-paragraph, take place before that day,

the grant shall be treated as taking place on that day to the extent thatit is made for rent relating to the part of the period falling on or afterthat day.

3

If—

a

the rent relates to a period beginning on or after the first day for whichthe election has effect; and

b

the grant for which the rent is consideration would, apart from thissub-paragraph, take place before that day,

the grant shall be treated as taking place on the first day of the periodto which the rent relates.

4

If—

a

the rent relates to a period beginning before the first day for which theelection has effect; and

b

the grant for which the rent is consideration takes place on or after thatday,

tax shall not be chargeable on the grant by virtue of paragraph 2 aboveto the extent that it is made for rent relating to any time before that day.

5

Where the rent is payable by a person in relation to a period when he isin occupation of a building completed before 1st August 1989 (or part of sucha building) or land of which he was in occupation immediately before thatdate, any tax which would be chargeable by virtue of paragraph 2 above on thegrant for which the rent is consideration—

a

except in the case of a charity, shall be chargeable as if theconsideration were reduced by 50 per cent. if and to the extent that the rentrelates to or to any part of the year beginning on 1st August 1989 and endingon 31st July 1990; and

b

in the case of a charity—

i

shall be chargeable as if the consideration were reduced by 80 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1989 and ending on 31st July 1990;

ii

shall be chargeable as if the consideration were reduced by 60 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1990 and ending on 31st July 1991;

iii

shall be chargeable as if the consideration were reduced by 40 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1991 and ending on 31st July 1992; and

iv

shall be chargeable as if the consideration were reduced by 20 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1992 and ending on 31st July 1993.

Developers of certain non-residential buildings etc.

5

1

Paragraph 6 below shall apply on the first occasion during the periodbeginning with the day when the construction of a building or work withinsub-paragraph (2) below is first planned and ending ten years after thecompletion of the building or work on which a person who is a developer inrelation to the building or work—

a

grants an interest in, right over or licence to occupy the building orwork (or any part of it) which is an exempt supply; or

b

is in occupation of the building, or uses the work, (or any part of it)when not a fully taxable person (or, if a person treated under section 29 ofthis Act as a member of a group, when the representative member is not a fullytaxable person).

2

Subject to sub-paragraph (3) below, the buildings and works within thissub-paragraph are—

a

any building neither designed as a dwelling or number of dwellings norintended for use solely for a relevant residential purpose or a relevantcharitable purpose; and

b

any civil engineering work, other than a work necessary for thedevelopment of a permanent park for residential caravans.

3

A building or work is not within sub-paragraph (2) above if—

a

construction of it was commenced before 1st August 1989; or

b

a grant of the fee simple in it which falls within paragraph (a) (ii) or(iv) of item 1 of Group 1 of Schedule 6 to this Act has been made before theoccasion concerned.

4

For the purposes of this paragraph a taxable person is, in relation to anybuilding or work, a fully taxable person throughout a prescribed accountingperiod if—

a

at the end of that period he is entitled to credit for input tax on allsupplies to, and importations by, him in the period (apart from any on whichinput tax is excluded from credit by virtue of section 14(10) of this Act);or

b

the building or work is not used by him at any time during the period in,or in connection with, making any exempt supplies of goods or services.

5

Subject to sub-paragraph (6) below, in this paragraph and paragraph 6below “developer”, in relation to a building or work, meansany person who—

a

constructs it;

b

orders it to be constructed; or

c

finances its construction,

with a view to granting an interest in, right over or licence to occupyit (or any part of it) or to occupying or using it (or any part of it) for hisown purposes.

6

Where—

a

a body corporate treated under section 29 of this Act as a member of agroup is a developer in relation to a building or work; and

b

it grants an interest in, right over or licence to occupy the building orwork (or any part of it) to another body corporate which is treated under thatsection as a member of the group,

then, for the purposes of this paragraph and paragraph 6 below, as fromthe time of the grant any body corporate such as is mentioned in sub-paragraph(7) below shall be treated as also being a developer in relation to thebuilding or work.

7

The bodies corporate referred to in sub-paragraph (6) above are any whichunder section 29 of this Act—

a

was treated as a member of the same group as the body corporate making thegrant at the time of the grant;

b

has been so treated at any later time when the body corporate by which thegrant was made had an interest in, right over or licence to occupy thebuilding or work (or any part of it); or

c

has been treated as a member of the same group as a body corporate withinparagraph (a) or (b) above or this paragraph at a time when that bodycorporate had an interest in, right over or licence to occupy the building orwork (or any part of it).

6

1

Where this paragraph applies the interest in, right over or licence tooccupy the building or work (or any part of it) held by the developer shallbe treated for the purposes of this Act as supplied to the developer for thepurpose of a business carried on by him and supplied by him in the course orfurtherance of the business on the last day of the prescribed accountingperiod during which it applies or, if later, of the prescribed accountingperiod during which the building or work becomes substantially ready foroccupation or use.

2

The supply treated as made by sub-paragraph (1) above shall be taken tobe a taxable supply and the value of the supply shall be the aggregateof—

a

the value of grants relating to the land on which the building or work isconstructed made or to be made to the developer, other than any grants to bemade for consideration in the form of rent the value of which cannot beascertained by the developer when the supply is treated as made; and

b

the value of all the taxable supplies of goods and services, other thanany that are zero-rated, made or to be made for or in connection with theconstruction of the building or work.

3

Where the value of a supply which, apart from this sub-paragraph, wouldbe treated as made by sub-paragraph (1) above would be less than£100,000, no supply shall be treated as made by that sub-paragraph.

General

7

Where the benefit of the consideration for the grant of an interest in,right over or licence to occupy land accrues to a person but that person isnot the person making the grant—

a

the person to whom the benefit accrues shall for the purposes of this Actbe treated as the person making the grant; and

b

to the extent that any input tax of the person actually making the grantis attributable to the grant it shall be treated as input tax of the personto whom the benefit accrues.

8

The Notes to Group 8 of Schedule 5 to this Act and Group 1 of Schedule 6to this Act apply in relation to this Schedule as they apply in relation totheir respective Groups but subject to any appropriate modifications.

7

In section 42 (adjustment of consideration on changes in tax) of the M97Value Added Tax Act 1983—

a

the following subsection shall be inserted after subsection (1)—

1A

Subsection (1) above shall apply in relation to a tenancy or lease as itapplies in relation to a contract except that a term of a tenancy or leaseshall not be taken to provide that the rule contained in that subsection isnot to apply in the case of the tenancy or lease if the term does not referspecifically to value added tax or this section.

b

in subsection (2), the words “(including a change attributable tothe making of an election under paragraph 2 of Schedule 6A to thisAct)” shall be added at the end.

8

In section 45(4) (orders etc.) of the M98Value Added TaxAct 1983, there shall be added after paragraph (c)—

d

an order under section 35A above, except one making only such amendmentsas are necessary or expedient in consequence of provisions of an order underthis Act which—

i

vary Schedule 5 or Schedule 6 to this Act; but

ii

are not within paragraph (c) above.

9

In section 48 (interpretation) of the Value Added Tax Act 1983, after thedefinition of “Commissioners” there shall be inserted—

“fee simple”—

a

in relation to Scotland, means the estate or interest of the proprietorof the dominium utile or, in the case of land not held on feudal tenure, theestate or interest of the owner;

b

in relation to Northern Ireland, includes the estate of a person who holdsland under a fee farm grant;

10

In Schedule 1 (registration) to the Value Added Tax Act 1983—

a

in paragraph 1 there shall be added at the end—

6

Where, apart from this sub-paragraph, an interest in, right over orlicence to occupy any land would under sub-paragraph (5) above be disregardedfor the purposes of sub-paragraph (1) above, it shall not be if it is suppliedon a taxable supply which is not zero-rated.

b

in paragraph 2 there shall be added at the end—

4

Where, apart from this sub-paragraph, an interest in, right over orlicence to occupy any land would under sub-paragraph (3) above be disregardedfor the purposes of sub-paragraph (1) above, it shall not be if it is suppliedon a taxable supply which is not zero-rated.

11

In Schedule 2 (supplies of goods and services) to the Value Added Tax Act1983—

a

in paragraph 4, for the word “granting” there shall be substitutedthe word “grant”,

b

in paragraph 5(1), for the words “the goods” there shall besubstituted the word “goods”, and

c

there shall be added at the end—

8

1

Subject to sub-paragraphs (2) and (3) below, paragraphs 5 to 7 above haveeffect in relation to land forming part of the assets of, or held or used forthe purposes of, a business as if it were goods forming part of the assets of,or held or used for the purposes of, a business.

2

In the application of those paragraphs by virtue of sub-paragraph (1)above, references to transfer, disposition or sale shall have effect asreferences to the grant or assignment of any interest in, right over orlicence to occupy the land concerned.

3

Except in relation to—

a

the grant or assignment of a major interest; or

b

a grant or assignment otherwise than for a consideration,

in the application of paragraph 5(1) above by virtue of sub-paragraph (1)above the reference to a supply of goods shall have effect as a reference toa supply of services.

Commencement

12

1

Subject to sub-paragraphs (2) and (3) and paragraph 13 below, theamendments made by paragraphs 1 to 4 of this Schedule shall have effect inrelation to grants, assignments and other supplies made on or after 1st April1989.

2

Note 4(b) to Group 8 of Schedule 5 to the M99Value AddedTax Act 1983 shall have effect in relation to grants, assignments and othersupplies made on or after 1st August 1989.

3

In relation to grants and assignments made on or after 1st April 1989 butbefore 1st August 1989—

a

that Group shall have effect as if the Notes to it included a Note in thesame terms as Note (1) to that Group as it had effect before the substitutionmade by paragraph 1 above, and

b

Group 8A of that Schedule shall have effect as if the Notes to it includeda Note in the same terms as Note (5) to that Group as it had effect before theamendments made by paragraph 2 above.

4

Paragraphs 5, 7, 8, 11 and 13(6) and (7) of this Schedule and paragraph6, so far as relating to section 35A(2) of, and paragraphs 2 to 7 of Schedule6A to, the Value Added Tax Act 1983, shall come into force on 1st August 1989.

5

Subject to the preceding provisions of this paragraph, this Schedule shallcome into force on 1st April 1989.

13

1

Subject to sub-paragraph (3) below, the amendments made by paragraphs 1and 2 of this Schedule shall not have effect in relation to a grant,assignment or other supply where—

a

it is made in pursuance of a legally binding obligation to make it whichwas incurred before 21st June 1988, and

b

if the Commissioners so require (whether before or after it is made), itis proved to their satisfaction by the production of documents made beforethat date that it is so made.

2

Subject to sub-paragraph (3) below, the amendments made by paragraphs 1and 2 of this Schedule shall not have effect in relation to a grant orassignment of an interest in, or in any part of, a building or its sitewhere—

a

the grant or assignment takes place before 21st June 1993,

b

the person making the grant or assignment was under a legally bindingobligation incurred before 21st June 1988 to construct (or reconstruct) thebuilding or to construct any development of which it forms part (other thanan obligation to receive services or goods in the course of the constructionor reconstruction),

c

if the Commissioners so require (whether before or after the grant orassignment is made), it is proved to their satisfaction by the production ofdocuments made before that date that he was under that obligation, and

d

planning permission for the construction (or reconstruction) of thebuilding was granted before 21st June 1988.

3

Where the grant or assignment is of a tenancy or lease—

a

if a premium is payable, sub-paragraph (1) or (2) above shall apply onlyto the extent that it is made for consideration in the form of the premium;and

b

if a premium is not payable, sub-paragraph (1) or (2) above shall applyonly to the extent that it is made for consideration in the form of the firstpayment of rent due under the tenancy or lease.

4

The amendments made by paragraphs 1 and 2 of this Schedule shall not haveeffect in relation to a supply relating to a building or civil engineeringwork where—

a

the supply takes place before 21st June 1993,

b

the supply is made to the person constructing the building or work (orreconstructing the building),

c

that person was under a legally binding obligation incurred before21st June 1988 to construct the building or work (or to reconstruct thebuilding) or to construct any development of which it forms part (other thanan obligation to receive services or goods in the course of the constructionor reconstruction),

d

if the Commissioners so require (whether before or after the supply ismade), it is proved to their satisfaction by the production of documents madebefore that date that he was under that obligation,

e

planning permission for the construction of the building or work (or thereconstruction of the building) was granted before 21st June 1988, and

f

before the supply takes place the person constructing the building or work(or reconstructing the building) has given to the person making the supply acertificate in such form as may be specified in a notice published by theCommissioners stating that the supply is zero-rated (in whole or to the extentspecified in the certificate) by virtue of this sub-paragraph.

5

Where a grant, assignment or other supply is zero-rated by virtue of thisparagraph, it is not a relevant zero-rated supply for the purposes ofparagraph 1 of Schedule 6A to the M100Value Added Tax Act1983.

6

Nothing in paragraphs 5 and 6 of that Schedule shall apply—

a

in relation to a person who has constructed a building if he incurredbefore 21st June 1988 a legally binding obligation to make a grant orassignment of a major interest in, or in any part of, the building or itssite;

b

in relation to a building or work if there was incurred before that datea legally binding obligation to make in relation to the building or work asupply within item 2 of Group 8 of Schedule 5 to the Value Added Tax Act 1983;

c

in relation to a person who has constructed a building if—

i

he incurred before that date a legally binding obligation to construct thebuilding or any development of which it forms part, and

ii

planning permission for the construction of the building was grantedbefore that date,

except where that person does not make a grant or assignment of a majorinterest in, or in any part of, the building or its site before 21st June1993.

7

If the Commissioners so require, proof of any of the matters specified insub-paragraph (6)(a), (b) or (c)(i) above shall be given to their satisfactionby the production of documents made before 21st June 1988.

F167SCHEDULE 4

Annotations:
Amendments (Textual)
F167

Sch. 4 repealed (19.3.1997 with effect as mentioned in Sch. 18 Pt. VI(3) notes 1, 2 of the amending Act) by 1997 c. 16, ss. 61(2)(3), 113, Sch. 18 Pt. VI(3)

1

The Taxes Act 1988 shall be amended in accordance with the followingprovisions of this Schedule.

2

1

In section 171(4) (limit on pay of which half may be exempt from tax) for “£3,000” there shall be substituted “£4,000”.

2

This paragraph shall have effect in relation to profit-related pay paidby reference to profit periods beginning on or after 1st April 1989.

3

After section 177 there shall be inserted—

177A Death of scheme employer.

1

Where a scheme employer has died, his personal representatives may makea written application to the Board under this section for the amendment of theregistration of the scheme.

2

If on receiving an application under this section the Board are satisfiedthat, apart from the death of the scheme employer, there would be no groundsfor cancelling the registration of the scheme, the Board shall amend theregistration of the scheme by substituting the personal representatives forthe deceased scheme employer.

3

An application under this section shall be made before the end of theperiod of one month beginning with the date of the grant of probate or lettersof administration or, in Scotland, confirmation of executors.

4

Where the Board amend the registration of a scheme under this section,this Chapter shall (subject to any necessary modifications) have effect as ifthe personal representatives had been the scheme employer throughout.

5

The Board shall give notice to the personal representatives if they refusean application under this section.

177B Alteration of scheme’s terms.

1

The alteration of the terms of a registered scheme shall not of itselfinvalidate the registration of the scheme.

2

Subsection (1) above is without prejudice to the power of cancellationconferred on the Board by section 178(3A); but the power conferred by section178(3A) shall not be exercisable by virtue of an alteration registered inaccordance with this section.

3

Where the terms of a registered scheme have been altered, the schemeemployer may apply to the Board for the registration of the alteration.

4

An application under subsection (3) above—

a

shall be in such form as the Board may prescribe;

b

shall be made within the period of one month beginning with the day onwhich the alteration is made;

c

shall contain a declaration by the applicant that the alteration is withinsubsection (8) below and that the scheme as altered complies with therequirements of Schedule 8 (either as that Schedule had effect when the schemewas registered, or as it then had effect but subject to one or more subsequentamendments specified in the declaration);

d

shall be accompanied by a report by an independent accountant, in a formprescribed by the Board, to the effect that in his opinion the alteration iswithin subsection (8) below and the scheme as altered complies with therequirements of Schedule 8 (either as that Schedule had effect when the schemewas registered, or as it then had effect but subject to one or more subsequentamendments specified in the report).

5

The Board shall not more than three months after the day on which theyreceive an application under subsection (3) above either register thealteration or refuse the application; and in either case they shall givenotice of their decision to the applicant.

6

Subject to subsection (7) below, the Board shall register an alterationon an application under subsection (3) above.

7

The Board may refuse an application under subsection (3) above if they arenot satisfied—

a

that the application complies with the requirements of subsection (4)above, or

b

that the declaration referred to in subsection (4)(c) above is true.

8

An alteration is within this subsection if—

a

it relates to a term which is not relevant to the question whether thescheme complies with the requirements of Schedule 8; or

b

it relates to a term identifying any person (other than the schemeemployer) who pays the emoluments of employees to whom the scheme relates; or

c

it consists of the addition of a term making provision for an abbreviatedprofit period of the kind referred to in paragraph 10(3) of Schedule 8; or

d

it amends the provisions by reference to which the employees to whom thescheme relates may be identified, and does so only for the purposes of profitperiods which begin after the date on which the alteration is made; or

e

it relates to a provision of a kind referred to in paragraph 13(4) or (5)or 14(3), (4) or (5) of Schedule 8 (as those provisions have effect at thetime of the application for registration of the alteration), and has effectonly for the purposes of profit periods beginning after the date on which thealteration is made; or

f

it amends the provisions as to when payments will be made to employees,and does so only for the purposes of profit periods beginning after the dateon which the alteration is made; or

g

the scheme did not comply with the requirements of Schedule 8 when it wasregistered, and the alteration—

i

is made in order to bring the scheme into compliance with the requirementsof that Schedule (either as it had effect when the scheme was registered oras it has effect at the time of the application for registration of thealteration), and

ii

is made for the purposes of the first and any subsequent profit period towhich the scheme relates, and

iii

is made within two years of the beginning of the first profit period, and

iv

does not invalidate (in whole or in part) any payment of profit-relatedpay already made under the scheme.

4

1

Section 178 (cancellation of registration) shall be amended as follows.

2

In subsection (1) for the words “subsection (5)” there shall besubstituted the words “subsections (5) and (5A)”.

3

After subsection (3) there shall be inserted—

3A

Where the terms of a registered scheme have been altered, then, subjectto section 177B(2), the Board may cancel the registration of the scheme witheffect from the beginning of the profit period during which the alterationtook effect or with effect from the beginning of any later profit period.

3B

If after an alteration of the terms of a scheme has been registered undersection 177B it appears to the Board—

a

that the application for registration of the alteration did not complywith the requirements of subsection (4) of that section, or

b

that the declaration referred to in subsection (4)(c) of that section wasfalse,

the Board may cancel the registration of the scheme with effect from thebeginning of the profit period during which the alteration took effect or witheffect from the beginning of any later profit period.

4

After subsection (5) there shall be inserted—

5A

Where—

a

the scheme employer has died, and

b

his personal representatives by notice request the Board to cancel theregistration of the scheme with effect from the date of death,

then, if the notice is given before the end of the period of one monthbeginning with the date of the grant of probate or letters of administrationor, in Scotland, confirmation of executors, the Board shall comply with therequest.

5

At the end of section 179 (recovery of tax) there shall be added—

3

Where—

a

the scheme employer has died, but

b

his personal representatives have not been substituted for him as thescheme employer by virtue of section 177A,

the reference in subsection (2) above to the scheme employer shall beconstrued as a reference to the personal representatives.

4

Where—

a

a payment to which this section applies was made by a person other thanthe scheme employer, and

b

the scheme employer is not resident in the United Kingdom,

then in relation to that payment the reference in subsection (2) aboveto the scheme employer shall include a reference to the person by whom thepayment was made.

6

At the end of section 180 (annual returns) there shall be added—

5

Where—

a

the scheme employer has died, but

b

his personal representatives have not been substituted for him as thescheme employer by virtue of section 177A,

the reference in subsection (1) above to the scheme employer shall beconstrued as a reference to the personal representatives.

7

At the end of section 181 (information) there shall be added—

4

Where the scheme employer has died, his personal representatives shallinform the Board of his death by notice given before the end of the period ofone month beginning with the date of the grant of probate or letters ofadministration or, in Scotland, confirmation of executors.

8

1

Section 182 (appeals) shall be amended as follows.

2

In subsection (1) after paragraph (b) there shall be inserted—

bb

against a refusal by the Board of an application under section 177B(3);

3

After subsection (1) there shall be inserted—

1A

An appeal to the Special Commissioners may be made by the personalrepresentatives of a scheme employer against a refusal by the Board of anapplication under section 177A.

4

In subsection (2) for the words “scheme employer” there shall besubstituted the word “appellant”.

9

1

Paragraph 7 of Schedule 8 (no payments for employees with materialinterest in company) shall be amended as follows.

2

In sub-paragraph (1), the words “, or is an associate of a person who has,” shall be omitted.

3

In sub-paragraph (3), after the words “section 417(3) and (4)” thereshall be inserted the words “, but subject to sub-paragraph (4) below”.

4

The following sub-paragraphs shall be added at the end—

4

For the purposes of this paragraph, where an employee of a company has aninterest in shares or obligations of the company as a beneficiary of anemployee benefit trust, the trustees shall not be regarded as associates ofhis by reason only of that interest unless sub-paragraph (8) below applies inrelation to him.

5

A trust is an employee benefit trust for the purposes of this paragraphif—

a

all or most of the employees of the company are eligible to benefit underit, and

b

none of the property subject to it has been disposed of on or after 14thMarch 1989 (whether by sale, loan or otherwise) except in the ordinary courseof management of the trust or in accordance with sub-paragraph (6) below.

6

Property is disposed of in accordance with this sub-paragraph if—

a

it is applied for the benefit of—

i

individual employees or former employees of the company,

ii

spouses, former spouses, widows or widowers of employees or formeremployees of the company,

iii

relatives, or spouses of relatives, of persons within sub-paragraph (i)or (ii) above, or

iv

dependants of persons within sub-paragraph (i) above,

b

it is applied for charitable purposes, or

c

it is transferred to the trustees of an approved profit sharing scheme(within the meaning of section 187), of another employee benefit trust, or ofa qualifying employee share ownership trust (within the meaning of Schedule5 to the Finance Act 1989),

and the property applied or transferred consists of any of the ordinaryshare capital of the company or of money paid outright.

7

In sub-paragraph (6)(a)(iii) above “relative” means parent or remoter forebear, child or remoterissue, brother, sister, uncle, aunt, nephew or niece.

8

This sub-paragraph applies in relation to an employee if at any time onor after 14th March 1989—

a

the employee, either on his own or with any one or more of his associates,or

b

any associate of his, with or without other such associates,

has been the beneficial owner of, or able (directly or through the mediumof other companies or by any other indirect means) to control, more than 25per cent. of the ordinary share capital of the company.

9

Where—

a

on or after 14th March 1989 an employee of a company, or an associate ofhis, receives a payment (“the relevant payment”) from the trustees of anemployee benefit trust, and

b

at any time during the period of three years ending with the day on whichthe relevant payment is received, the property subject to the trust consistsof or includes any part of the ordinary share capital of the company,

the employee or associate shall be treated for the purposes ofsub-paragraph (8) above as if he were the beneficial owner of the appropriatepercentage of the ordinary share capital of the company on the day on whichthe relevant payment is received (in addition to any percentage of that sharecapital of which he is actually the beneficial owner on that day).

10

For the purposes of sub-paragraph (9) above, the appropriate percentageis—

Ax100Bmath

where—

  • A is the smaller of—

    • (a) the aggregate of the relevant payment and any other paymentsreceived by the employee or associates of his from the trustees of the trustduring the period of 12 months ending with the day on which the relevant payment is received, and

    • (b) the aggregate of the distributions made to the trustees of the trustby the company in respect of its ordinary share capital during the period ofthree years ending with the day on which the relevant payment is received; and

  • B is the aggregate of—

    • (a) any distributions made by the company in respect of its ordinaryshare capital during the period of 12 months ending with the day on which therelevant payment is received,

    • (b) any distributions so made during the period of 12 months immediatelypreceding that mentioned in paragraph (a) above, and

    • (c) any distributions so made during the period of 12 months immediately preceding that mentioned in paragraph (b) above,

divided by the number of the periods mentioned in paragraphs (a) to(c) above in which distributions were so made.

11

Where—

a

an employee or associate is treated by sub-paragraph (9) above as if hewere the beneficial owner of a percentage of the ordinary share capital of acompany by reason of receiving the relevant payment from the trustees of atrust, and

b

that employee, or an associate of his, has, during the period of 12 monthsending with the day on which the relevant payment is received, received oneor more payments from trustees of another employee benefit trust or trustssatisfying the requirement in paragraph (b) of sub-paragraph (9) above,

that sub-paragraph shall have effect in relation to the employee orassociate mentioned in paragraph (a) above as if he had received the paymentfrom the trustees of the trust or of each of the trusts mentioned in paragraph(b) above (or where more than one payment has been received from the trusteesof a trust, the last of the payments) on the day on which the relevant paymentis received.

12

In sub-paragraphs (8) to (11) above “associate”, in relation to an employee, does not include thetrustees of an employee benefit trust by reason only that the employee has aninterest in shares or obligations of the trust.

10

1

Paragraphs 13(2) and 14(2) of Schedule 8 (which provide for a scheme’sdistributable pool to be at least 5 per cent. of the pay of all the employeesto whom the scheme relates if profits remain unchanged) shall be omitted.

2

In consequence of sub-paragraph (1) above—

a

the following provisions shall be omitted—

  • section 175(3);

  • in section 176(1), the words “(but not more than six months)”;

  • section 178(2)(b);

  • in paragraph 13(1) of Schedule 8, the word “fixed”;

  • paragraph 13(3) of that Schedule;

  • paragraph 14(7) of that Schedule.

b

in paragraph 13 of Schedule 8—

i

after sub-paragraph (1) there shall be inserted—

1A

That percentage must be a fixed percentage specified in the scheme and,if the scheme relates to more than one period, must be the same for eachperiod.

ii

in sub-paragraph (4)(a), for the words “the base year referred to insub-paragraph (3) above” there shall be substituted the words “a baseyear specified in the scheme”;

iii

in sub-paragraph (5), for the words “must be” onwards there shall besubstituted the words “must not exceed the profits for a base year specifiedin the scheme”;

iv

for sub-paragraph (6), there shall be substituted—

6

The base year referred to in sub-paragraph (4)(a) and sub-paragraph (5)above must be a period of 12 months ending at a time within the period of twoyears immediately preceding the profit period, or the first of the profitperiods, to which the scheme relates

c

in paragraph 14(5) of that Schedule, for the words “must be” onwardsthere shall be substituted the words “must not exceed the profits in theperiod of 12 months immediately preceding the first or only profit period towhich the scheme relates”.

11

At the end of paragraph 13 of Schedule 8 (calculation of distributablepool by method A) there shall be added—

7

Any provision included in a scheme by virtue of sub-paragraph (4) or (5)above may take effect either from the scheme’s first profit period or from anylater profit period determined in accordance with the scheme.

12

In paragraph 14 of Schedule 8 (calculation of distributable pool by methodB), in sub-paragraph (5) the words “specified in, or” shall be omitted.

13

At the end of paragraph 14 of Schedule 8 there shall be added—

8

Any provision included in a scheme by virtue of sub-paragraph (3)(b), (4)or (5) above may take effect either from the scheme’s first profit period orfrom any later profit period determined in accordance with the scheme.

14

1

Paragraph 19 of Schedule 8 (profit and loss account for purposes ofprofit-related pay scheme) shall be amended as follows.

2

After sub-paragraph (4) (account to make no allowance for remuneration ofpersons excluded from scheme) there shall be inserted—

4A

In sub-paragraph (4) above “remuneration”, in relation to a person, includes fees andpercentages, any sums paid by way of expenses allowance (insofar as those sumsare charged to income tax), any contributions paid in respect of him under anypension scheme and the estimated value of any other benefits received by himotherwise than in cash.

3

In sub-paragraph (6) (items which may be left out of account in arrivingat profits or losses) for paragraph (f) there shall be substituted—

f

profit-related pay payable under the scheme, and profit-related paypayable under any other registered scheme if it is one to which paragraph 21below applies;

ff

secondary Class 1 contributions under Part I of the Social Security Act 1975 or Part I of the SocialSecurity (Northern Ireland) Act 1975 in respect of profit-related pay payableunder the scheme;

15

After paragraph 20 of Schedule 8 there shall be inserted—

Parts of undertakings

21

1

This paragraph shall apply to a scheme if the employment unit is a partof an undertaking, and the scheme states that the profits or losses of theunit are for the purposes of the scheme to be taken to be equivalent to thoseof the whole undertaking (which must be identified by the scheme).

2

Where this paragraph applies to a scheme, this Schedule shall have effectas if any reference to the profits or losses of the employment unit were areference to the profits or losses of the undertaking of which it forms part.

22

1

Where paragraph 21 above applies to a scheme, the scheme must containprovisions ensuring that no payments are made under it by reference to aprofit period unless, at the beginning of that profit period,—

a

there is at least one other registered scheme which relates to employeesemployed in the same undertaking as that of which the employment unit formspart, and

b

the number of the employees to whom the scheme relates does not exceed 33per cent. of the number of the employees to whom that other scheme relates (orif there is more than one other scheme, the aggregate number of the employeesto whom they relate).

2

Another registered scheme shall be disregarded for the purposes ofsub-paragraph (1) above—

a

if paragraph 21 above applies to it, or

b

if, by virtue of provisions of the kind described in paragraph 6 above,no payments could be made under it by reference to the profit periodconcerned.

3

Where paragraph 21 above applies to two or more schemes relating toemployment units which are parts of the same undertaking, an employee to whomanother scheme relates shall not be counted for the purposes of sub-paragraph(1)(b) above in connection with more than one of those schemes.

C40 SCHEDULE 5 Employee Share Ownership Trusts

Section 74.

Annotations:
Modifications etc. (not altering text)
C40

Sch. 5 applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the applying Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 228(7), 235(8), 289 (with ss. 60, 101(1), 171, 201(3))

Qualifying trusts

C231

A trust is a qualifying employee share ownership trust at the time it isestablished if the conditions set out in paragraphs 2 to 11 below aresatisfied in relation to the trust at that time.

Annotations:
Modifications etc. (not altering text)
C23

SeeFinance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts

General

C242

1

The trust must be established under a deed (the trust deed).

2

The trust must be established by a company (the founding company) which,at the time the trust is established, is resident in the United Kingdom andnot controlled by another company.

Annotations:
Modifications etc. (not altering text)
C24

SeeFinance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts

Trustees

C253

1

The trust deed must provide for the establishment of a body of trustees.

2

The trust deed must—

a

appoint the initial trustees;

b

contain rules for the retirement and removal of trustees;

c

contain rules for the appointment of replacement and additional trustees.

3

The trust deed must provide that at any time while the trust subsists (therelevant time)—

a

the number of trustees must not be less than three;

b

all the trustees must be resident in the United Kingdom;

C26C56c

the trustees must include one person who is a trust corporation, asolicitor, or a member of such other professional body as the Board may fromtime to time allow for the purposes of this paragraph;

d

most of the trustees must be persons who are not and have never beendirectors of any company which falls within the founding company’s group atthe relevant time;

e

most of the trustees must be persons who are employees of companies whichfall within the founding company’s group at the relevant time, and who do nothave and have never had a material interest in any such company;

f

the trustees falling within paragraph (e) above must, before beingappointed as trustees, have been selected by a majority of the employees ofthe companies falling within the founding company’s group at the time of theselection or by persons elected to represent those employees.

4

For the purposes of sub-paragraph (3) above a company falls within thefounding company’s group at a particular time if—

a

it is the founding company, or

b

it is at that time resident in the United Kingdom and controlled by thefounding company.

F1685

This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed.

F1693A

Where a trust is established after the day on which the Finance Act 1994 was passed, the trust deed must make provision as mentioned in one of paragraphs (a) to (c) below—

a

provision for the establishment of a body of trustees and complying with paragraph 3(2) to (4) above;

b

provision for the establishment of a body of trustees and complying with paragraph 3B(2) to (9) below;

c

provision that at any time while the trust subsists there must be a single trustee.

F1703B

1

The following are the provisions that must be complied with under paragraph 3A(b) above.

2

The trust deed must—

a

appoint the initial trustees;

b

contain rules for the retirement and removal of trustees;

c

contain rules for the appointment of replacement and additional trustees.

3

The trust deed must be so framed that at any time while the trust subsists the conditions set out in sub-paragraph (4) below are fulfilled as regards the persons who are then trustees; and in that sub-paragraph “the relevant time” means that time.

4

The conditions are that—

a

the number of trustees is not less than three;

b

all the trustees are resident in the United Kingdom;

c

the trustees include at least one person who is a professional trustee and at least two persons who are non-professional trustees;

d

at least half of the non-professional trustees were, before being appointed as trustees, selected in accordance with sub-paragraph (7) or (8) below;

e

all the trustees so selected are persons who are employees of companies which fall within the founding company’s group at the relevant time, and who do not have and have never had a material interest in any such company.

5

For the purposes of this paragraph a trustee is a professional trustee at a particular time if—

a

the trustee is then a trust corporation, a solicitor, or a member of such other professional body as the Board may at that time allow for the purposes of this sub-paragraph,

b

the trustee is not then an employee or director of any company then falling within the founding company’s group, and

c

the trustee meets the requirements of sub-paragraph (6) below;

and for the purposes of this paragraph a trustee is a non-professional trustee at a particular time if the trustee is not then a professional trustee for those purposes.

6

A trustee meets the requirements of this sub-paragraph if—

a

he was appointed as an initial trustee and, before being appointed as trustee, was selected by (and only by) the persons who later became the non-professional initial trustees, or

b

he was appointed as a replacement or additional trustee and, before being appointed as trustee, was selected by (and only by) the persons who were the non-professional trustees at the time of the selection.

7

Trustees are selected in accordance with this sub-paragraph if the process of selection is one under which—

a

all the persons who are employees of the companies which fall within the founding company’s group at the time of the selection, and who do not have and have never had a material interest in any such company, are (so far as is reasonably practicable) given the opportunity to stand for selection,

b

all the employees of the companies falling within the founding company’s group at the time of the selection are (so far as is reasonably practicable) given the opportunity to vote, and

c

persons gaining more votes are preferred to those gaining less.

8

Trustees are selected in accordance with this sub-paragraph if they are selected by persons elected to represent the employees of the companies falling within the founding company’s group at the time of the selection.

9

For the purposes of this paragraph a company falls within the founding company’s group at a particular time if—

a

it is at that time resident in the United Kingdom, and

b

it is the founding company or it is at that time controlled by the founding company.

F1713C

1

This paragraph applies where the trust deed provides that at any time while the trust subsists there must be a single trustee.

2

The trust deed must—

a

be so framed that at any time while the trust subsists the trustee is a company which at that time is resident in the United Kingdom and controlled by the founding company;

b

appoint the initial trustee;

c

contain rules for the removal of any trustee and for the appointment of a replacement trustee.

3

The trust deed must be so framed that at any time while the trust subsists the company which is then the trustee is a company so constituted that the conditions set out in sub-paragraph (4) below are then fulfilled as regards the persons who are then directors of the company; and in that sub-paragraph “the relevant time” is that time and “the trust company” is that company.

4

The conditions are that—

a

the number of directors is not less than three;

b

all the directors are resident in the United Kingdom;

c

the directors include at least one person who is a professional director and at least two persons who are non-professional directors;

d

at least half of the non-professional directors were, before being appointed as directors, selected in accordance with sub-paragraph (7) or (8) below;

e

all the directors so selected are persons who are employees of companies which fall within the founding company’s group at the relevant time, and who do not have and have never had a material interest in any such company.

5

For the purposes of this paragraph a director is a professional director at a particular time if—

a

the director is then a solicitor or a member of such other professional body as the Board may at that time allow for the purposes of this sub-paragraph,

b

the director is not then an employee of any company then falling within the founding company’s group,

c

the director is not then a director of any such company (other than the trust company), and

d

the director meets the requirements of sub-paragraph (6) below;

and for the purposes of this paragraph a director is a non-professional director at a particular time if the director is not then a professional director for those purposes.

6

A director meets the requirements of this sub-paragraph if—

a

he was appointed as an initial director and, before being appointed as director, was selected by (and only by) the persons who later became the non-professional initial directors, or

b

he was appointed as a replacement or additional director and, before being appointed as director, was selected by (and only by) the persons who were the non-professional directors at the time of the selection.

7

Directors are selected in accordance with this sub-paragraph if the process of selection is one under which—

a

all the persons who are employees of the companies which fall within the founding company’s group at the time of the selection, and who do not have and have never had a material interest in any such company, are (so far as is reasonably practicable) given the opportunity to stand for selection,

b

all the employees of the companies falling within the founding company’s group at the time of the selection are (so far as is reasonably practicable) given the opportunity to vote, and

c

persons gaining more votes are preferred to those gaining less.

8

Directors are selected in accordance with this sub-paragraph if they are selected by persons elected to represent the employees of the companies falling within the founding company’s group at the time of the selection.

9

For the purposes of this paragraph a company falls within the founding company’s group at a particular time if—

a

it is at that time resident in the United Kingdom, and

b

it is the founding company or it is at that time controlled by the founding company.

Beneficiaries

C274

1

The trust deed must contain provision as to the beneficiaries under thetrust, in accordance with the following rules.

2

The trust deed must provide that a person is a beneficiary at a particulartime (the relevant time) if—

a

he is at the relevant time an employee or director of a company which atthat time falls within the founding company’s group,

b

at each given time in a qualifying period he was an employee or directorof a company falling within the founding company’s group at that given time,and

c

F172in the case of a director, at that given time he worked as a director of the companyconcerned at the rate of at least 20 hours a week (ignoring such matters asholidays and sickness).

F1732A

The trust deed may provide that a person is a beneficiary at a given time if at that time he is eligible to participate in F264an SAYE option scheme—

a

which was established by a company within the founding company’s group, and

b

which is approved under F265Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003.

F1732B

Where a trust deed contains a rule conforming with sub-paragraph (2A) above it must provide that the only powers and duties which the trustees may exercise in relation to persons who are beneficiaries by virtue only of that rule are those which may be exercised in accordance with the provisions of a scheme such as is mentioned in that sub-paragraph.

3

The trust deed may provide that a person is a beneficiary at a particulartime (the relevant time) if—

a

he has at each given time in a qualifying period been an employee ordirector of a company falling within the founding company’s group at thatgiven time,

b

he has ceased to be an employee or director of the company or the companyhas ceased to fall within that group, and

c

at the relevant time a period of not more than eighteen months has elapsedsince he so ceased or the company so ceased (as the case may be).

4

The trust deed may provide for a person to be a beneficiary if the personis a charity and the circumstances are such that—

a

there is no person who is a beneficiary within any rule which is includedin the deed and conforms with sub-paragraph (2) F174, (2A) or (3) above, and

b

the trust is in consequence being wound up.

5

For the purposes of sub-paragraph (2) above a qualifying period is aperiod—

a

whose length is F175. . . not more than five years,

b

whose length is specified in the trust deed, and

c

which ends with the relevant time (within the meaning of thatsub-paragraph).

6

For the purposes of sub-paragraph (3) above a qualifying period is aperiod—

a

whose length is equal to that of the period specified in the trust deedfor the purposes of a rule which conforms with sub-paragraph (2) above, and

b

which ends when the person or company (as the case may be) ceased asmentioned in sub-paragraph (3)(b) above.

7

The trust deed must not provide for a person to be a beneficiary unlesshe falls within any rule which is included in the deed and conforms withsub-paragraph (2) F176, (2A), (3) or (4) above.

8

The trust deed must provide that, notwithstanding any other rule which isincluded in it, a person cannot be a beneficiary at a particular time (therelevant time) F177by virtue of a rule which conforms with sub-paragraph (2), (3) or (4) above if—

a

at that time he has a material interest in the founding company, or

b

at any time in the period of one year preceding the relevant time he hashad a material interest in that company.

9

For the purposes of this paragraph a company falls within the foundingcompany’s group at a particular time if—

a

it is at that time resident in the United Kingdom, and

b

it is the founding company or it is at that time controlled by thefounding company.

F40310

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustees’ functions

C285

1

The trust deed must contain provision as to the functions of the trustees.

2

The functions of the trustees must be so expressed that it is apparentthat their general functions are—

a

to receive sums from the founding company and other sums (by way of loanor otherwise);

b

to acquire securities;

c

to transfer securities or sums (or both) to persons who are beneficiariesunder the terms of the trust deed;

F178cc

to grant rights to acquire shares to persons who are beneficiaries under the terms of the trust deed;

d

to transfer securities to the trustees of profit sharing schemes approvedunder Schedule 9 to the Taxes Act 1988, for a price not less than the pricethe securities might reasonably be expected to fetch on a sale in the openmarket;

e

pending transfer, to retain the securities and to manage them (whether byexercising voting rights or otherwise).

Sums

C296

1

The trust deed must require that any sum received by the trustees—

a

must be expended within the relevant period,

b

may be expended only for one or more of the qualifying purposes, and

c

must, while it is retained by them, be kept as cash or be kept in anaccount with a bank or building society.

2

For the purposes of sub-paragraph (1) above the relevant period is theperiod of nine months beginning with the day found as follows—

a

in a case where the sum is received from the founding company, or acompany which is controlled by that company at the time the sum is received,the day following the end of the period of account in which the sum is chargedas an expense of the company from which it is received;

b

in any other case, the day the sum is received.

3

For the purposes of sub-paragraph (1) above each of the following is aqualifying purpose—

a

the acquisition of shares in the founding company;

b

the repayment of sums borrowed;

c

the payment of interest on sums borrowed;

d

the payment of any sum to a person who is a beneficiary under the termsof the trust deed;

e

the meeting of expenses.

4

The trust deed must provide that, in ascertaining for the purposes of arelevant rule whether a particular sum has been expended, sums receivedearlier by the trustees shall be treated as expended before sums received bythem later; and a relevant rule is one which is included in the trust deed andconforms with sub-paragraph (1) above.

5

The trust deed must provide that, where the trustees pay sums to differentbeneficiaries at the same time, all the sums must be paid on similar terms.

6

For the purposes of sub-paragraph (5) above, the fact that terms varyaccording to the levels of remuneration of beneficiaries, the length of theirservice, or similar factors, shall not be regarded as meaning that the termsare not similar.

Annotations:
Modifications etc. (not altering text)
C29

SeeFinance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts

Securities

C307

1

Subject to paragraph 8 below, the trust deed must provide that securitiesacquired by the trustees must be shares in the founding company which—

a

form part of the ordinary share capital of the company,

b

are fully paid up,

c

are not redeemable, and

d

are not subject to any restrictions other than restrictions which attachto all shares of the same class or a restriction authorised by sub-paragraph(2) below.

2

Subject to sub-paragraph (3) below, a restriction is authorised by thissub-paragraph if—

a

it is imposed by the founding company’s articles of association,

b

it requires all shares held by directors or employees of the foundingcompany, or of any other company which it controls for the time being, to bedisposed of on ceasing to be so held, and

c

it requires all shares acquired, in pursuance of rights or interestsobtained by such directors or employees, by persons who are not (or haveceased to be) such directors or employees to be disposed of when they areacquired.

3

A restriction is not authorised by sub-paragraph (2) above unless—

a

any disposal required by the restriction will be by way of sale for aconsideration in money on terms specified in the articles of association, and

b

the articles also contain general provisions by virtue of which any persondisposing of shares of the same class (whether or not held or acquired asmentioned in sub-paragraph (2) above) may be required to sell them on termswhich are the same as those mentioned in paragraph (a) above.

4

The trust deed must provide that shares in the founding company may notbe acquired by the trustees at a price exceeding the price they mightreasonably be expected to fetch on a sale in the open market.

5

The trust deed must provide that shares in the founding company may notbe acquired by the trustees at a time when that company is controlled byanother company.

Annotations:
Modifications etc. (not altering text)
C30

SeeFinance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts

C318

The trust deed may provide that the trustees may acquire securities otherthan shares in the founding company—

a

if they are securities issued to the trustees in exchange in circumstancesmentioned in section [F179135(1) of the M86Taxation of Chargeable Gains Act1992], or

b

if they are securities acquired by the trustees as a result of areorganisation, and the original shares the securities represent are sharesin the founding company (construing “reorganisation” and “originalshares” in accordance with section F179126 of that Act).

C329

1

The trust deed must provide that—

a

where the trustees transfer securities to a beneficiary, they must do soon qualifying terms;

b

the trustees must transfer securities before the expiry of the F180qualifying period beginning with the date on which they acquired them.

2

For the purposes of sub-paragraph (1) above a transfer of securities ismade on qualifying terms if—

a

all the securities transferred at the same time F181other than those transferred on a transfer such as is mentioned in sub-paragraph (2ZA) below are transferred on similarterms,

b

securities have been offered to all the persons who are beneficiariesunder the terms of the trust deed F182by virtue of a rule which conforms with paragraph 4(2), (3) or (4) above when the transfer is made, and

c

securities are transferred to all such F183persons who have accepted.

F1842ZA

For the purposes of sub-paragraph (1) above a transfer of securities is also made on qualifying terms if—

a

it is made to a person exercising a right to acquire shares, and

b

that right was obtained in accordance with the provisions of F266an SAYE option scheme—

i

which was established by, or by a company controlled by, the founding company, and

ii

which is approved under F267Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003, and

c

that right is being exercised in accordance with the provisions of that scheme, and

d

the consideration for the transfer is payable to the trustees.

F1852A

For the purposes of sub-paragraph (1) above the qualifying period is—

a

seven years, in the case of trusts established on or before the day on which the Finance Act 1994 was passed;

b

twenty years, in the case of other trusts.

3

For the purposes of sub-paragraph (2) above, the fact that terms varyaccording to the levels of remuneration of beneficiaries, the length of theirservice, or similar factors, shall not be regarded as meaning that the termsare not similar.

4

The trust deed must provide that, in ascertaining for the purposes of arelevant rule whether particular securities are transferred, securitiesacquired earlier by the trustees shall be treated as transferred by thembefore securities acquired by them later; and a relevant rule is one which isincluded in the trust deed and conforms with sub-paragraph (1) above.

Other features

C3310

The trust deed must not contain features which are not essential orreasonably incidental to the purpose of acquiring sums and securities, F186granting rights to acquire shares to persons who are eligible to participate in F262SAYE option schemes approved under Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003, transferring shares to such persons, transferring sums and securities to employees and directors, and transferringsecurities to the trustees of profit sharing schemes approved under F263Schedule 9 to the Taxes Act 1988.

Rules about acquisition etc.

C3411

1

The trust deed must provide that, for the purposes of the deed, thetrustees—

a

acquire securities when they become entitled to them;

b

transfer securities to another person when that other becomes entitled tothem;

c

retain securities if they remain entitled to them.

2

But if the deed provides as mentioned in paragraph 8 above, it mustprovide for the following exceptions to any rule which is included in it andconforms with sub-paragraph (1)(a) above, namely, that—

a

if securities are issued to the trustees in exchange in circumstancesmentioned in section [F187135(1) of the M87Taxation of Chargeable Gains Act 1992], they shall be treated as having acquired them when they became entitledto the securities for which they are exchanged;

b

if the trustees become entitled to securities as a result of areorganisation, they shall be treated as having acquired them when they becameentitled to the original shares which those securities represent (construing “reorganisation” and “original shares” in accordance with section [F187126] of that Act).

3

The trust deed must provide that—

a

if the trustees agree to take a transfer of securities, for the purposesof the deed they become entitled to them when the agreement is made and noton a later transfer made pursuant to the agreement;

b

if the trustees agree to transfer securities to another person, for thepurposes of the deed the other person becomes entitled to them when theagreement is made and not on a later transfer made pursuant to the agreement.

Position after trust’s establishment

C3512

A trust which was at the time it was established a qualifying employeeshare ownership trust shall continue to be one, except that it shall not besuch a trust at any time when the requirements mentioned in paragraph 3(3)(a)to (f) above are not satisfied. F188This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed.

F18912A

1

Subject to sub-paragraphs (2) and (3) below, a trust which was at the time it was established a qualifying employee share ownership trust shall continue to be one.

2

If the trust deed makes provision under paragraph 3A(a) above, the trust shall not be a qualifying employee share ownership trust at any time when the requirements mentioned in paragraph 3(3)(a) to (f) above are not satisfied.

3

If the trust deed makes provision under paragraph 3A(b) above, the trust shall not be a qualifying employee share ownership trust at any time when the conditions mentioned in paragraph 3B(4)(a) to (e) above are not satisfied.

4

If the trust deed makes provision under paragraph 3A(c) above, the trust shall not be a qualifying employee share ownership trust at any time when—

a

there is not a single trustee,

b

the trustee is not a company which is resident in the United Kingdom and controlled by the founding company, or

c

the conditions mentioned in paragraph 3C(4)(a) to (e) above are not satisfied as regards the directors of the trustee.

5

This paragraph applies in relation to trusts established after the day on which the Finance Act 1994 was passed.

C3613

A trust is an employee share ownership trust at a particular time (therelevant time) if it was a qualifying employee share ownership trust at thetime it was established; and it is immaterial whether or not it is aqualifying employee share ownership trust at the relevant time.

Annotations:
Modifications etc. (not altering text)
C36

SeeFinance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts

Interpretation

C3714

For the purposes of this Schedule the following are securities—

a

shares;

b

debentures.

Annotations:
Modifications etc. (not altering text)
C37

SeeFinance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts

C3815

For the purposes of this Schedule, the question whether one company is controlled by another shall be construed in accordance with F326section 995 of the Income Tax Act 2007.

C3916

1

For the purposes of this Schedule a person shall be treated as having a material interest in a company if he, either on his own or with one or more of his associates, or if any associate of his with or without other such associates,—

a

is the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control, more than 5 percent. of the ordinary share capital of the company, or

b

possesses, or is entitled to acquire, such rights as would, in the event of the winding-up of the company or in any other circumstances, give an entitlement to receive more than 5 per cent. of the assets which would then be available for distribution among the participators.

2

In this paragraph—

a

“associate” has the F392meaning given by section 448 of the Corporation Tax Act 2010, but subject to sub-paragraph (3) below,

b

“control” has the meaning given by F324section 995 of the Income Tax Act 2007, and

c

“participator” has the F393meaning given by section 454 of the Corporation Tax Act 2010.

3

Where a person has an interest in shares or obligations of the company asa beneficiary of an employee benefit trust, the trustees shall not be regarded as associates of his by reason only of that interest unless sub-paragraph (5)below applies in relation to him.

4

In sub-paragraph (3) above “employee benefit trust” has the same meaning as in paragraph 7 of Schedule 8 to the Taxes Act 1988, except that in its application for this purpose paragraph 7(5)(b) of that Schedule shall have effect as if it referred to the day on which this Act was passed instead of to 14th March 1989.

5

This sub-paragraph applies in relation to a person if at any time on or after the day on which this Act was passed—

a

he, either on his own or with any one or more of his associates, or

b

any associate of his, with or without other such associates,

has been the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control, more than 5 percent. of the ordinary share capital of the company.

6

Sub-paragraphs (9) to (12) of paragraph 7 of Schedule 8 to the Taxes Act1988 shall apply for the purposes of sub-paragraph (5) above as they apply for the purposes of that paragraph.

F19017

For the purposes of this Schedule a trust is established when the deed under which it is established is executed.

F24318

For the purposes of this Schedule “SAYE option scheme” has the same meaning as in the SAYE code (see section 516 of the Income Tax (Earnings and Pensions) Act 2003 (approved SAYE option schemes)).

F299SCHEDULE 6 Retirement Benefits Schemes

Section 75.

Annotations:
Amendments (Textual)
F299

Sch. 6 repealed (6.4.2006) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3 (with Sch. 36)

F299Part I Amendments of Taxes Act

F299 Preliminary

F2991

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Amendments

F2992

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2993

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2994

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2995

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2996

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2997

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2998

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2999

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29910

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29911

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29912

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29913

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29914

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29915

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29916

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29917

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Effect of amendments

F29918

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299Part II Approved Schemes: General

F299 Preliminary

F29919

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Remuneration

F29920

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29921

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29922

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Accelerated accrual

F29923

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29924

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Associated employments

F29925

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Connected schemes

F29926

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Augmentation

F29927

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Centralised schemes

F29928

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Election

F29929

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Supplementary

F29930

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299Part III Approved Schemes: Additional Voluntary Contributions

F299 Preliminary

F29931

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Abatement of benefits

F29932

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Return of surplus funds

F29933

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29934

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F299 Supplementary

F29935

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F300SCHEDULE 7 Personal Pension Schemes

Section 77.

Annotations:
Amendments (Textual)
F300

Sch. 7 repealed (6.4.2006) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3 (with Sch. 36)

F300Part I Amendments of Taxes Act

F3001

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3002

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3003

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3004

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3005

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3006

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3007

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3008

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3009

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F300Part II Schemes Approved Before Passing of This Act

F300 Interpretation

F30010

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F300 Lump sum to member

F30011

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30012

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F425SCHEDULE 8 Amendments of Chapter I of Part XII of Taxes Act 1988 (InsuranceCompanies)

Section 84.

Annotations:
Amendments (Textual)
F425

Sch. 8 omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 247(a)(ii)

F4251

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4252

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4253

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4254

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4255

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4256

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4257

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F312SCHEDULE 8A Modification of sections 82 TO 83A, 88 and 89 in relation to overseas life insurance companies

Section 89A.

Annotations:
Amendments (Textual)
F312

Sch. 8A repealed (with effect in accordance with reg. 1 of the amending S.I.) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), reg. 1, Sch. Pt. 1

F3121

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3121ZA

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3121ZB

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3121A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3121AA

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3121B

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3121C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3121D

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3122

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F346SCHEDULE 9 Life Policies Etc. Held by Companies

Section 90.

Annotations:
Amendments (Textual)
F346

Sch. 9 omitted (with effect in accordance with Sch. 14 para. 18 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 14 para. 17(a)

F3461

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3462

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3463

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3464

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3465

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3466

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3467

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3468

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F191SCHEDULE 10

Annotations:
Amendments (Textual)
F191

Sch. 10 repealed (29.4.1996) by 1996 c. 8, s. 205, Sch. 41 Pt. V(3) (with savings in Pt. IV Ch. II (ss. 80-105))

1

Schedule 4 to the Taxes Act 1988 (deep discount securities) shall beamended as mentioned in the following provisions of this Schedule.

2

1

Paragraph 1 shall be amended as follows.

2

The following paragraph shall be inserted after sub-paragraph(1)(d)—

dd

“a deep discount security” also means any redeemable security whichhas been issued by a public body (at whatever time) at a deep discount, otherthan—

i

a security such as is mentioned in paragraph (d)(ii) above;

ii

a security falling within sub-paragraph (5), (6) or (7) below;

3

In sub-paragraph (1)(g) after the words “the company” there shall beinserted the words “or the public body”.

4

The following shall be inserted at the end of sub-paragraph (2)— “ This sub-paragraph applies only in the case of securities issued by acompany. ”

5

The following sub-paragraphs shall be inserted after sub-paragraph(3)—

4

For the purposes of this Schedule a public body is any of the followingwhich is not a company—

a

a government, whether of the United Kingdom or elsewhere;

b

a public or local authority, whether in the United Kingdom or elsewhere.

5

A security falls within this sub-paragraph if it is a gilt-edged securityand—

a

it was issued before 14th March 1989, or

b

it was issued on or after that date but was issued under the sameprospectus as any gilt-edged security issued before that date.

6

A security falls within this sub-paragraph if it is a gilt-edged securityand—

a

it was issued under a prospectus under which no securities were issuedbefore 14th March 1989,

b

it was issued otherwise than on the occasion of the original issue underthe prospectus, and

c

all the securities issued on the occasion of the original issue under theprospectus are gilt-edged securities which are not deep discount securities.

7

A security falls within this sub-paragraph if it is not a gilt-edgedsecurity and was issued (at whatever time) under the same prospectus as anyother security which was issued before the security in question and which isnot a deep discount security.

8

For the purposes of this Schedule “gilt-edged security”has the same meaning as it has for the purposes of the 1979 Act.

3

The following sub-paragraph shall be inserted after paragraph 4(7)—

8

In the case of a deep discount security issued by a public body, thisparagraph applies where a disposal is made on or after 14th March 1989(whatever the date of acquisition).

4

In paragraph 11(1) after the words “deep discount security” thereshall be inserted the words “issued by a company”.

5

The following paragraph shall be inserted after paragraph 11—

11A

Where any deep discount security issued by a public body is redeemedbefore the redemption date by the body which issued it, paragraph 4 aboveshall have effect subject to paragraph 11(2) above (ignoring the wordsfollowing paragraph (b)).

6

The following sub-paragraph shall be inserted after paragraph 13(2)—

3

Every public body which issues deep discount securities on or after 1stAugust 1989 shall cause to be shown on the certificate of each such securitythe income element for each income period between the date of issue of thesecurity and the redemption date.

7

The following shall be inserted after paragraph 14—

15 Retirement benefit schemes

1

In a case where—

a

paragraph 4 above would apply (apart from this paragraph) to a disposalof a security, and

b

immediately before the disposal was made the security was held for thepurposes of an exempt approved scheme (within the meaning of Chapter I of PartXIV),

that paragraph shall not apply to the disposal.

2

Sub-paragraph (1) above shall not apply unless the disposal is made on orafter 14th March 1989.

16 Stock lending

1

In a case where—

a

a security is the subject of a transfer which falls within section 129(3),and

b

the transfer constitutes a disposal to which (apart from this paragraph)paragraph 4 above would apply,

that paragraph shall not apply to the disposal.

2

Sub-paragraph (1) above shall not apply unless the disposal is made on orafter 14th March 1989.

17 Trustees

1

Where on the disposal by trustees of a deep discount security an amountis treated as income chargeable to tax by virtue of paragraph 4(1) above, therate at which it is chargeable shall be a rate equal to the sum of the basicrate and the additional rate for the year of assessment in which the disposalis made.

2

Where the trustees are trustees of a scheme to which section 469 applies,sub-paragraph (1) above shall not apply if or to the extent that the amountis treated as income in the accounts of the scheme.

3

Sub-paragraph (1) above shall not apply unless the disposal is made on orafter 14th March 1989.

18 Underwriters

1

An underwriting member of Lloyd’s shall be treated for the purposes ofthis Schedule as absolutely entitled as against the trustees to the securitiesforming part of his premiums trust fund, his special reserve fund (if any) andany other trust fund required or authorised by the rules of Lloyd’s, orrequired by the underwriting agent through whom his business or any part ofit is carried on, to be kept in connection with the business.

2

Sub-paragraph (1) above applies where a disposal is made on or after 14thMarch 1989 (whatever the date of acquisition).

3

Where a security forms part of a premiums trust fund at the end of 31stDecember of any relevant year, for the purposes of this Schedule the trusteesof the fund shall be deemed to dispose of the security at that time; and forthis purpose relevant years are 1989 and subsequent years.

4

Where a security forms part of a premiums trust fund at the beginning of1st January of any relevant year, for the purposes of this Schedule thetrustees of the fund shall be deemed to acquire the security at that time; andfor this purpose relevant years are 1990 and subsequent years.

5

Sub-paragraph (6) below applies where the following state of affairsexists at the beginning of 1st January of any year or the end of 31st Decemberof any year—

a

securities have been transferred by the trustees of a premiums trust fundin pursuance of an arrangement mentioned in section 129(1) or (2),

b

the transfer was made to enable another person to fulfil a contract or tomake a transfer,

c

securities have not been transferred in return, and

d

section 129(3) applies to the transfer made by the trustees.

6

The securities transferred by the trustees shall be treated for thepurposes of sub-paragraphs (3) and (4) above as if they formed part of thepremiums trust fund at the beginning of 1st January concerned or the end of31st December concerned (as the case may be).

7

Paragraph 7 above shall have effect subject to sub-paragraph (3) above.

8

Paragraph 7(2) above shall not apply where—

a

the deceased was an underwriting member of Lloyd’s who died on or after14th March 1989, and

b

immediately before his death the security concerned formed part of apremiums trust fund, a special reserve fund or any other trust fund requiredor authorised by the rules of Lloyd’s, or required by the underwriting agentthrough whom the deceased’s business or any part of it was carried on, to bekept in connection with the business.

9

In a case where an amount treated as income chargeable to tax by virtueof paragraph 4(1) above constitutes profits or gains mentioned in section450(1)—

a

section 450(1)(b) shall apply; and

b

paragraph 4(1)(b) above shall not apply.

10

For the purpose of computing income tax for the year 1987–88sub-paragraph (9) above shall have effect as if—

a

the reference to section 450(1) were to paragraph 2 of Schedule 16 to theFinance Act 1973, and

b

the reference to section 450(1)(b) were to paragraph 2(b) of thatSchedule.

11

In this paragraph “business” and “premiums trustfund” have the meanings given by section 457.

19 Gilts: special rules

1

In a case where—

a

securities have been issued by a public body under a prospectus underwhich no securities were issued before 14th March 1989,

b

some of the securities issued under the prospectus are gilt-edgedsecurities which are would-be deep discount securities,

c

some of the securities issued under the prospectus are gilt-edgedsecurities which are not would-be deep discount securities, and

d

there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities falling within paragraph (c) above (at that time),

sub-paragraph (2) below shall apply in relation to any gilt-edgedsecurity which has been or is issued under the prospectus at any time (whetherbefore, at or after the time mentioned in paragraph (d) above).

2

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(d) above, paragraphs 4, 7, 8, 11A, 12 and 14to 18 above shall have effect as if—

a

the security were a deep discount security,

b

it had been issued as such (whatever the time it was issued), and

c

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (1) above a would-be deep discountsecurity is a security which would be a deep discount security apart fromparagraph 1(6) above.

4

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a disposal for the purposes of the1979 Act, the death of a person competent to dispose of the security, adisposal mentioned in paragraph 18(3) above, and an acquisition mentioned inparagraph 18(4) above.

20 Non-gilts: special rules

1

In a case where—

a

all the securities issued by a public body on the occasion of the originalissue under a particular prospectus (whatever the time of the issue) areneither gilt-edged securities nor deep discount securities,

b

some of the securities issued under the prospectus are not gilt-edgedsecurities but are new would-be deep discount securities, and

c

there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities which (looking at the state of affairs at that time) havebeen issued under the prospectus and are neither gilt-edged securities nor newwould-be deep discount securities,

sub-paragraph (2) below shall apply in relation to any security which isnot a gilt-edged security but which has been or is issued under the prospectusat any time (whether before, at or after the time mentioned in paragraph (c)above).

2

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(c) above, paragraphs 4, 7, 8, 11A, 12 and 14to 18 above shall have effect as if—

a

the security were a deep discount security,

b

it had been issued as such (whatever the time it was issued), and

c

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (1) above a new would-be deep discountsecurity is a security which—

a

would be a deep discount security apart from paragraph 1(7) above, and

b

was issued on or after 14th March 1989.

4

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a disposal for the purposes of the1979 Act, the death of a person competent to dispose of the security, adisposal mentioned in paragraph 18(3) above, and an acquisition mentioned inparagraph 18(4) above.

F192SCHEDULE 11

Annotations:
Amendments (Textual)
F192

Sch. 11 repealed (29.4.1996) by 1996 c. 8, ss. 104, 205, Sch. 14 para. 57, Sch. 41 Pt. V(3) (with savings in Pt. IV Ch. II (ss. 80-105))

Deep gain securities

1

C421

For the purposes of this Schedule a deep gain security is a redeemable security (whenever issued) which fulfils the first and second conditions.

2

The first condition is that, taking the security at the time it is issuedand assuming redemption, the amount payable on redemption might constitute adeep gain; and if the security is capable of redemption on one of a number ofoccasions, this condition is fulfilled if it is fulfilled as regards any oneof them.

3

For the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity only at the option of the person who issued the security(and no other person).

F2123A

In the case of a security issued before 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity otherwise than in pursuance of the exercise by the person who holds the security for the time being of an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur.

3B

In the case of a security issued on or after 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity otherwise than at the option of the person who holds the security for the time being and as regards which the following conditions are fulfilled (judged at the time of the security’s issue)—

a

the event occasioning redemption is such that, if it occurred and there was no provision for redemption, the interests of the person holding the security at the time of the occurrence might be adversely affected,

b

the event occasioning redemption is neither certain nor likely to occur,

c

the event occasioning redemption is not one of a number of events occasioning or allowing redemption before maturity at least one of which is certain or likely to occur, and

d

the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might be expected to accrue from the provision for redemption.

3C

The condition set out in sub-paragraph (3B)(a) above is fulfilled if it is fulfilled by reference to any one potential holder, whether or not it is fulfilled by reference to other potential holders.

(3D) In a case where—

a

the security is one which under the terms of issue can be converted into or exchanged for a security of a different kind, and

b

it falls to be decided whether the condition set out in paragraph (b) or (c) of sub-paragraph (3B) above is fulfilled,

the condition concerned shall not be treated as fulfilled unless it is fulfilled having regard only to circumstances in which (judged at the time of the security’s issue) the right to convert or exchange cannot be or is unlikely to be exercised.

3E

In the case of a security issued on or after 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity at the option of the person who holds the security for the time being and as regards which the following conditions are fulfilled (judged at the time of the security’s issue)—

a

the event allowing the option to be exercised is such that, if it occurred and there was no provision for redemption, the interests of the person holding the security at the time of the occurrence might be adversely affected,

b

the event allowing the option to be exercised is neither certain nor likely to occur,

c

the event allowing the option to be exercised is not one of a number of events occasioning or allowing redemption before maturity at least one of which is certain or likely to occur, and

d

the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might be expected to accrue from the provision for redemption.

3F

The condition set out in sub-paragraph (3E)(a) above is fulfilled if it is fulfilled by reference to any one potential holder, whether or not it is fulfilled by reference to other potential holders.

(3G) In a case where—

a

the security is one which under the terms of issue can be converted into or exchanged for a security of a different kind, and

b

it falls to be decided whether the condition set out in paragraph (b) or (c) of sub-paragraph (3E) above is fulfilled,

the condition concerned shall not be treated as fulfilled unless it is fulfilled having regard only to circumstances in which (judged at the time of the security’s issue) the right to convert or exchange cannot be or is unlikely to be exercised.

4

The second condition is that the security—

a

is not a deep discount security (either because the amount payable onredemption is not known at issue or for some other reason),

b

is not a share in a company,

c

is not a qualifying indexed security,

d

is not a convertible security, and

e

does not fall within sub-paragraph (5), (6) or (7) below.

5

A security falls within this sub-paragraph if it is a gilt-edged securityand—

a

it was issued before 14th March 1989, or

b

it was issued on or after that date but was issued under the sameprospectus as any gilt-edged security issued before that date.

6

A security falls within this sub-paragraph if it is a gilt-edged securityand—

a

it was issued under a prospectus under which no securities were issuedbefore 14th March 1989,

b

it was issued otherwise than on the occasion of the original issue underthe prospectus, and

c

all the securities issued on the occasion of the original issue under theprospectus are gilt-edged securities which are not deep gain securities.

7

A security falls within this sub-paragraph if it is not a gilt-edgedsecurity and was issued (at whatever time) under the same prospectus as anyother security which was issued before the security in question and which isnot a deep gain security.

8

For the purposes of this paragraph—

a

a deep discount security is a security which is a deep discount securityfor the purposes of Schedule 4 to the Taxes Act 1988,

b

“qualifying indexed security” has the meaning given byparagraph 2 below, and

c

a gilt-edged security is a security which is a gilt-edged security for thepurposes of the M101F213Taxation of Chargeable Gains Act 1992 .

9

For the purposes of this paragraph the amount payable on redemption of asecurity constitutes a deep gain if the issue price is less than the amountso payable, and the amount by which it is less represents more than—

a

15 per cent. of the amount so payable, or

b

half Y per cent. of the amount so payable, where Y is the number ofcomplete years between the date of issue and the redemption date.

10

For the purposes of this paragraph the amount payable on redemption doesnot include any amount payable by way of interest.

Qualifying indexed securities

2

1

For the purposes of paragraph 1 above a qualifying indexed security is asecurity which fulfils each of the conditions set out below.

2

The first condition is that—

a

the security is denominated in sterling and under the terms of issue theamount payable on redemption is determined by reference to the movement of theretail prices index,

b

the security is denominated in a currency other than sterling and underthe terms of issue the amount payable on redemption is determined by referenceto any similar general index of prices which is published by the government,or by an agent of the government, of the territory in whose currency thesecurity is denominated, or

c

F214the security was quoted in the official list of arecognised stock exchange at the time it was issued, and under the terms of issue the amount payable on redemption isdetermined by reference to the movement of a published index of prices ofshares quoted in the official list of a recognised stock exchange.

3

The second condition is that the terms of issue make no provision forconversion into, or redemption in, a currency other than that in which thesecurity is denominated on issue.

4

The third condition is that under the terms of issue—

a

interest is payable on the security,

b

not more than one year can elapse between the day of issue and the firstday on which interest becomes payable, or between any day on which interestbecomes payable and the next day on which it becomes payable,

c

the interest payable is determined by reference to a rate which is notless than a reasonable commercial rate (judged by reference to the date ofissue and by reference to securities of a similar nature to the one inquestion), and

d

the interest payable is also determined by reference to the movement ofthe index by reference to which the amount payable on redemption isdetermined.

5

The fourth condition is that where that index is applied to determine theamount payable on redemption or to determine interest it must, under the termsof issue, be applied precisely and without restriction.

6

The fifth condition is that—

a

the security is expressed to be issued for a definite period stated on theface of the security, and

b

the period so stated commences with the day of issue and is five years ormore.

7

The sixth condition is that the terms of issue contain no provisionenabling the person who holds the security for the time being to require anyof the following before the expiry of a period which commences with the dayof issue and which is five years or more—

a

the security to be repurchased by the person who issued it;

b

the security to be purchased by a person other than the person who issuedit;

c

the security to be converted into another kind of security;

d

the security to be redeemed in circumstances other than any of thequalifying circumstances (set out in sub-paragraph (13) below).

8

The seventh condition is that, where the issue is handled by an agent forthe person making the issue or by an underwriter, the terms on which the agentor underwriter offers the security—

a

contain no provision for the security to be repurchased by the person whoissued it, converted into another kind of security, or redeemed, before theexpiry of a period which commences with the day of issue and which is fiveyears or more, and

b

contain no provision enabling the person who holds the security for thetime being to require the security to be purchased, by a person other than theperson who issued it, before the expiry of a period which commences with theday of issue and which is five years or more.

F2158A

If a security was issued before 9th June 1989, was not quoted in theofficial list of a recognised stock exchange at the time it was issued, butwas quoted in such a list on 8th June 1989, for the purposes of subparagraph(2)(c) above it shall be deemed to have been quoted in that list at the timeit was issued.

8B

If a security was issued on or after 9th June 1989, and was quoted in theofficial list of a recognised stock exchange at a time aftet it was issued butbefore the end of the qualifying period, for the purposes of sub-paragraph(2)(c) above it shall be deemed to have been quoted in that list at the timeit was issued; and the qualifying period is the period of one month beginningwith the day on which the security was issued

9

For the purposes of sub-paragraph (5) above “redemption” does not include any redemption which may bemade before maturity only at the option of the person who issued the security(and no other person).

10

In a case where the amount payable on redemption, or the amount ofinterest, is under the terms of issue determined by reference to the movementof the index for a period (a notional period) in place of a later actualperiod (a process commonly known as lagging) the fourth condition shall betreated as fulfilled if the following rules are fulfilled—

a

under the terms of issue the notional period must start not more thaneight months before the actual period starts and must end not more than eightmonths before the actual period ends, and

b

where the index is applied for the notional period it must, under theterms of issue, be applied precisely and without restriction.

11

In a case where the terms of issue contain provision for the amountpayable on redemption to be not less than an amount stated in the terms, theprovision shall not prevent the fourth condition being fulfilled if—

a

the security was issued before 9th June 1989, and

b

the amount stated does not constitute a deep gain (within the meaninggiven by paragraph 1(9) above).

F21511A

In a case where the terms of issue contain provision for the amountpayable on redemption to be not less than a specified percentage of the issueprice, the provision shall not prevent the fourth condition being fulfilledif the specified percentage is not greater than 10.

12

In a case where—

a

the terms of issue contain provision for the amount payable on redemptionin any of the qualifying circumstances (set out in sub-paragraph (13) below)to be not less than an amount stated in the terms, and

b

the security was issued before 9th June 1989,

the provision shall not prevent the fourth condition being fulfilled.

F21612A

In a case where—

a

the terms of issue contain provision for the amount payable on redemptionin any of the qualifying circumstances (set out in sub-paragraph (13) below)to be not more than the issue price, and

b

the security was issued on or after 9th June 1989,

the provision shall not prevent the fourth condition being fulfilled.

13

For the purposes of sub-paragraphs (7) F217, (12) and (12A) above the following are qualifying circumstances—

a

there is a fundamental change in the rules governing the index and thechange would be detrimental to the interests of the person who holds thesecurity for the time being;

b

the index ceases to be published without being replaced by a comparableindex;

F218c

in the case of a security issued before 13th November 1991, any circumstances except circumstances in which the person who holds the security for the time being exercises an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur;

d

in the case of a security issued on or after 13th November 1991, any circumstances for redemption which may be made before maturity otherwise than at the option of the person who holds the security for the time being and as regards which the conditions set out in paragraph 1(3B) above are fulfilled (judged at the time of the security’s issue and read subject to paragraph 1(3C) and (3D) above);

e

in the case of a security issued on or after 13th November 1991, any circumstances for redemption which may be made before maturity at the option of the person who holds the security for the time being and as regards which the conditions set out in paragraph 1(3E) above are fulfilled (judged at the time of the security’s issue and read subject to paragraph 1(3F) and (3G) above).

14

In a case where an issue is handled by an agent for the person making theissue, or by an underwriter, for the purposes of sub-paragraphs (2) to (5) and(10) above the terms of issue shall be taken to include any terms on which theagent or underwriter offers the security.

15

For the purposes of this paragraph the amount payable on redemption doesnot include any amount payable by way of interest.

16

For the purposes of this paragraph “control” (in relation to acompany) shall be construed in accordance with section 840 of the Taxes Act1988.

Convertible securities

3

1

For the purposes of paragraph 1 above a security is a convertible securityif—

a

it was issued by a company before 9th June 1989,

b

under the terms of issue it can be converted into or exchanged for sharecapital in a company (whether or not the company is the one which issued thesecurity), and

c

the condition set out in sub-paragraph (2) below is fulfilled.

2

The condition is that—

a

at some time in the qualifying period the security was quoted in theofficial list of a recognised stock exchange,

b

at some time in that period relevant share capital was so quoted, or

c

each of paragraphs (a) and (b) above is satisfied (though not necessarilyas regards the same time).

3

For the purposes of sub-paragraph (2) above the qualifying period is theperiod of one month beginning with the day on which the security was issued.

4

For the purposes of sub-paragraph (2) above relevant share capital isshare capital in the company into whose share capital the security can beconverted or for whose share capital the security can be exchanged; andrelevant share capital need not be share capital into or for which thesecurity can be converted or exchanged.

5

References in this paragraph to share capital are to share capital bywhatever name called.

F230Issue price

Annotations:
Amendments (Textual)

3A

1

This paragraph applies where—

a

securities (old securities) of a particular kind are issued by way of the original issue of securities of that kind,

b

on a later occasion securities (new securities) of the same kind are issued,

c

a sum (the extra return) is payable in respect of each new security, by the person issuing it, to reflect the fact that interest is accruing on the old securities,

d

the issue price of each new security includes an element (whether or not separately identified) representing payment for the extra return, and

e

the extra return is equal to the amount of interest payable for the relevant period on each old security.

2

In such a case, the issue price of each new security shall be deemed for the purposes of paragraph 1(9) above to be its actual issue price less an amount equal to the extra return payable in respect of the security.

3

For the purposes of this paragraph securities are of the same kind if they are treated as being of the same kind by the practice of a recognised stock exchange or would be so treated if dealt with on such a stock exchange.

4

For the purposes of this paragraph the relevant period is the period beginning with the day following the relevant day and ending with the day on which the new securities are issued.

5

For the purposes of this paragraph the relevant day is—

a

the last (or only) interest payment day to fall in respect of the old securities before the day on which the new securities are issued, or

b

the day on which the old securities were issued, in a case where no interest payment day fell in respect of them before the day on which the new securities are issued;

and an interest payment day, in relation to the old securities, is a day on which interest is payable under them.

Meaning of transfer etc.

4

1

This paragraph has effect for the purposes of this Schedule.

2

“Transfer”, in relation to a security, means transfer by wayof sale, exchange, gift or otherwise.

F2192A

But (notwithstanding sub-paragraph (2) above) “transfer”does not include a transfer made ona conversion of a security into sharecapital in a company.

3

Where an agreement for the transfer of a security is made, it istransferred, and the person to whom it is agreed to be transferred becomesentitled to it, when the agreement is made and not on a later transfer madepursuant to the agreement; and “entitled”, “transfer” and cognateexpressions shall be construed accordingly.

4

A person holds a security at a particular time if he is entitled to it atthe time.

5

A person acquires a security when he becomes entitled to it; and “acquisition” shall be construed accordingly.

6

If an agreement is conditional (whether on the exercise of an option orotherwise) for the purposes of sub-paragraph (3) above it is made when thecondition is exercised.

Charge to tax on transfer

5

1

This paragraph applies if—

a

there is a transfer of a deep gain security on or after 14th March 1989(irrespective of when the person making the transfer acquired it), and

b

the amount obtained on transfer exceeds the amount paid on acquisition.

2

In such a case—

a

an amount equal to the difference between those two amounts, less theamount of any costs, shall be treated as income of the person making thetransfer,

b

the income shall be chargeable to tax under Case III or Case IV (as thecase may be) of Schedule D,

c

the income shall be treated as arising in the year of assessment in whichthe transfer takes place, and

d

notwithstanding anything in sections 64 to 67 of the Taxes Act 1988, thetax shall be computed on the income arising in the year of assessment forwhich the computation is made.

3

For the purposes of this paragraph—

a

the amount obtained on transfer is the amount obtained, in respect of thetransfer, by the person making it,

b

the amount paid on acquisition is the amount paid by that person inrespect of his acquisition of the security (or his last acquisition of itbefore the transfer), and

c

costs are the costs incurred by that person in connection with thetransfer and with his acquisition of the security (or his last acquisition ofit before the transfer).

4

For the purposes of sub-paragraph (3)(a) above the person making thetransfer shall be treated as obtaining in respect of it—

a

any amount he actually obtains in respect of it, and

b

any amount he is entitled to obtain, but does not obtain, in respect ofit.

5

Sub-paragraph (4) above shall not apply where paragraph 7, 8 or 9 belowapplies.

F231 Exchange gains and losses

Annotations:
Amendments (Textual)
F231

Sch. 11 para. 5A and crossheading inserted (27.7.1993) by 1993 c. 34, s. 170, Sch. 18 para.7

F2325A

1

This paragraph applies where—

a

there is a transfer or redemption of a deep gain security, and

b

the person making the transfer or (as the case may be) the person who was entitled to the security immediately before redemption is a qualifying company.

2

For the purposes of paragraph 5 above the amount treated as income—

a

shall be increased by the amount of any non-trading exchange loss, or the aggregate of the amounts of any non-trading exchange losses, accruing to the company as regards the underlying right for any accrual period or periods constituting or falling within the holding period;

b

shall (after taking account of paragraph (a) above) be reduced by the amount of any non-trading exchange gain, or the aggregate of the amounts of any non-trading exchange gains, accruing to the company as regards the underlying right for any accrual period or periods constituting or falling within the holding period.

3

For the purposes of this paragraph—

a

the underlying right is the right to settlement under the debt on the security;

b

“accrual period” and “qualifying company” have the same meanings as in Chapter II of Part II of the Finance Act 1993;

c

the question whether a non-trading exchange gain or loss accrues to the company as regards the underlying right for an accrual period shall be decided in accordance with that Chapter.

4

For the purposes of this paragraph the holding period is the period which—

a

begins when the company acquired (or last acquired) the security before the transfer or redemption, and

b

ends when the transfer or redemption is made.

Redemption

6

1

Paragraph 5 above applies where there is a redemption of a deep gainsecurity as well as where there is a transfer.

2

In its application by virtue of sub-paragraph (1) above, paragraph 5 aboveshall have effect as if—

a

references to the person making the transfer were to the person who wasentitled to the security immediately before redemption, and

b

other references to transfer were to redemption.

Death

7

C431

Where an individual who is entitled to a security dies, for the purposesof this Schedule—

a

he shall be treated as transferring it to his personal representativesimmediately before his death, and

b

he shall be treated as obtaining in respect of the transfer an amountequal to the market value of the security at the time of the transfer.

2

Where a security is transferred by personal representatives to a legatee,for the purposes of paragraph 5 above they shall be treated as obtaining inrespect of the transfer an amount equal to the market value of the securityat the time of the transfer.

3

In sub-paragraph (2) above “legatee” includes any person taking (whether beneficiallyor as trustee) under a testamentary disposition or on an intestacy or partialintestacy, including any person taking by virtue of an appropriation by thepersonal representatives in or towards satisfaction of a legacy or otherinterest or share in the deceased’s property.

Connected persons

8

1

This paragraph applies where a security is transferred from one person toanother (whether or not on or after 14th March 1989) and they are connectedwith each other.

2

For the purposes of paragraph 5 above—

a

the person making the transfer shall be treated as obtaining in respectof it an amount equal to the market value of the security at the time of thetransfer, and

b

the person to whom the transfer is made shall be treated as paying inrespect of his acquisition of the security an amount equal to that marketvalue.

3

Section 839 of the Taxes Act 1988 (connected persons) shall apply for thepurposes of this paragraph.

Market value

9

1

This paragraph applies where a security is transferred from one person toanother (whether or not on or after 14th March 1989) and—

a

the transfer is made for a consideration which consists of or includesconsideration not in money or money’s worth, or

b

the transfer is made otherwise than by way of a bargain made at arm’slength.

2

For the purposes of paragraph 5 above—

a

the person making the transfer shall be treated as obtaining in respectof it an amount equal to the market value of the security at the time of thetransfer, and

b

the person to whom the transfer is made shall be treated as paying inrespect of his acquisition of the security an amount equal to that marketvalue.

Underwriters

F22010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustees

11

1

Where on a transfer or redemption of a security by trustees an amount istreated as income chargeable to tax by virtue of paragraph 5 above, the rateat which it is chargeable shall be F221the rate applicable to trusts for the year of assessment in which the transfer ismade.

2

Where the trustees are trustees of a scheme to which section 469 of theTaxes Act 1988 applies, sub-paragraph (1) above shall not apply if or to theextent that the amount is treated as income in the accounts of the scheme.

Foreign currency

12

1

Where, for the purposes of paragraph 5 above and apart from thisparagraph, the amount obtained on transfer would be an amount expressed in acurrency other than sterling, it shall be treated for those purposes as thesterling equivalent on the day of the transfer of the amount so expressed.

2

Where, for the purposes of paragraph 5 above and apart from thisparagraph, the amount paid on acquisition would be an amount expressed in acurrency other than sterling, it shall be treated for those purposes as thesterling equivalent on the day of the acquisition of the amount so expressed.

3

Where, for the purposes of paragraph 5 above and apart from thisparagraph, the amount of the costs incurred by a person in connection with atransfer would be an amount expressed in a currency other than sterling, itshall be treated for those purposes as the sterling equivalent on the day ofthe transfer of the amount so expressed.

4

Where, for the purposes of paragraph 5 above and apart from thisparagraph, the amount of the costs incurred by a person in connection with anacquisition would be an amount expressed in a currency other than sterling,it shall be treated for those purposes as the sterling equivalent on the dayof the acquisition of the amount so expressed.

5

In sub-paragraphs (1) and (3) above “transfer” includes “redemption”.

6

For the purposes of this paragraph the sterling equivalent of an amounton a particular day is the sterling equivalent calculated by reference to theLondon closing rate of exchange for that day.

Receipts in United Kingdom

13

1

Sub-paragraph (2) below applies where—

a

by virtue of paragraph 5(2) above an amount is treated as income of aperson and as chargeable to tax under Case IV of Schedule D, and

b

the person satisfies the Board, on a claim in that behalf, that he is notdomiciled in the United Kingdom, or that (being a Commonwealth citizen or acitizen of the Republic of Ireland) he is not ordinarily resident in theUnited Kingdom.

2

In such a case—

a

any amounts received in the United Kingdom in respect of the amounttreated as income shall be treated as income arising in the year of assessmentin which they are so received, and

b

paragraph 5(2) above shall have effect with the substitution of paragraph(a) above for paragraph 5(2)(c).

3

For the purposes of sub-paragraph (2) above—

a

there shall be treated as received in the United Kingdom all amounts paid,used or enjoyed in, or in any manner or form transmitted or brought to, theUnited Kingdom, and

b

subsections (6) to (9) of section 65 of the Taxes Act 1988 shall apply asthey apply for the purposes of subsection (5) of that section.

Retirement benefit schemes

14

In a case where—

a

paragraph 5 above would apply (apart from this paragraph) to a transferor redemption of a security, and

b

immediately before the transfer or redemption was made the security washeld for the purposes of an exempt approved scheme (within the meaning ofChapter I of Part XIV of the Taxes Act 1988),

that paragraph shall not apply to the transfer or redemption.

Charities

15

1

In a case where—

a

paragraph 5 above would apply (apart from this paragraph) to a transferor redemption of a security,

b

immediately before the transfer or redemption was made the security washeld by a charity, and

c

the amount which would (apart from this paragraph) be treated as incomeby virtue of paragraph 5 above is applicable and applied for charitablepurposes,

that paragraph shall not apply to the transfer or redemption.

2

In this paragraph “charity” has the same meaning as in section 506 of the TaxesAct 1988.

Stock lending

16

In a case where—

a

a security is the subject of a transfer which falls within section 129(3)of the Taxes Act 1988, and

b

paragraph 5 above would apply to the transfer (apart from this paragraph),

that paragraph shall not apply to the transfer.

Accrued income scheme

17

In a case where—

a

a security is the subject of a transfer to which paragraph 5 aboveapplies, and

b

apart from this paragraph, the transfer would be a transfer for thepurposes of sections 710 to 728 of the Taxes Act 1988,

the transfer shall not be a transfer for those purposes.

Other provisions excluded

18

In a case where paragraph 5 above applies to the redemption of a security,sections 123 and 348 to 350 of the Taxes Act 1988 shall not apply to anyproceeds of the redemption.

Identification of securities

19

Section F222108 of the M102Taxation of Chargeable Gains Act 1992 shall apply to theidentification, for the purposes of this Schedule, of deep gain securitiestransferred or redeemed as it applies to the identification, for the purposesof capital gains tax, of deep discount securities disposed of.

F223Early redemption: special rules

Annotations:
Amendments (Textual)
F223

Sch. 11 para 19A and cross heading inserted (retrospectively and deemed always to have had effect) by Finance (No. 2) Act 1992 (c. 48), s. 33, Sch. 7 paras4, 7, 8

F22419A

1

Sub-paragraph (2) below applies where—

a

a security is issued on or after 13th November 1991,

b

it would be a deep gain security apart from paragraph 1(3B) or (3E) above,

c

it is redeemed before maturity, and

d

immediately before redemption it was held by a person connected with the person who issued it.

2

As regards the redemption, paragraphs 5 to 19 above shall have effect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

Sub-paragraph (4) below applies where—

a

the conditions set out in sub-paragraph (1)(a) to (c) above are fulfilled,

b

the security was transferred in the period ending with redemption and beginning with the day falling one year before the day of redemption, and

c

the transfer was by a person connected with the person who issued the security.

4

As regards the transfer, paragraphs 5 to 19 above shall have effect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

5

Section 839 of the Taxes Act 1988 (connected persons) shall apply for the purposes of this paragraph.

Gilts: special rules

20

1

In a case where—

a

securities have been issued under a prospectus under which no securitieswere issued before 14th March 1989,

b

some of the securities issued under the prospectus are gilt-edgedsecurities which are would-be deep gain securities,

c

some of the securities issued under the prospectus are gilt-edgedsecurities which are not would-be deep gain securities, and

d

there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities falling within paragraph (c) above (at that time),

sub-paragraph (2) below shall apply in relation to any gilt-edgedsecurity which has been or is issued under the prospectus at any time (whetherbefore, at or after the time mentioned in paragraph (d) above).

2

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(d) above, paragraphs 5 to 19 above shall haveeffect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (1) above a would-be deep gain securityis a security which would be a deep gain security apart from paragraph 1(6)above.

4

In sub-paragraph (1) above “gilt-edged security” has the same meaning as in paragraph1 above.

5

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

Non-gilts: special rules

21

1

In a case where—

a

all the securities issued on the occasion of the original issue under aparticular prospectus (whatever the time of the issue) are neither gilt-edgedsecurities nor deep gain securities,

b

some of the securities issued under the prospectus are not gilt-edgedsecurities but are new would-be deep gain securities, and

c

there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities which (looking at the state of affairs at that time) havebeen issued under the prospectus and are neither gilt-edged securities nor newwould-be deep gain securities,

sub-paragraph (2) below shall apply in relation to any security which isnot a gilt-edged security but which has been or is issued under the prospectusat any time (whether before, at or after the time mentioned in paragraph (c)above).

2

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(c) above, paragraphs 5 to 19 above shall haveeffect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (1) above F225, and subject to paragraph 21A below, a new would-be deep gain security is a security which—

a

would be a deep gain security apart from paragraph 1(7) above, and

b

was issued on or after 14th March 1989.

4

In sub-paragraph (1) above “gilt-edged security” has the same meaning as in paragraph1 above.

5

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

F22621A

1

A security which (apart from this paragraph) would be a new would-be deep gain security for the purposes of paragraph 21(1) above is not such a security if the following three conditions are fulfilled.

2

The first condition is that all the securities issued on the occasion of the original issue were issued before 13th November 1991.

3

The second condition is that the security is issued on or after 13th November 1991.

4

The third condition is that, even if paragraph 1(7) above did not prevent the security being a deep gain security, it would nevertheless not be a deep gain security if for the purposes of paragraph 1(2) above “redemption” did not include any redemption which may be made before maturity otherwise than in pursuance of the exercise by the person who holds the security for the time being of an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur.

Indexed securities: special rules

22

1

Sub-paragraph (2) below applies where—

a

a qualifying indexed security has been issued,

b

the person by whom it was issued and the person for the time being holdingit make an agreement, on or after 14th March 1989, varying the terms underwhich it is held, and

c

the terms as varied are such that, had the security been issued on thoseterms, it would be a deep gain security.

2

As regards any event occurring in relation to the security after theagreement is made, paragraphs 5 to 19 above shall have effect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

4

In this paragraph “qualifying indexed security” has the meaning given byparagraph 2 above.

F227 Convertible securities: special rules (1)

Annotations:
Amendments (Textual)

22A

1

Sub-paragraph (2) below applies where—

a

a security is a qualifying convertible security, for the purposes ofSchedule 10 to the Finance Act 1990, at the time of its issue,

b

apart from paragraph 21 of Schedule 4 to the Taxes Act 1988, it would bea deep discount security at that time, and

c

at a later time it ceases to be a qualifying convertible security for thepurposes of Schedule 10 to the Finance Act 1990.

2

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(c) above, paragraphs 5 to 19 above shall haveeffect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

Convertible securities: special rules (2)

22B

1

In a case where—

a

a security is a qualifying convertible security, for the purposes ofSchedule 10 to the Finance Act 1990, at the time of its issue, and

b

apart from this sub-paragraph it would be a deep gain security at thattime,

then (subject to sub-paragraph(3) below) the security shall be treated,at the time of its issue and at all subsequent times, as not being a deep gainsecurity.

2

Sub-paragraph (3) below applies where—

a

sub-paragraph (1) above applies in the case of a security, and

b

at a time after its issue it ceases to be a qualifying convertiblesecurity for the purposes of Schedule 10 to the Finance Act 1990.

3

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (2)(b) above, paragraphs 5 to 19 above shall haveeffect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

4

For the purposes of sub-paragraph (3)above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

F228No particular redemption date: special rule

Annotations:
Amendments (Textual)
F228

Sch. 11 para 22C and cross heading inserted (retrospectively and deemed always to have had effect) by Finance (No. 2) Act 1992 (c. 48), s. 33, Sch. 7 paras6, 7, 8

F22922C

1

This paragraph applies to a security whose terms contain no particular date by which it is to be redeemed.

2

In the case of such a security the following expressions, wherever they appear in this Schedule, shall be construed as if the words “before maturity” were omitted—

a

the expression “redemption which may be made before maturity”;

b

the expression “redemption before maturity”;

c

the expression “redeemed before maturity”.

Power to modify

23

1

The Treasury may make regulations amending paragraph 2 above so as to doone or more of the following—

a

vary any condition for the time being set out in that paragraph;

b

omit any condition for the time being so set out;

c

add a new condition to any for the time being so set out;

d

substitute a condition or conditions for any condition or conditions forthe time being so set out.

2

Regulations under sub-paragraph (1) above—

a

shall be made by statutory instrument subject to annulment in pursuanceof a resolution of the House of Commons,

b

shall apply where there is a transfer within the meaning of this Schedule,or a redemption, on or after such day as may be specified in the regulations,and

c

may include such supplementary, incidental, consequential or transitionalprovisions as appear to the Treasury to be necessary or expedient.

SCHEDULE 12 Close Companies

Section 107.

Part I Administrative Provisions

Interpretation

F3941

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provision of information by company

F3752

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provision of information by shareholders

F395F4083

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information about bearer securities

F3954

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II Amendments Connected with Repeal of Chapter III of Part XI of Taxes Act1988

The Taxes Management Act 1970 (c.9)

F3765

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Capital Gains Tax Act 1979 (c.14)

F1936

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Income and Corporation Taxes Act 1988 (c.1)

7

In section 13 of the Taxes Act 1988 (small companies’ rate) in subsection(9) for the words “paragraph 17 of Schedule 19” there shall besubstituted the words “paragraphs 2 to 4 of Schedule 12 to the Finance Act1989”.

F2618

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

1

In section 187(3) of the Taxes Act 1988 (cases in which a person has amaterial interest in a company for the purposes of sections 185 to 187 of, andSchedules 9 and 10 to, that Act) for the words from “in a company” to theend of paragraph (b) there shall be substituted—

in a company if he, either on his own or with one or more associates,or if any associate of his with or without such other associates,—

a

is the beneficial owner of, or able, directly or through the medium ofother companies, or by any other indirect means to control, more than 25 percent., or in the case of a share option scheme which is not a savings-relatedshare option scheme more than 10 per cent., of the ordinary share capital ofthe company, or

b

where the company is a close company, possesses, or is entitled toacquire, such rights as would, in the event of the winding-up of the companyor in any other circumstances, give an entitlement to receive more than 25 percent., or in the case of a share option scheme which is not a savings-relatedshare option scheme more than 10 per cent., of the assets which would then beavailable for distribution among the participators.

2

This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

10

1

In section 214 of the Taxes Act 1988 (chargeable payments connected with exempt distributions) in subsection (1)(c) for the words from “338(2)(a)”to “Schedule 19” there shall be substituted the words “and338(2)(a)”.

2

This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989, except in any case where section 427(4) ofthe Taxes Act 1988 has effect by virtue of section 103(2) of this Act.

F39611

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F39612

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

F3271

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3272

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3273

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

14

1

In section 576 of the Taxes Act 1988 (which relates to relief for losses on certain unquoted shares) in subsection (5), for paragraph (a) of the definition of “trading company” there shall be substituted—

a

a company whose business consists wholly or mainly of the carrying on ofa trade or trades

2

This paragraph shall have effect in relation to disposals made after 31stMarch 1989.

F30715

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30816

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32817

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18

1

Paragraph 7 of Schedule 8 to the Taxes Act 1988 (cases in which a person has a material interest in a company for the purposes of a profit-related pay scheme) shall be amended in accordance with this paragraph.

2

In sub-paragraph (2) for the words from “in a company” onwards there shall be substituted—

in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,—

a

is the beneficial owner of, or able, directly or through the medium of other companies, or by any other indirect means to control, more than 25 percent. of the ordinary share capital of the company, or

b

in the case of a close company, possesses, or is entitled to acquire, such rights as would, in the event of the winding-up of the company or in any other circumstances, give an entitlement to receive more than 25 per cent. of the assets which would then be available for distribution among the participators

3

In sub-paragraph (3) the second “and” shall be omitted and after the definition of “control” there shall be inserted

and

“participator” has the meaning given by section 417(1)

4

This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

SCHEDULE 13 Capital Allowances: Miscellaneous Amendments

Section 121.

1–26

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F194

Patent rights

F19527

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28–30

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F196

F203SCHEDULE 14

Annotations:
Amendments (Textual)
F203

Sch. 14 repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 22, 26(2), 27)

Gifts of business assets

F1971

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1982

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1993

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gifts on which inheritance tax is chargeable etc.

F2004

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of tax by instalments

F2015

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Minor and consequential amendments

F2026

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F209SCHEDULE 15

Annotations:
Amendments (Textual)
F209

Sch. 15 repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 22, 26(2), 27)

Postponed charges etc.: pre-1st April 1982 events

F2041

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2052

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reduction of 1982 value in certain cases

F2063

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No gain/no loss disposals

F2074

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Elections

F2085

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F210SCHEDULE 16 Broadcasting: Additional Payments by Programme Contractors

Section 181.

Annotations:
Amendments (Textual)

Part I Amendments of the Principal Sections

1

1

Section 32 of the M88Broadcasting Act 1981 (rentalpayments by programme contractors) shall be amended as follows.

2

In subsection (1)(b), after the word “amounts” there shall beinserted the words “in respect of profits and in respect of advertisingrevenue”.

3

In subsection (2)(b), after the word “amounts” there shall beinserted the words “in respect of profits”.

4

In subsection (4), for the word “Table”, where it first occurs, thereshall be substituted the word “Tables” and the following Tables shall besubstituted for the Table in that subsection—

TABLE A RATES OF ADDITIONAL PAYMENTS IN RESPECT OF ADVERTISING REVENUE

Rate for determining amount of additional payments

For so much of the advertising revenue for the accounting period as does not exceed the free slice for advertising revenue.

Nil

For so much of the advertising revenue for the accounting period as exceedsthe free slice for advertising revenue.

The relevant revenue rate except where the rate is nil

For the purposes of this Table—

a

a nil rate, instead of the relevant revenue rate, is applicable in thecase of persons who are DBS programme contractors or DBS teletext contractors;

b

the relevant revenue rate is 10 per cent; and

c

the free slice for advertising revenue is £15 million or, in thecase of a TV programme contractor, that amount with the addition of thepayments payable by him in pursuance of section 13(2).

TABLE B RATES OF ADDITIONAL PAYMENTS IN RESPECT OF PROFITS

For so much of the profits for the accounting period after deducting anyamount payable under Table A as does not exceed the free slice for profits.

Nil

For so much of the profits for the accounting period after deducting anyamount payable under Table A as exceeds the free slice for profits.

The relevant profits rate except where the rate is nil.

For the purposes of this Table—

a

a nil rate, instead of the relevant profits rate, is applicable in thecase of—

i

programme contractors who provide local sound broadcasts, and

ii

DBS programme contractors or DBS teletext contractors;

b

the relevant profits rate is 25 per cent; and

c

the free slice for profits is £2 million.

5

Subsection (4A) shall be omitted.

6

In subsection (5), for the words “relevant sum mentioned in subsection(4A)” there shall be substituted the words “relevant sum mentioned in theTables above”.

7

In subsection (7), after the words “additional payments” there shallbe inserted the words “in respect of profits”.

8

In subsection (8), for the words “any of the provisions of subsections(4), (4A)” there shall be substituted the words “any of the provisionsof subsections (4)”.

9

For subsection (9) there shall be substituted the followingsubsections—

9

The power of the Secretary of State under subsection (8) shall includepower to amend the provisions in question as there mentioned—

a

only in their application in relation to the additional payments mentionedin subsection (1)(b); or

b

only in their application in relation to the additional payments mentionedin subsection (2)(b); or

c

differently in their application as mentioned in paragraphs (a) and (b)respectively; or

d

only in their application in relation to additional payments in respectof advertising revenue; or

e

only in their application in relation to additional payments in respectof profits; or

f

differently in their application as mentioned in paragraphs (d) and (e)respectively.

9A

In the application of the provisions mentioned in subsection (8) inrelation to the additional payments mentioned in subsection (1)(b), the powerof the Secretary of State under subsection (8) shall also include power toamend those provisions as mentioned in subsection (8)—

a

only in relation to persons who are TV programme contractors (includingpersons who are both TV programme contractors and teletext contractors); or

b

only in relation to persons who are DBS programme contractors (includingpersons who are both DBS programme contractors and teletext contractors); or

c

only in relation to persons who are teletext contractors (other than DBSteletext contractors) but are not TV or DBS programme contractors; or

d

only in relation to persons who are DBS teletext contractors but are notTV or DBS programme contractors; or

e

differently in relation to persons within paragraphs (a), (b), (c) and (d)respectively.

2

1

Section 33 of the M89Broadcasting Act 1981 (supplementalprovisions) shall be amended as follows.

2

In subsection (1), for the words “advertising receipts” there shallbe substituted the words “advertising revenue”.

3

In subsection (2), for the words “advertising receipts” there shallbe substituted the words “advertising revenue” and for the words “thosereceipts derive” there shall be substituted the words “the revenuederives”.

4

In subsection (3)(c), for the words “advertising receipts” thereshall be substituted the words “advertising revenue” and for the word “derive” there shall be substituted the word “derives”.

3

1

Section 34 of the Broadcasting Act 1981 (instalments payable on accountby programme contractors for their accounting periods) shall be amended asfollows.

2

In subsection (3)(c), for the words “receipts are” there shall besubstituted the words “revenue is”.

4

1

Section 35 of the M90Broadcasting Act 1981 (provision forsupplementing additional payments) shall be amended as follows.

2

In subsection (1)—

a

in paragraph (a), after the words “additional payments” there shallbe inserted the words “in respect of profits”;

b

in paragraph (b)(ii), the words “in the case of second categoryprofits,” shall be omitted; and

c

at the end, there shall be added the words “in respect of profits of hisfor that period”.

Part II Provisions Inserted as Schedule 4 to the Broadcasting Act 1981

Schedule 4 Rental Payments

Advertising revenue

1

1

The advertising revenue of a programme contractor for an accounting periodshall be computed in accordance with this paragraph.

2

Advertising revenue shall consist of the payments received or to bereceived by the programme contractor in consideration of the insertion ofadvertisements in programmes provided by the programme contractor andbroadcast in the United Kingdom by the Authority.

3

In the application of this Schedule in relation to the additional paymentsmentioned in section 32(1)(b), the advertising revenue of a programmecontractor other than a teletext contractor who is not a TV programmecontractor includes payments received or to be received by him inconsideration of the insertion of programmes consisting of advertisementsprovided by him for broadcasting on the Fourth Channel and so broadcast.

4

If, in connection with the insertion of advertisements which are paid forby payments constituting advertising revenue, any payments are made to theprogramme contractor to meet any additional payments, those payments shall beregarded as made in consideration of the insertion of the advertisements inquestion.

5

In the case of an advertisement inserted in a programme under arrangementsmade between a programme contractor and a person acting as advertising agent,the amount of any receipt by the programme contractor which represents apayment by the advertiser from which the advertising agent has deducted anyamount by way of commission shall, except in a case falling withinsub-paragraph (6), be the amount of the payment by the advertiser after thededuction of the commission.

6

If the amount deducted by way of commission as mentioned in sub-paragraph(5) exceeds 15 per cent. of the payment by the advertiser, the amount of thereceipt shall be the amount of that payment less 15 per cent.

7

Any contract shall provide that where for any insertion of anadvertisement a programme contractor receives or is entitled to an entireconsideration not solely referable to that insertion, the advertising revenueshall be calculated by reference to so much only of the consideration as isreferable to that insertion according to an apportionment made in such manneras the contract may provide.

Profits

2

1

The profits of a programme contractor for an accounting period shall becomputed in accordance with this paragraph.

2

The profits shall consist of the excess of relevant income over relevantexpenditure.

3

“Relevant income” means—

a

in relation to a programme contractor other than a DBS programmecontractor or a DBS teletext contractor, income which accrues to thecontractor in connection (directly or indirectly) with—

i

the provision by the contractor of programmes for broadcasting on ITV, theFourth Channel or a local sound broadcasting service, or

ii

the provision by the contractor, for broadcasting, distribution or showingin the United Kingdom, of programmes provided by him for broadcasting on ITV,the Fourth Channel or a local sound broadcasting service;

b

in relation to a DBS programme contractor or DBS teletext contractor,income which accrues to the contractor in connection (directly or indirectly)with—

i

the provision by the contractor to the Authority, in accordance with theterms of his contract as a DBS programme contractor or (as the case may be)DBS teletext contractor, of programmes for broadcasting in the Authority’s DBSservice to which his contract with the Authority relates, or

ii

the provision by the contractor, for broadcasting, distribution or showingin the United Kingdom, of programmes broadcast in the Authority’s DBS service.

4

Without prejudice to the generality of sub-paragraph (3), “relevant income” includes—

a

all revenue which is advertising revenue for the purposes of thisparagraph; and

b

such part of any income which—

i

accrues to any subsidiary of or company related to the programmecontractor or to the contractor’s holding company, and

ii

would be relevant income of that contractor if he and the subsidiary orrelated company or his holding company were a single programme contractor,

as, in the opinion of the Authority, should be attributed to thecontractor as reflecting his financial interest in the subsidiary or therespective financial interests of the holding company in the contractor andthe company related to the contractor or the financial interest of the holdingcompany in the contractor, as the case may be.

5

For the purposes of this paragraph advertising revenue includes—

a

in relation to a DBS programme contractor, payments received or to bereceived by him in respect of charges made for the reception of programmesprovided by him and broadcast in a DBS service;

b

in relation to a teletext contractor, payments received or to be receivedby him in respect of charges made for the reception of programmes provided byhim and broadcast in a DBS or additional teletext service.

6

“Relevant expenditure” means any expenditure of the programmecontractor which is properly chargeable to revenue account and which isincurred in connection with the provision by him of programmes of a kindmentioned in sub-paragraph (3).

7

Without prejudice to the generality of sub-paragraph (6), “relevant expenditure” includes—

a

expenditure in connection with the sale of rights to insert advertisementsin programmes; and

b

such part of any expenditure which—

i

is incurred by any subsidiary of or company related to the programmecontractor or by the contractor’s holding company, and

ii

would be relevant expenditure of that contractor if he and the subsidiaryor related company or his holding company were a single programme contractor,

as, in the opinion of the Authority, should be attributed to thecontractor as reflecting his financial interest in the subsidiary or therespective financial interests of the holding company in the contractor andthe company related to the contractor or the financial interest of the holdingcompany in the contractor, as the case may be;

c

in the case of a DBS programme contractor or a teletext contractor, anyexpenditure incurred in connection with the collection of charges for thereception of programmes provided by him and broadcast in a DBS service or ina DBS or additional teletext service, as the case may be; and

d

in the case of a DBS programme or DBS teletext contractor, any expenditureincurred in connection with the provision of the satellite transponder.

8

In ascertaining relevant income or relevant expenditure no account shallbe taken of interest on any loan.

9

Items of relevant income and items of relevant expenditure shall beattributed to accounting periods in accordance with the foregoing provisionsof this Schedule.

10

In this paragraph “programme” means—

a

in the application of this Schedule in relation to the additional paymentsmentioned in section 32(1)(b), a television programme; and

b

in the application of this Schedule in relation to the additional paymentsmentioned in section 32(2)(b), a local sound broadcast.

Carry forward of losses

3

1

Where, in any accounting period, the relevant expenditure of a programmecontractor exceeds his relevant income, the excess shall be carried forwardto the following accounting period and treated as relevant expenditure forthat period for the purpose of computing his profits for that period.

2

When a programme contractor’s contract with the Authority comes to an end,no losses incurred at any time during the currency of that contract may becarried forward under this paragraph and set against income attributable toany subsequent contract between him and the Authority.

Computation of profits of programme contractors

4

1

It shall be the duty of the Authority—

a

to draw up, and from time to time review, a statement setting out theprinciples to be followed in ascertaining, for any accounting period, aprogramme contractor’s—

i

advertising revenue, and

ii

relevant income and relevant expenditure for the purpose of computing hisprofits;

b

in computing the advertising revenue and the profits of a programmecontractor for any accounting period, to take account of that statement(including any revision thereof which has taken effect before the end of thatperiod).

2

A statement under this paragraph may set out different principles for TVprogramme contractors, DBS programme contractors, programme contractors forthe provision of local sound broadcasting and teletext contractors.

3

Before drawing up or revising a statement under this paragraph theAuthority shall consult the Secretary of State and the Treasury.

4

The Authority shall—

a

publish the statement drawn up under this paragraph and every revision ofthat statement; and

b

transmit a copy of the statement, and of every revision of it, to theSecretary of State;

and the Secretary of State shall lay copies of the statement and of everysuch revision before each House of Parliament.

5

The principles relating to advertising revenue and to profits may be setout in separate statements under this paragraph; and where this is done itsprovisions apply to each statement.

Disputes

5

1

For the purposes of the principal sections and this Schedule—

a

the amount of any advertising revenue, or

b

the amount of any profits, or

c

the amount of any additional payments, or of an instalment of additionalpayments,

shall, in the event of a disagreement between the Authority and theprogramme contractor, be the amount determined by the Authority.

2

No determination of the Authority under this paragraph shall be called inquestion in any court of law, or be the subject of any arbitration; butnothing in this sub-paragraph shall prevent the bringing of proceedings forjudicial review.

Accounting periods

6

1

Subject to the provisions of this Schedule, each period for which a bodycorporate which is a programme contractor makes up a profit and loss accountwhich is laid before the body corporate in general meeting shall be anaccounting period, whether that period is a year or not.

2

If part of the said period for which a profit and loss account is made upfalls before, and part after—

a

the commencement of a relevant order under section 32, or

b

the time when the programme contractor begins or ceases to provideprogrammes for broadcasting by the Authority,

the two parts shall be treated as separate accounting periods.

In paragraph (a) “relevant order” means, in theapplication of this Schedule in relation to the additional payments mentionedin subsection (1)(b) or (as the case may be) subsection (2)(b) of section 32,an order having effect in relation to those payments.

3

Where two parts of such a period as is mentioned in sub-paragraph (1) fallto be divided from each other under sub-paragraph (2)(a), section 32(4) shallhave effect as if the profits and advertising revenue for each part were theprofits and advertising revenue for the whole multiplied by—

XX+Ymath

where X and Y are respectively the number of weeks in that part and thenumber of weeks in the other part, counting (in each case) an odd four daysor more as a week.

4

If sub-paragraph (2)(b) would produce an accounting period of three monthsor less, that period shall be added on to the accounting period (if any) whichprecedes or succeeds it (and which does not fall to be divided from it undersub-paragraph (2)(b)).

5

A contract which varies another contract may modify the precedingprovisions of this paragraph.

6

Nothing in this paragraph shall create an accounting period during whichthe programme contractor is not providing programmes for broadcasting by theAuthority.

7

If a programme contractor is not a body corporate the contractor’saccounting periods shall be such as the Authority may direct, or as may beprovided in the contract.

Information

8

1

Every contract shall impose on the contractor such requirements withrespect to the furnishing of information to the Authority as appear to theAuthority, after consultation with the Secretary of State, to berequisite—

a

for enabling the Authority to perform their functions under the provisionsof the principal sections and this Schedule, and

b

for enabling the Authority to furnish to the Secretary of State suchinformation as he may require for the purpose of determining whether, and inwhat manner, to exercise his powers of making orders under the saidprovisions.

2

Without prejudice to the generality of sub-paragraph (1), the duty imposedon the Authority by that sub-paragraph includes the duty to impose, so far asis reasonably practicable, such requirements as will enable the Authority todetermine the amounts (if any) which, in relation to any programme contractor,are to be treated as advertising revenue and relevant income and relevantexpenditure for the computation of profits by virtue, respectively, ofparagraphs 1 and 2.

3

It shall be the duty of the Authority to furnish to the Secretary of Statesuch information (whether obtained from contractors or otherwise) as is intheir possession and is required by the Secretary of State for the purpose ofdetermining whether, and in what manner, to exercise his powers of makingorders under the said provisions.

9

It shall be the duty of the Authority in framing any contract to includeterms ensuring that the Authority will have the right to inspect accounts andrecords—

a

of the programme contractor, and

b

of any subsidiary of the programme contractor,

for the purpose of discharging their functions under the principalsections and this Schedule.

Interpretation

10

1

In this Schedule, and in the principal sections, except where the contextotherwise requires—

  • “accounting period” shall be construed in accordance withparagraph 6;

  • “additional payments” and “contract”—

a

in the application of this Schedule and the principal sections in relationto the additional payments mentioned in section 32(1)(b), mean respectivelyadditional payments payable by virtue of that paragraph and a contract betweenthe Authority and a programme contractor under which television programmes areto be provided by the programme contractor, and

b

in their application in relation to the additional payments mentioned insection 32(2)(b), mean respectively additional payments payable by virtue ofthat paragraph and a contract between the Authority and a programme contractorunder which local sound broadcasts are to be provided by the programmecontractor;

  • “related”, in relation to a company and a programmecontractor, means that another person (whether alone or jointly with one ormore persons and whether directly or indirectly) holds, or is beneficiallyentitled to, 50 per cent or more of the equity share capital, or possesses 50per cent or more of the voting power, in the company and in the programmecontractor and “holding company” means that other person; and

  • “subsidiary”, in relation to any person, means a company inwhich that person (whether alone or jointly with one or more persons andwhether directly or indirectly) holds, or is beneficially entitled to, 10 percent or more of the equity share capital, or possesses 10 per cent or more ofthe voting power.

2

In this Schedule “payment” includes any valuableconsideration, and references to revenue and receipts and expenditure shallbe construed accordingly.

Part III Transitional Provisions

1

1

In this paragraph—

  • “new statutory provisions” means the provisions of the M91Broadcasting Act 1981 as amended by this Act; and

  • “existing statutory provisions” means the provisions of thatAct as they had effect immediately before the coming into force of section181.

2

Any contract between the Authority and a programme contractor which is inforce immediately before the day on which section 181 of this Act comes intoforce shall, until it is varied or superseded by a further contract betweenthem or expires or is otherwise terminated (whichever first occurs), be deemedto be modified by virtue of this Schedule so as—

a

to substitute provisions in conformity with the new statutory provisionsfor so much of the contract as is in accordance with the existing statutoryprovisions and is not in conformity with the new statutory provisions, and

b

to incorporate in the contract such additional provisions as a contractbetween the Authority and a programme contractor is required to include inaccordance with the new statutory provisions;

and (subject to paragraph 5 of Schedule 4 to the 1981 Act) any provisionsof the contract which provide for arbitration as to any matters contained inthe contract in accordance with the existing statutory provisions shall beconstrued as making the like provision for arbitration in relation to mattersdeemed to be included in the contract by virtue of this sub-paragraph.

3

Where it appears to the Authority that the new statutory provisions callfor the inclusion of additional terms in any such contract, but do not affordsufficient particulars of what those terms should be, the Authority may, afterconsulting the programme contractor, decide what those terms are to be.

4

This paragraph shall not be taken to have effect in relation to anycontract entered into by a programme contractor and any person other than theAuthority before the day on which section 181 of this Act comes into force.

2

Where any accounting period of a programme contractor begins before 1stJanuary 1990 and ends after 31st December 1989, the additional paymentspayable by the programme contractor in relation to that accounting periodunder section 32 of the M92Broadcasting Act 1981 shall be theaggregate of—

a

the amounts payable by him on the assumption that section 181 of this Actwas not in force at any time during the accounting period, multipliedby—

XX+Y,math

and

b

the amounts payable by him on the assumption that that section was inforce throughout the accounting period, multiplied by—

YX+Y;math

where (taking any odd four days or more as a week)—

  • X is the number of weeks in the accounting period falling before 1stJanuary 1990, and

  • Y is the number of weeks in the accounting period falling after 31stDecember 1989.

3

Where, under the existing statutory provisions, any excess of firstcategory expenditure over first category income of a programme contractorwould have been carried forward and treated as relevant first categoryexpenditure of his for an accounting period ending after 31st December 1989if those provisions had applied in relation to that period then the excessshall be carried forward and treated, under the new statutory provisions, asrelevant expenditure of the contractor for any accounting period which endsafter that date.

4

In this Part of this Schedule, references to programme contractors shallbe read as including references to teletext contractors.

SCHEDULE 17 Repeals

Section 187.

Part I Customs and Excise

1979 c. 2.

The Customs and Excise Management Act 1979.

Section 17(5)(a).Section 147(1).

1979 c. 4.

The Alcoholic Liquor Duties Act 1979.

Section 73.

1988 c. 39.

The Finance Act 1988.

Section 11(2).

The repeals of section 147(1) of the Customs and Excise Management Act1979 and section 11(2) of the Finance Act 1988 have effect in relation tooffences committed on or after the day on which this Act is passed.

F211Part II

Annotations:
Amendments (Textual)

Part III Value Added Tax

1983 c. 55.

The Value Added Tax Act 1983.

In Schedule 5, Group 6 and, in Group 8A, Note (5).

1984 c. 43.

The Finance Act 1984.

In Schedule 6, Part II.

S.I. 1986/704.

The Value Added Tax (Land) Order 1986.

The whole Order.

S.I. 1986/716.

The Value Added Tax (Land) (No.2) Order 1986.

The whole Order.

S.I. 1987 /1072.

The Value Added Tax (Construction of Buildings) (No.2) Order 1987.

Article 2.

1

The repeal of Group 6 of Schedule 5 to the Value Added Tax Act 1983 haseffect in relation to supplies made on or after 1st April 1989.

2

The remaining repeals have effect in accordance with Schedule 3 to thisAct.

Part IV Income and Corporation Tax: General

1970 c. 9.

The Taxes Management Act 1970.

In section 15(11), paragraph (b) and the word “and” preceding it.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 131(2), the words “for the same or another chargeableperiod”.In section 149(1), the words “for that period” and the words “for that or any other period”. Section 170.Section 175(3).In section 176(1), the words “(but not morethan six months)”.In section 178(2), paragraph (b) and the word “or”preceding it.Section 203(4).In section 231, in subsection (4) the words “andwhere” onwards, and subsection (5).Section 433.Section 434(4) and(5).Section 435.Section 436(3)(b).Section 507(2).In section 590(3)(d), thewords “(disregarding any excess of that remuneration over the permittedmaximum)”.Section 595(2) and (3).In section 596(3)(a), the word “either” and the words “or subsection (2)”.In section 600(1), thewords “or have been” and the words “or has at any time been”.Section635(4).In section 645, in subsection (3), the word “and” followingparagraph (a) and subsection (5).In section 655(5), the words “in caseswhere the applications are made before 1st February 1990”.Section 769(7)(b)and (c).In section 824(10), the definition of “United Kingdom estate”.InSchedule 8, in paragraph 7(1), the words “, or is an associate of a personwho has,”; in paragraph 13, in sub-paragraph (1) the word “fixed” andsub-paragraphs (2) and (3); and, in paragraph 14, sub-paragraph (2), insub-paragraph (5) the words “specified in, or” and sub-paragraph (7).InSchedule 9, in paragraph 10, paragraph (ii) of sub-paragraph (c) and the word “and” preceding it.In Schedule 23, paragraph 8.

1988 c. 39.

The Finance Act 1988.

In section 68(1), the words from “at the fixed price” to “tendered”.

1

The repeals in sections 131 and 149 and of section 170 of the Income andCorporation Taxes Act 1988 have effect in accordance with section 42 of thisAct.

2

The repeals in sections 231 and 824 of the Income and Corporation TaxesAct 1988 have effect in accordance with sections 110 and 111 of this Act.

3

The repeals in sections 433 to 435 of the Income and Corporation Taxes Act1988 have effect in accordance with section 84(5) of this Act and the repealof section 436(3)(b) of that Act has effect in accordance with section 87(5)of this Act.

4

The repeals in sections 590, 595, 596 and 600 of, and in Schedule 23 to,the Income and Corporation Taxes Act 1988 have effect in accordance withSchedule 6 to this Act.

5

The repeals in sections 635, 645 and 655 of the Income and CorporationTaxes Act 1988 have effect in accordance with Schedule 7 to this Act.

6

The repeal of section 769(7)(b) and (c) of the Income and CorporationTaxes Act 1988 has effect in accordance with section 100 of this Act.

7

The repeal in the Finance Act 1988 has effect in relation to offers madeon or after 11th October 1988.

C41Part V Close Companies

Annotations:
Modifications etc. (not altering text)
C41

Sch. 17 Pt. V restricted (retrospectively) by 1993 c. 34, s. 79(2)(a)

1970 c. 9.

The Taxes Management Act 1970.

Section 29(2).In section 31(3)(b), the words “426,”.In the Table insection 98, in the first column, the reference to paragraph 17 of Schedule 19to the principal Act.In Schedule 3, in rule 8, the words from “orrelating” to “Schedule 19 to the principal Act”.

1972 c. 41.

The Finance Act 1972.

In Schedule 24, paragraph 6.

1979 c. 14.

The Capital Gains Tax Act 1979.

In section 89(1), paragraph (b) and the word “or” preceding it.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 127(3), paragraph (b) and the word “or” preceding it.Insection 230, the word “either”, the words from “or to” to “Schedule 19” and the words “in either case”.In section 239(7), thewords “subsections (5) to (7) of section 430 and”.In section 249(3), thewords “and paragraph 12(1) to (3) of Schedule 19”.In section 250(7), thewords “and paragraph 12 of Schedule 19”.Section 414(3).In section 416(1),the words from “except” to “Schedule 19”.Sections 423 to 430.Insection 539(1), the words “including tax under section 426”.In section681, in subsection (1), paragraph (b) and the word “and” preceding it andsubsections (2) and (3).Section 686(3) and (4).Section 687(3)(b) and (c).Insection 701(8), the words “426(3)”.Section 742(9)(d) and (10).In section825(1)(a), the words from “and any” to “430(7)(a)”.In Schedule 4,paragraph 10(3).In Schedule 8, in paragraph 7(3), the second “and”.Schedule 19.In Schedule 29, in the Table in paragraph 32, theentries relating to section 29(2) of the Taxes Management Act 1970 andsections 89(1)(b) and 136(10)(b) of the Capital Gains Tax Act 1979.

1988 c. 39.

The Finance Act 1988.

Section 102(2)(a).

1

The repeal in section 98 of the Taxes Management Act 1970 and the repealof paragraph 17 of Schedule 19 to the Income and Corporation Taxes Act 1988have effect on and after the day on which this Act is passed.

2

The repeal in section 89 of the Capital Gains Tax Act 1979 (and thecorresponding repeal in Schedule 29 to the Income and Corporation Taxes Act1988) have effect where the due date of issue of the share capital issued toa close company falls in an accounting period of the company beginning after31st March 1989.

3

The repeal of section 414(3) of the Income and Corporation Taxes Act 1988has effect from 1st April 1989.

4

The repeal of sections 423 to 430 of, and Schedule 19 to, the Income andCorporation Taxes Act 1988 has effect in accordance with section 103 of thisAct.

5

The repeals in section 681 of the Income and Corporation Taxes Act 1988have effect in relation to the income of bodies corporate for accountingperiods beginning after 31st March 1989.

6

The remaining repeals have effect in relation to accounting periodsbeginning after 31st March 1989.

Part VI Capital Allowances

1968 c. 3.

The Capital Allowances Act 1968.

Section 9(b).Section 14.Section 50.Section 67(11).In section 68, insubsections (1) and (3), the words “or forestry”, in each place wherethey occur, and in subsection (2), the words “and forestryincome”.Section 80.In section 87(4), the words “or forestry”, in bothplaces where they occur.In section 92(5), the words “allowed or” and thewords “balancing allowance or”.Section 93(1) and (2).Schedule 8.

1971 c. 68.

The Finance Act 1971.

In Schedule 8, paragraph 2 and, in paragraph 7, in sub-paragraph (1) thewords “Subject to sub-paragraph (2) below” and the words from “byreason of” to the end of paragraph (b) and sub-paragraph (2).

1978 c. 42.

The Finance Act 1978.

In Schedule 6, paragraph 8.

1980 c. 48.

The Finance Act 1980.

In section 74(6), the words from the beginning to “and”.In section75(6), the words from the beginning to “and”.

1982 c. 39.

The Finance Act 1982.

In Schedule 12, paragraph 11.

1986 c. 41.

The Finance Act 1986.

Section 56(5).In Schedule 15, in paragraphs 1 to 3, the words “orforestry”, in each place where they occur, in paragraph 7(3), the words “subject to paragraph 9 below”, and in paragraph 11, the words “andforestry income” and the words “or forestry income”.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 521(5), the words “within the terms of section 839”.

1

The repeal in paragraph 7(1)(b) of Schedule 8 to the Finance Act 1971 haseffect in cases where machinery or plant is brought into use on or after theday on which this Act is passed.

2

The repeals in sections 68 and 87(4) of the Capital Allowances Act 1968and in paragraphs 1 to 3 and 11 of Schedule 15 to the Finance Act 1986 haveeffect in relation to chargeable periods beginning on or after 6th April 1993.

3

The repeal in section 521(5) of the Income and Corporation Taxes Act 1988has effect in accordance with paragraph 27 of Schedule 13 to this Act.

4

The repeals of the provisions listed in sub-paragraph (5) of paragraph 28of Schedule 13 to this Act have effect in accordance with that paragraph.

Part VII Capital Gains

1973 c. 51.

The Finance Act 1973.

In section 38(3B)(a), the words “within the period of two years endingat the date of the disposal”.

1979 c. 14.

The Capital Gains Tax Act 1979.

Section 126(7)(b).Section 142A(5)(c).In Schedule 4, in paragraph 1(2), thewords “at the rate of 50 per cent.,”, in paragraph 3(1), the words from “by virtue” to “(settled property)”, in paragraph 3(2), the words “at the rate of 50 per cent.,” and in paragraph 4(4), the words “(taking account” onwards.

1980 c. 48.

The Finance Act 1980.

Section 79.

1981 c. 35.

The Finance Act 1981.

Section 78.Section 96(3)(e) and (4).

1982 c. 39.

The Finance Act 1982.

Sections 81 and 82.

1984 c. 43.

The Finance Act 1984.

Section 64(2)(a).

1984 c. 51.

The Inheritance Tax Act 1984.

In section 97(2), the words from “and in this section” to the end.

1985 c. 54.

The Finance Act 1985.

In section 70(10), paragraph (a) and the word “and” following it.

1986 c. 41.

The Finance Act 1986.

In section 58(2), paragraph (b) and the word “and” precedingit.Section 101(2).

1987 c. 51.

The Finance (No.2) Act 1987.

Section 78.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In Schedule 29, in the Table in paragraph 32, the entry relating to section126(7) of the Capital Gains Tax Act 1979.

1

The repeal in the Finance Act 1973 has effect in accordance with section130 of this Act.

2

The repeal in section 142A of the Capital Gains Tax Act 1979 has effectin accordance with section 92 of this Act.

3

The repeal of section 81 of the Finance Act 1982 has effect in relationto disposals on or after 6th April 1989 or, in the case of section 81(1)(b),assets acquired on or after that date.

4

The repeal of section 64(2)(a) of the Finance Act 1984 has effect inaccordance with section 139(1) of this Act.

5

The repeal in section 97(2) of the Inheritance Tax Act 1984 has effect inaccordance with section 138(7) of this Act.

6

The repeal in the Finance (No.2) Act 1987 has effect in accordance withsection 140 of this Act.

7

The remaining repeals have effect in relation to disposals on or after14th March 1989 (except that they shall not have effect in relation to sucha disposal in a case where the enactment in question operates in consequenceof relief having been given under section 79 of the Finance Act 1980 inrespect of a disposal made before that date).

Part VIII Management

1970 c. 9.

The Taxes Management Act 1970.

Section 16(6).In section 20, subsections (4) and (5) and, in subsection(6), the words “and in relation” onwards.In section 20B(7), the wordsfrom “to a person” to “daughter”.Sections 37 to 39.In section 40(2),the words “Subject to section 41 below,”.Section 41.In section 53(1), thewords “and the reference” onwards.In section 61(5), the words “withinthe said five days” and the words from “The costs” to “thecollector, and”.Section 62(3), so far as unrepealed.Section 64(3), so faras unrepealed.Section 70(5).Section 86(6).Section 87(4) and (5).In section 98,in the Table, in column 1, in the entry relating to Part III of the TaxesManagement Act 1970, the words “, except sections 16 and 24(2)” and theentry relating to section 481(5)(k) of the Income and Corporation Taxes Act1988.In section 118(1), the definition of “neglect”.

1973 c. 51.

The Finance Act 1973.

In Schedule 16A, paragraph 10.

1975 c. 45.

The Finance (No.2) Act 1975.

In section 47(1), the words “of not less than £25”.

1976 c. 24.

The Development Land Tax Act 1976.

In Schedule 8, paragraphs 17 and 18, so far as unrepealed.

1980 c. 48.

The Finance Act 1980.

Section 62.

1982 c. 39.

The Finance Act 1982.

Section 69.

1987 c. 51.

The Finance (No.2) Act 1987.

In section 84, subsections (1) to (3) and (5) to (8).

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 824, in subsections (1)(a) and (b), the words “of not lessthan £25” and, in subsection (5), the words “of not less than£25” and paragraph (b) and the word “and” preceding it.Insection 825(2), the words “of not less than £100”.In Schedule 19A,paragraph 10.

1988 c. 39.

The Finance Act 1988.

In section 126, subsection (1) and, in subsection (4)(b), the words “and(9)”.

In Schedule 3, paragraph 29.

1989 c. 26.

The Finance Act 1989.

Section 165(2).

1

The repeals in sections 16, 53 and 98 of the Taxes Management Act 1970have effect in accordance with section 164 of this Act.

2

The repeals in sections 20 and 20B of the Taxes Management Act 1970 andsection 126 of the Finance Act 1988 have effect with respect to notices given,or warrants issued, on or after the day on which this Act is passed.

3

The repeals of sections 37 to 39, in section 40, of section 41 and insection 118 of the Taxes Management Act 1970 and in Schedule 3 to the FinanceAct 1988 have effect in accordance with section 149 of this Act.

4

The repeals in section 61 of the Taxes Management Act 1970 come into forceon the day appointed under section 152(7) of this Act.

5

The repeals in sections 86 and 87 of the Taxes Management Act 1970, theFinance (No.2) Act 1975, the Finance Act 1980 and sections 824 and 825 of theIncome and Corporation Taxes Act 1988 have effect in accordance with section158 of this Act.

6

The repeal in the Finance Act 1982 has effect in accordance with section156(4) of this Act.

7

The repeal of subsection (2) of section 165 of this Act has effect inrelation to failures beginning on or after the day appointed under thatsubsection.

Part IX Stamp Duty: Insurance

54 & 55 Vict. c. 39.

The Stamp Act 1891.

Section 91.Section 98(1).Section 100.Section 118.In Schedule 1, paragraph(3) of the heading beginning “Bond, Covenant, or Instrument of any kindwhatsoever”, the whole of the heading beginning “Insurance”, and thewhole of the heading beginning “Policy of Life Insurance”.

4 & 5 Eliz. 2 c. 54.

The Finance Act 1956.

Section 38.

4 & 5 Eliz. 2 c. 11 (N.I.).

The Finance Act (Northern Ireland) 1956.

Section 6.

7 & 8 Eliz. 2 c. 58.

The Finance Act 1959.

In section 30(4), the words preceding paragraph (a) and the words followingparagraph (c).

7 & 8 Eliz. 2 c. 9 (N.I.).

The Finance Act (Northern Ireland) 1959.

In section 5(4), the words preceding paragraph (a) and the words followingparagraph (c).

1966 c. 18.

The Finance Act 1966.

Section 47.

1966 c. 21 (N.I.).

The Finance Act (Northern Ireland) 1966.

Section 5.

1970 c. 24.

The Finance Act 1970.

In Schedule 7, paragraphs 7(4) and 17.

1970 c. 21 (N.I.).

The Finance Act (Northern Ireland) 1970.

In Schedule 2, paragraphs 7(4) and 17.

1982 c. 39.

The Finance Act 1982.

Section 130.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In Schedule 14, in paragraph 3(4) the words from “and section 100” tothe end.

These repeals have effect in accordance with section 173 of this Act.

Part X Rates of Interest

1970 c. 9.

The Taxes Management Act 1970.

Section 89.

1970 c. 24.

The Finance Act 1970.

Section 30.

1970 c. 21 (N.I.).

The Finance Act (Northern Ireland) 1970.

Section 1(1) and (2).

1973 c. 51.

The Finance Act 1973.

In Schedule 16A, in paragraph 3(4), para-graph (a) and the word “and”following it and the words “they apply”.

1975 c. 22.

The Oil Taxation Act 1975.

In Schedule 2, in the Table in paragraph 1, the entry relating to section89 of the Taxes Management Act 1970.

1975 c. 45.

The Finance (No.2) Act 1975.

Section 47(2).

1980 c. 1.

The Petroleum Revenue Tax Act 1980.

Section 2(3).

1984 c. 51.

The Inheritance Tax Act 1984.

Section 233(2) and (4).

1986 c. 41.

The Finance Act 1986.

Section 92(4) and (5).In Schedule 19, paragraph 32.

1987 c. 51.

The Finance (No.2) Act 1987.

Section 89.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 824, subsection (1A), in subsection (2) the words “and(1A)” and in subsection (6) the words “Without prejudice to subsection(1A) above”.In section 825, subsection (2A) and in subsection (5) the words “Without prejudice to subsection (2A) above”.In Schedule 19A, inparagraph 3(4), para-graph (a) and the word “and” following it and thewords “they apply”.

1988 c. 39.

The Finance Act 1988.

In Schedule 13, paragraphs 7(b) and (f) and 8.

These repeals have effect in accordance with section 178(7) of this Act.

Part XI Broadcasting

1981 c. 68.

The Broadcasting Act 1981.

Section 32(4A).In section 35(1)(b)(ii), the words “in the case of secondcategory profits,”.

1982 c. 39.

The Finance Act 1982.

In section 144, subsections (1), (2), (4) and (5).

1984 c. 46.

The Cable and Broadcasting Act 1984.

Section 40(2).In Schedule 5, in paragraph 40, sub-paragraphs (7), (8) and(9).

1986 c. 41.

The Finance Act 1986.

In Schedule 22, paragraph 1, and paragraphs 4 to 8.

These repeals have effect on 1st January 1990.

Part XII Government Stock: Redemption

11 and 12 Geo. 5 c. 32.

The Finance Act 1921.

Sections 50 and 51.Schedule 3.

5 and 6 Geo. 6 c. 21.

The Finance Act 1942.

In Schedule 11, in Part II, the amendments of the Finance Act 1921.

9 and 10 Geo. 6 c. 64.

The Finance Act 1946.

Section 66.

1969 c. 48.

The Post Office Act 1969.

Section 108(1)(c).

1982 c. 41.

The Stock Transfer Act 1982.

Section 4.

So far as relating to stock registered in the National Savings StockRegister these repeals have effect on the coming into force of the firstregulations made by virtue of section 3(1)(bb) of the National Debt Act 1972and so far as relating to other stock and bonds they have effect on the cominginto force of the first regulations made by virtue of section 47(1)(bb) of theFinance Act 1942.

Part XIII National Savings

1971 c. 29.

The National Savings Bank Act 1971.

Section 5(2), (5), (6) and (7).In section 26(2), paragraph (b) and the word “or” preceding it.

1982 c. 39.

The Finance Act 1982.

In Schedule 20, paragraph 4(2).

These repeals, apart from the repeal of section 5(2), (5) and (6) of theNational Savings Bank Act 1971, come into force on 1st October 1989.

Part XIV Tithe Redemption

26 Geo. 5 & 1 Edw. 8 c. 43.

The Tithe Act 1936.

Section 2(1).In section 4(2), in paragraph (a) the words “the amount”onwards.Section 7.Part II.Section 31(7).In section 47(1), the definition of “interest date”.In section 47(4), the words “of any stock, or”.InSchedule 7, paragraph 3(a) of Part I, Part II, and paragraph 2 of Part III.

5 & 6 Geo. 6 c. 21.

The Finance Act 1942.

In Schedule 11, in Part I the entry relating to Redemption Stock and inPart II the amendment of the Tithe Act 1936.

14 & 15 Geo. 6 c. 62.

The Tithe Act 1951.

In section 8(2), the words from “which” to “Act”, and the words “and appended” onwards.

6 & 7 Eliz. 2 c. 55.

The Local Government Act 1958.

In Schedule 8, paragraph 15.

1968 c. 13.

The National Loans Act 1968.

In section 16(7), the words “Part II of the Tithe Act 1936”.Section16(9)(a).In section 22(3), the words “Part II of the Tithe Act 1936”.InSchedule 1, the entries relating to section 26 of the Tithe Act 1936.

1972 c. 65.

The National Debt Act 1972.

In section 15(1), the words “section 24 of the Tithe Act 1936”.

1979 c. 14.

The Capital Gains Tax Act 1979.

In Schedule 2, in Part II, the entry relating to securities issued underPart II of the Tithe Act 1936.

These repeals have effect from the day appointed under section 187(2)of this Act.