SCHEDULE 1 Vehicles Excise Duty: Rates
F1Part I
Part II F2
SCHEDULE 2 Vehicles Excise Duty: Special Machines
F31
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F42
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3F5
F64
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F7SCHEDULE 3
Zero-rating
1
“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.
Notes: 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.
(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)
“(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)
“(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)
“(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
“(b)
the supply of accommodation in a caravan or houseboat.”
Exemptions
4
(1)
“Group 1 – Land
Item No.
Notes: 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.
(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 M3Value Added Tax Act1983 for “(a)” there shall be substituted “(c)”.
Other provisions
5
“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)
“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)
“Schedule 6A Buildings and Land
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 M5Value Added Tax Act 1983—
(a)
“(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.”, and
(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
“(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
““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)
“(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.”, and
(b)
“(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)
“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 M7Value 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 M8Value 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.
F8SCHEDULE 4
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
“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)
“(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)
“(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
“(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
“(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
“(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)
“(bb)
against a refusal by the Board of an application under section 177B(3);”.
(3)
“(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)
“(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—
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)
“(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)
“(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
“(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
“(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)
“(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)
“(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
“ 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.”
SCHEDULE 5 Employee Share Ownership Trusts
Qualifying trusts
1
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.
General
2
(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.
Trustees
3
(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;
(c)
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.
F9(5)
This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed.
F103A
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.
F113B
(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.
F123C
(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
4
(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)
F13in 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).
F14(2A)
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 F15an SAYE option scheme—
(a)
which was established by a company within the founding company’s group, and
(b)
which is approved under F16Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003.
F14(2B)
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) F17, (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 F18. . . 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) F19, (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) F20by 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.
(10)
For the purposes of this paragraph a charity is a body of personsestablished for charitable purposes only.
Trustees’ functions
5
(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;
F21(cc)
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
6
(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.
Securities
7
(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.
8
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 [F22135(1) of the M9Taxation 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 F22126 of that Act).
9
(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 F23qualifying 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 F24other 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 F25by 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 F26persons who have accepted.
F27(2ZA)
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 F28an SAYE option scheme—
(i)
which was established by, or by a company controlled by, the founding company, and
(ii)
which is approved under F29Schedule 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.
F30(2A)
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
10
The trust deed must not contain features which are not essential orreasonably incidental to the purpose of acquiring sums and securities, F31granting rights to acquire shares to persons who are eligible to participate in F32SAYE 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 F33Schedule 9 to the Taxes Act 1988.
Rules about acquisition etc.
11
(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 [F34135(1) of the M10Taxation 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 [F34126] 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
12
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. F35This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed.
F3612A
(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.
13
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.
Interpretation
14
For the purposes of this Schedule the following are securities—
(a)
shares;
(b)
debentures.
15
For the purposes of this Schedule, the question whether one company is controlled by another shall be construed in accordance with F37section 995 of the Income Tax Act 2007.
16
(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 same meaning as in section 417(3) and (4)of the Taxes Act 1988, but subject to sub-paragraph (3) below,
(b)
“control” has the meaning given by F38section 995 of the Income Tax Act 2007, and
(c)
“participator” has the same meaning as in Part XI of F39the Taxes Act 1988.
(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.
F4017
For the purposes of this Schedule a trust is established when the deed under which it is established is executed.
F4118
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)).
F42SCHEDULE 6 Retirement Benefits Schemes
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F43SCHEDULE 7 Personal Pension Schemes
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE 8 Amendments of Chapter I of Part XII of Taxes Act 1988 (InsuranceCompanies)
1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F44
2
Section 433 (profits reserved for policy holders or annuitants) shallcease to have effect.
3
(1)
“(3)
Subject to sections 437 and 438, the policy holders’ fraction of thefranked investment income from investments held in connection with a company’slife assurance business shall not be used under Chapter V of Part VI to frankdistributions made by the company and, accordingly, for the purposes of thatChapter (other than the application of franked investment income under section241), in relation to any unrelieved income of a company falling withinsubsection (1) above, the surplus of franked investment income for anyaccounting period means the aggregate of—
(a)
the policy holders’ fraction of that franked investment income; and
(b)
the amount determined under section 241(3) on the basis that the referencetherein to franked investment income is a reference only to the shareholders’fraction of that income.
(3A)
The policy holders’ fraction of the franked investment income frominvestments held in connection with a company’s life assurance business shallbe left out of account in determining, under subsection (7) of section 13, thefranked investment income forming part of the company’s profits for thepurposes of that section.”
(2)
Subsections (4) and (5) of that section shall be omitted.
(3)
F45(4)
In subsection (7) of that section for “(4)” there shall besubstituted “(3)” and after the words “against which” there shallbe inserted “disregarding relief under section 242”.
F464
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Section 435 (taxation of gains reserved for policy holders and annuitants)shall cease to have effect.
6
In section 436 (annuity and pension business: separate charge on profits)in subsection (3)(a) for the words “section 433” there shall besubstituted “sections 82 and 83 of the Finance Act 1989”.
7
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F47
F48SCHEDULE 8A Modification of sections 82 TO 83A, 88 and 89 in relation to overseas life insurance companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE 9 Life Policies Etc. Held by Companies
1
Chapter II of Part XIII of the Taxes Act 1988 shall be amended as follows.
2
“(9)
A policy of life insurance issued in respect of an insurance made before14th March 1989 shall be treated for the purposes of sections 540(5A), 547(8)and 548(3A) as issued in respect of one made on or after that date if it isvaried on or after that date so as to increase the benefits secured or toextend the term of the insurance; and any exercise of rights conferred by thepolicy shall be regarded for this purpose as a variation.”
3
(1)
Section 540 shall be amended as follows.
(2)
In subsection (4), for the words “this section” there shall besubstituted the words “subsections (1) and (3) above”.
(3)
“(5A)
Sub-paragraphs (i) and (ii) of subsection (1)(b) above shall not apply inrelation to a policy issued in respect of an insurance made on or after 14thMarch 1989 if, immediately before the happening of the event, the rightsconferred by the policy were in the beneficial ownership of a company, or wereheld on trusts created, or as security for a debt owed, by a company.”
4
(1)
Section 541 shall be amended as follows.
(2)
“(4A)
Where, immediately before the happening of the chargeable event, therights conferred by a qualifying endowment policy are held as security for adebt owed by a company, then, if—
(a)
the conditions in subsection (4B) below are satisfied,
(b)
the amount of the debt exceeds the total amount previously paid under thepolicy by way of premiums, and
(c)
the company makes a claim for the purpose within two years after the endof the accounting period in which the chargeable event happens,
this section shall have effect as if the references in subsection (1)(a)and (b) to that total amount were references to the amount of the debt.
(4B)
The conditions referred to in subsection (4A) above are—
(a)
that, throughout the period beginning with the making of the insurance andending immediately before the happening of the chargeable event, the rightsconferred by the policy have been held as security for a debt owed by thecompany;
(b)
that the capital sum payable under the policy in the event of death duringthe term of the policy is not less than the amount of the debt when theinsurance was made;
(c)
that any sum payable under the policy by reason of the chargeable eventis applied in repayment of the debt (except to the extent that its amountexceeds the amount of the debt);
(d)
that the debt was incurred to defray money applied—
(i)
in purchasing an estate or interest in land to be occupied by the companyfor the purposes of a trade carried on by it, or
(ii)
for the purpose of the construction, extension or improvement (but not therepair or maintenance) of buildings which are or are to be so occupied.
(4C)
If the amount of the debt is higher immediately before the happening ofthe chargeable event than it was at some earlier time during the periodmentioned in subsection (4B)(a) above, the amount to be taken into account forthe purposes of subsection (1) above shall be the lowest amount at which itstood during that period.
(4D)
If during the period mentioned in subsection (4B)(a) above the companyincurs a debt by borrowing in order to repay another debt, subsections (4B)and (4C) above shall have effect as if, where appropriate, references toeither debt included references to the other.”
(3)
“and
(c)
“qualifying endowment policy” means a policy which is aqualifying policy by virtue of paragraph 2 of Schedule 15;”.
5
(1)
Section 547 shall be amended as follows.
(2)
“(b)
if, immediately before the happening of that event, those rights were inthe beneficial ownership of a company, or were held on trusts created, or assecurity for a debt owed, by a company, the amount of the gain shall be deemedto form part of the company’s income (chargeable under Case VI of Schedule D)for the accounting period in which the event happened;”.
(3)
“(8)
Subsection (1)(b) above shall not have effect as respects—
(a)
a policy of life insurance issued in respect of an insurance made before14th March 1989,
(b)
a contract for a life annuity made before that date, or
(c)
a capital redemption policy issued in respect of an insurance made beforethat date, or issued by a company resident in the United Kingdom in respectof an insurance made on or after that date.”
6
(1)
Section 548 shall be amended as follows.
(2)
In subsection (1)—
F49(a)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)
in paragraph (c), after the words “that individual” there shall beinserted the words “or company”;
(c)
for the words “subsection (3)” there shall be substituted the words “subsections (3) and (3A)”.
(3)
“(3A)
Subsections (1) and (2) do not apply where the rights conferred by thepolicy or contract are in the beneficial ownership of a company, or are heldon trusts created, or as security for a debt owed, by a company, if the policywas issued in respect of an insurance made before 14th March 1989 or thecontract was made before that date.”
7
“or
(c)
the event is a chargeable event only because of section 540(5A).”
8
Paragraph 5 above shall have effect in relation to chargeable eventshappening in any accounting period of the company concerned which begins after31st March 1989; but subject to that this Schedule shall have effect as from14th March 1989.
F50SCHEDULE 10
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)
“(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)
“(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
“(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
“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
“(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
“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.”
F51SCHEDULE 11
Deep gain securities
1
(1)
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).
F52(3A)
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 M11F53Taxation 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)
F54the 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.
F55(8A)
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).
F55(11A)
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.
F56(12A)
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) F57, (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;
F58(c)
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.
F59Issue price
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.
F60(2A)
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.
F61 Exchange gains and losses
F625A
(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
(1)
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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6310
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 F64the 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 F65108 of the M12Taxation 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.
F66Early redemption: special rules
F6719A
(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 F68, 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.
F6921A
(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.
F70 Convertible securities: special rules (1)
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.
F71No particular redemption date: special rule
F7222C
(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
Part I Administrative Provisions
Interpretation
1
In this Part of this Schedule “the relevant provisions”means—
(b)
Chapter III of Part XI of that Act (as it has effect in relation toaccounting periods beginning before 1st April 1989).
F75(c)
section 397 of the Income Tax (Trading and Other Income) Act 2005, and
(d)
Chapter 6 of Part 4 of that Act.
Provision of information by company
2
The inspector may, by notice, require any company which is, or appears tohim to be, a close company to furnish him within such time (not being lessthan 30 days) as may be specified in the notice with such particulars as hethinks necessary for the purposes of the relevant provisions.
Information about bearer securities
4
(1)
The inspector may, for the purposes of the relevant provisions, by noticerequire—
(a)
any company which appears to him to be a close company to furnish him withparticulars of any bearer securities issued by the company, and the names andaddresses of the persons to whom the securities were issued and the respectiveamounts issued to each person, and
(b)
any person to whom bearer securities were issued by the company, or to orthrough whom such securities were subsequently sold or transferred, to furnishhim with such further information as he may require with a view to enablinghim to ascertain the names and addresses of the persons beneficiallyinterested in the securities.
(2)
In this paragraph—
“loan creditor” has the same meaning as in Part XI of theTaxes Act 1988, and
“securities” includes shares, stock, bonds, debentures anddebenture stock and also any promissory note or other instrument evidencingindebtedness to a loan creditor of the company.
Part II Amendments Connected with Repeal of Chapter III of Part XI of Taxes Act1988
The Taxes Management Act 1970 (c.9)
5
In the first column of the Table in section 98 of the Taxes Management Act1970 (penalty for failure to give particulars etc.) there shall be added atthe end— “
Paragraphs 2 to 4 of Schedule 12 to the Finance Act 1989.
”
The Capital Gains Tax Act 1979 (c.14)
F766
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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”.
F778
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
(1)
“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.”and at the end there shall be added the words
“ and “participator” has the meaning given by section 417(1) ”.
(2)
This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.
10
(1)
In section 214 of the Taxes Act 1988 (chargeable payments connected withexempt 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 periodsbeginning 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.
11
In section 234 of the Taxes Act 1988 (information relating todistributions) in subsection (9) for the words from “paragraph 17” to “that Schedule” there shall be substituted the words “paragraphs 2 to4 of Schedule 12 to the Finance Act 1989 for the purposes of the relevantprovisions (as defined in paragraph 1 of that Schedule)”.
12
F78(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F78(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F78(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
This paragraph shall have effect in relation to interest paid on or afterthe day on which this Act is passed (and, accordingly, the conditions ofsection 424(4) of the Taxes Act 1988 shall continue to have effect for thepurposes of section 360 of that Act in relation to interest paid before thatday).
13
F79(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F79(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F79(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.
14
(1)
“(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.
F8015
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F8116
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F8217
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
(1)
Paragraph 7 of Schedule 8 to the Taxes Act 1988 (cases in which a personhas a material interest in a company for the purposes of a profit-related payscheme) shall be amended in accordance with this paragraph.
(2)
“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. of the ordinary share capital of the company, or
(b)
in the case of a close company, possesses, or is entitled to acquire, suchrights as would, in the event of the winding-up of the company or in any othercircumstances, give an entitlement to receive more than 25 per cent. of theassets which would then be available for distribution among the participators”.
(3)
“and
“participator” has the meaning given by section 417(1)”.
(4)
This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.
SCHEDULE 13 Capital Allowances: Miscellaneous Amendments
1–26
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F83
Patent rights
F8427
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28–30
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F85
F86SCHEDULE 14
Gifts of business assets
F871
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F882
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F893
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gifts on which inheritance tax is chargeable etc.
F904
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of tax by instalments
F915
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minor and consequential amendments
F926
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F93SCHEDULE 15
Postponed charges etc.: pre-1st April 1982 events
F941
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F952
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reduction of 1982 value in certain cases
F963
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
No gain/no loss disposals
F974
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Elections
F985
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F99SCHEDULE 16 Broadcasting: Additional Payments by Programme Contractors
Part I Amendments of the Principal Sections
1
(1)
Section 32 of the M13Broadcasting 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)
“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)
“(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 M14Broadcasting 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 M15Broadcasting 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—
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 M16Broadcasting 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 M17Broadcasting 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—
and
(b)
the amounts payable by him on the assumption that that section was inforce throughout the accounting period, multiplied by—
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
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.
F100Part II
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.
Part V Close Companies
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.