Finance Act 1991

TABLE

1. Cigarettes	An amount equal to 21 per cent. of the retail price plus £40.15 per thousand cigarettes.
2. Cigars	£61.72 per kilogram.
3. Hand-rolling tobacco	£65.12 per kilogram.
4. Other smoking tobacco and chewing tobacco	£28.69 per kilogram.

TABLE

Part of gross gaming yield	R ate
The first £450,000	2½ per cent.
The next £2,250,000	12½ per cent.
The next £2,700,000	25 per cent.
The remainder	33⅓ per cent.

4

In subsection (1)(b) above the reference to amounts of gaming licence duty includes amounts payable in anticipation of gaming licence duty by virtue of regulations under paragraph 3(3)(d) of Schedule 2 to this Act.

d

requiring, in relation to gaming licence duty chargeable by reference to the gross gaming yield from any premises in any period, that, at such time before the end of the period and in such manner as may be specified in the regulations, an amount be paid in anticipation of the duty chargeable, being an amount calculated in such manner as may be so specified.

5

In sub-paragraphs (1)(b) and (3)(a) above references to the duty on gaming licences include amounts payable in anticipation of gaming licence duty by virtue of regulations under paragraph 3(3)(d) above.

6

In ascertaining for the purposes of sub-paragraph (1) or (3) above the amount of the duty which is unpaid or payment of which is sought to be avoided, an amount payable in anticipation of gaming licence duty by virtue of regulations under paragraph 3(3)(d) above shall be treated as an amount of duty.

36 Beer: charge of excise duty.

1

There shall be charged on beer—

a

imported into the United Kingdom, or

b

produced in the United Kingdom,

a duty of excise at the rate of £10.60 per hectolitre per cent. of alcohol in the beer.

2

Subject to the provisions of this Act—

a

the duty on beer produced in, or imported into, the United Kingdom shall be charged and paid, and

b

the amount chargeable in respect of any such duty shall be determined and become due,

in accordance with regulations under section 49 below.

41A Suspension of duty: registration of persons and premises.

1

A person registered by the Commissioners under this section may hold, on premises so registered in relation to him, any beer of a prescribed class or description—

a

which has been produced in, or imported into, the United Kingdom, and

b

which is chargeable as such with excise duty,

without payment of that duty.

2

A person entitled under subsection (1) above to hold beer on premises without payment of duty may also without payment of duty carry out on those premises such operations as may be prescribed on, or in relation to, such of the beer as may be prescribed.

3

No person shall be registered under this section unless—

a

he is a registered brewer or a packager of beer; and

b

he appears to the Commissioners to satisfy such requirements for registration as they may think fit to impose.

4

No premises shall be registered under this section unless—

a

they are used for the production or packaging of beer, or

b

they are adjacent to, and occupied by the same person as, premises falling within paragraph (a) above which are registered under this section,

and they appear to the Commissioners to satisfy such requirements for registration as the Commissioners may think fit to impose.

5

The Commissioners may register a person or premises under this section for such periods and subject to such conditions as they think fit.

6

The Commissioners may at any time for reasonable cause—

a

revoke or vary the terms of their registration of any person or premises under this section; or

b

restrict the premises which are so registered.

7

As respects beer chargeable with a duty of excise that has not been paid, regulations under section 49 below may, without prejudice to the generality of that section, make provision—

a

regulating the holding or packaging of, or the carrying out of other operations on or in relation to, any such beer on registered premises without payment of the duty;

b

for securing and collecting the duty on any such beer held on registered premises;

c

permitting the removal of any such beer from registered premises without payment of duty in such circumstances and subject to such conditions as may be prescribed;

d

for such persons as may be prescribed to be liable to pay the duty on any such beer held on, or removed without payment of duty from, registered premises, and for the circumstances in which, and the time at which, they are liable to do so.

8

If any person contravenes or fails to comply with any condition of registration under this section he shall be liable on summary conviction to a penalty not exceeding level 5 on the standard scale; and any beer in respect of which the offence was committed shall be liable to forfeiture.

9

In this section—

• “prescribed means specified in, or determined in accordance with, regulations made by the Commissioners under section 49 below;

• “registered premises means premises registered under this section.

47 Registration of producers of beer.

1

A person who produces beer on any premises in the United Kingdom must be registered with the Commissioners under this section in respect of those premises; and in this Act “registered brewer means a person registered under this section in respect of any premises.

2

A person who produces beer on any premises shall not be required to be registered under this section in respect of those premises if the beer is produced solely for his own domestic use or solely for the purposes of research or experiments in the production of beer.

3

An application for the registration under this section of any person required to be so registered in respect of any premises—

a

shall be made at least fourteen days before the day on which he begins production of beer on those premises; and

b

shall be in such form and manner as the Commissioners may by or under regulations prescribe.

4

If any person fails to apply for registration under this section in circumstances where he is required by subsection (3)(a) above to do so, he shall be liable on summary conviction to a penalty not exceeding level 4 on the standard scale; and any beer or worts produced in contravention of that provision shall be liable to forfeiture.

5

If any person produces beer on any premises in circumstances in which he is required to be, but is not, registered under this section in respect of those premises, he shall be liable on summary conviction to a penalty not exceeding level 5 on the standard scale; and any beer or worts in respect of which the offence was committed shall be liable to forfeiture.

“registered excise dealer and shipper means a revenue trader approved and registered by the Commissioners under section 100G below;

“registered excise dealers and shippers regulations means regulations under section 100G below;

or which consists of or includes—

i

the buying, selling, importation, exportation, dealing in or handling of any goods of a class or description which is subject to a duty of excise (whether or not duty is chargeable on the goods); or

ii

the financing or facilitation of any such transactions or activities,

Part I TABLES OF FLAT RATE CASH EQUIVALENTS

TABLE A

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

Cylinder capacity of car in cubic centimetres	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
1400 or less	£2,050	£1,400
More than 1400 but not more than 2000	£2,650	£1,800
More than 2000	£4,250	£2,850

TABLE B

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

Original market vaue of car	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
Less than £6,000	£2,050	£1,400
£6,000 or more but less than £8,500	£2,650	£1,800
£8,500 or more but not more than £19,250	£4,250	£2,850

TABLE C

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

Original market value of car	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
More than £19,250 but not more than £29,000	£5,500	£3,700
More than £29,000	£8,900	£5,900

159A Mobile telephones.

1

Where in any year in the case of a person employed in employment to which this Chapter applies a mobile telephone is made available (without any transfer of the property in it) either to that person or to others who are members of his family or household, and—

a

it is so made available by reason of his employment and it is in that year available for his or their private use, and

b

the benefit of the mobile telephone is not (apart from this section) chargeable to tax as the employee’s income,

there is to be treated as emoluments of the employment, and accordingly chargeable to income tax under Schedule E, an amount equal to whatever is the cash equivalent of that benefit in that year.

2

The cash equivalent of a benefit taxable under this section in any year shall be £200 for each mobile telephone made available in that year, but subject to the following provisions of this section.

3

If for any year—

a

there is no private use of the mobile telephone, or

b

the employee is required to, and does, make good to the person providing the benefit the full cost of any private use of the mobile telephone,

then the cash equivalent of the benefit for that year is nil.

4

If the mobile telephone is unavailable for any part of a year, the cash equivalent of the benefit for that year shall be reduced by an amount which bears to that specified in subsection (2) above for that year the proportion which the number of days in the year on which the mobile telephone is unavailable bears to 365.

5

For the purposes of subsection (4) above, a mobile telephone is to be regarded as “unavailable on any day if, and only if—

a

it is not made available as mentioned in subsection (1) above until after that day, or

b

it ceases to be so available before that day, or

c

it is incapable of being used at all throughout a period of not less than 30 consecutive days of which that day is one.

6

Where different mobile telephones are made available on different days in a year, the employee shall be treated for the purposes of this section as if the same mobile telephone (or, in a case where two or more mobile telephones are made available concurrently, the same mobile telephones) had been made available on each of those days.

7

The Treasury may by order taking effect from the beginning of any year commencing after the making of the order increase or further increase the amount specified in subsection (2) above.

8

For the purposes of this section—

a

“mobile telephone means wireless telegraphy apparatus designed or adapted for the purpose of transmitting and receiving spoken messages so as to provide a telephone which is connected to a public telecommunication system (within the meaning of the Telecommunications Act 1984) but which is not physically connected to a land-line and—

i

includes any such apparatus provided in connection with a car, notwithstanding that the car is made available as mentioned in section 157, but

ii

does not include a cordless telephone or a telepoint telephone, whether or not provided in connection with a car;

b

“cordless telephone means wireless telegraphy apparatus—

i

designed or adapted for the purpose of transmitting and receiving spoken messages so as to provide a wireless extension to a telephone, and

ii

used only as such an extension to a telephone that is physically connected to a land-line;

c

“telepoint telephone means wireless telegraphy apparatus used for the purpose of a short-range radio communications service utilising frequencies between 864 and 868 megahertz (inclusive);

d

“private use, in relation to a mobile telephone, means any use of the telephone to make calls, other than calls made wholly, exclusively and necessarily in the performance of the duties of the employment;

e

“full cost, in relation to any private use of a mobile telephone, means the aggregate of—

i

the cost of any telephone calls which constitute private use of the mobile telephone; and

ii

any other cost of the benefit provided, determined in accordance with the provisions of section 156(2) and (5) to (7) as they would apply if the benefit were chargeable to tax under section 154;

f

an employee who accepts a call on the footing that the cost of the call will be charged to the person providing the benefit shall be treated as if the employee had made the call.

, or

e

on account of any payments to which section 32(4) of the Finance Act 1991 applies.

4A

In subsection (3)(c) above “benefits does not include any benefits for whose payment the scheme makes provision in pursuance of any obligation imposed by legislation relating to social security.

591B Cessation of approval: general provisions.

1

If in the opinion of the Board the facts concerning any approved scheme or its administration cease to warrant the continuance of their approval of the scheme, they may at any time by notice to the administrator, withdraw their approval on such grounds, and from such date (which shall not be earlier than the date when those facts first ceased to warrant the continuance of their approval or 17th March 1987, whichever is the later), as may be specified in the notice.

2

Where an alteration has been made in a retirement benefits scheme, no approval given by the Board as regards the scheme before the alteration shall apply after the date of the alteration unless—

a

the alteration has been approved by the Board, or

b

the scheme is of a class specified in regulations made by the Board for the purposes of this paragraph and the alteration is of a description so specified in relation to schemes of that class.

In this paragraph, the reference to the relevant age is a reference, in the case of a scheme approved before the day on which the Finance Act 1991 was passed, to pensionable age and, in the case of a scheme approved on or after that day, to the specified age.

“specified age,in relation to a scheme, means the age specified in pursuance of paragraph 8A of Schedule 9 as the specified age for the purposes of the scheme;

8A

1

In the case of a savings-related share option scheme or a profit sharing scheme, the scheme must specify what age is to be the specified age for the purposes of the scheme.

2

The age specified—

a

must be the same for men and women, and

b

must be not less than 60 and not more than 75.

29

1

The price at which scheme shares may be acquired by the exercise of a right obtained under the scheme—

a

must be stated at the time the right is obtained, and

b

except where stated under provision included in the scheme pursuant to sub-paragraph (2) below, must not be manifestly less than the market value of shares of the same class at the material time.

2

The scheme may provide that, if sub-paragraph (3) below applies, scheme shares may be acquired by the exercise of a right obtained under the scheme at a price which is not manifestly less than 85 per cent. of the market value of shares of the same class at the material time.

3

This sub-paragraph applies if the conditions specified in sub-paragraph (4)(a) and, as the case may be, (b) or (c) below, are met—

a

where at the time the right is obtained the scheme is not a group scheme, as respects the grantor;

b

where at the time the right is obtained the scheme is a group scheme, as respects each company to which the scheme is expressed to extend at that time.

4

The conditions are—

a

that the company has established, or is at the time the right is obtained a participating company in relation to, a scheme which is at that time an approved savings-related share option scheme or an approved profit sharing scheme (a “qualifying scheme);

b

where there is only one qualifying scheme, that every employee eligible to participate in that scheme at the time the right is obtained has, in the twelve months immediately preceding that time, been informed by an appropriate person of the scheme’s existence;

c

where there is more than one qualifying scheme, that, in the case of each of those schemes, every employee eligible to participate in that scheme at the time the right is obtained has, in the twelve months immediately preceding that time, been informed by an appropriate person of the scheme’s existence.

5

In determining whether the condition specified in sub-paragraph (4)(a) above is met, the withdrawal of approval under paragraph 3 above with effect from a time before the right is obtained shall be disregarded if the withdrawal takes place retrospectively from a time after the right is obtained.

6

For the purposes of sub-paragraph (4)(b) and (c) above, an employee has been informed of the existence of a scheme by an appropriate person if he has been informed by one or more of the following—

a

a company by virtue of employment with which the employee is eligible to participate in the scheme,

b

the grantor, and

c

where the scheme under which the right to acquire the shares is obtained is a group scheme, any other company which is a participating company in relation to that scheme.

7

The scheme may provide for such variation of the price at which scheme shares may be acquired as may be necessary to take account of any variation in the share capital of which the scheme shares form part.

8

In this paragraph, references to the material time are to the time the right to acquire the scheme shares is obtained or, if the Board and the grantor agree in writing, such earlier time or times as may be provided in the agreement.

6

Subsection (6A) below applies where—

a

a person obtains a right to acquire shares under a scheme which is not a savings-related share option scheme, and

b

the price at which he may acquire shares by exercising the right is not applicable by virtue of provision included in the scheme pursuant to paragraph 29(2) of Schedule 9.

6A

Where the aggregate of—

a

the amount or value of any consideration given by him for obtaining the right, and

b

the price at which he may acquire the shares by exercising the right,

is less than the market value, at the time he obtains the right, of the same quantity of issued shares of the same class, he shall be chargeable to tax under Schedule E for the year of assessment in which he obtains the right on the amount of the difference; and the amount so chargeable shall be treated as earned income, whether or not it would otherwise fall to be so treated.

6B

Subsection (6A) above shall also apply where—

a

a person obtains a right to acquire shares under a scheme which is not a savings-related share option scheme, and

b

the price at which he may acquire shares by exercising the right is applicable by virtue of provision included in the scheme pursuant to paragraph 29(2) of Schedule 9;

but with the substitution for “the market value” of “85 per cent. of the market value”.

1ZA

A case falls within this subsection if—

a

there is a bona fide offer to the public of a combination of shares in two or more companies at a fixed price or by tender ( “the public offer);

b

there is at the same time an offer ( “the employee offer) of shares, or of a combination of shares, in any one or more, but not all, of those companies—

i

to directors or employees, or

ii

to directors or employees and to other persons,

(whether the directors or employees are directors or employees of any of those companies, or of any other company or person); and

c

any of those directors or employees is entitled, by reason of his office or employment, to an allocation of shares under the employee offer in priority to any allocation to members of the public under the public offer.

1ZB

In any case falling within subsection (1ZA) above—

a

the public offer and the employee offer shall be regarded for the purposes of subsection (1) above as together constituting a single offer of shares to the public, notwithstanding the difference in the shares to which each offer relates;

b

the reference to “the shares in paragraph (b) of that subsection shall be taken as a reference to any of the shares which, in consequence of paragraph (a) above, are to be regarded as subject to that single offer; and

c

in the following provisions of this section references to the offer or to shares subject to the offer shall be construed accordingly.

1A

Where, disregarding the amount or value of any registrant discount made to the director or employee in respect of the shares of the company (or, in a case falling within subsection (1ZA) above, of the company in question), the price payable by him for the shares of that company which are allocated to him under the offer—

a

in a case not falling within subsection (1ZA) above, is less than the fixed price or the lowest price successfully tendered, or

b

in a case falling within that subsection, is not the same as, or as near as reasonably practicable to, the appropriate notional price for the shares of that company,

subsection (1) above shall not apply to the benefit (if any) represented by the difference in price.

2C

In a case falling within subsection (1ZA) above, the condition in paragraph (a) of subsection (2) above shall be taken to be satisfied in relation to the offer if, and only if, it is separately satisfied with respect to the shares in each one of the companies which are subject to that offer; and for this purpose only, any reference in that paragraph or in subsection (2A) or (2B) above to shares is a reference to shares in the particular company in question.

“the public offer and “the employee offer have the meaning given by paragraphs (a) and (b) of subsection (1ZA) above.

5A

For the purposes of this section, there is a “registrant discount in respect of the shares of a company in any case where—

a

in connection with the offer, members of the public who comply with such requirements as may be imposed in that behalf are, or may become, entitled to a discount in respect of the whole or some part of the shares of that company which are allocated to them; and

b

at least 40 per cent. of the shares of that company which are allocated to members of the public other than employees and directors are allocated to individuals who are or become entitled either to that discount or to some other benefit of similar value for which they may elect as an alternative to the discount; and

c

directors or employees who either—

i

subscribe for shares under the offer (or, in a case falling within subsection (1ZA) above, under the public offer) as members of the public, or

ii

subscribe for shares under the employee offer, as directors or employees,

and who comply (or, in the case of a requirement to register, are taken under the terms of the offer to comply) with the same requirements as are mentioned in paragraph (a) above, are, or may become, entitled to the same discount in respect of the shares of the company as any other members of the public to whom shares of that company are allocated under the offer;

and any reference in this section to the amount or value of the registrant discount made to a director or employee is a reference to the amount of any such discount made to him as is mentioned in paragraph (c) above or, as the case may be, the value of any such other benefit as is mentioned in paragraph (b) above which is conferred upon him as an alternative to the discount.

5B

For the purposes of this section, in a case falling within subsection (1ZA) above “the appropriate notional price for the shares of any of the companies subject to the offer is such price as—

a

had the shares of that company, and of each of the other companies, instead of being subject to the offer, been subject to separate offers to the public in respect of each company at fixed prices, and

b

had those separate offers been made at the time at which the public offer was in fact made,

might reasonably have been expected to be the fixed price for the shares of that company under the separate offer of those shares; but where subsection (5C) below applies, the amount determined in accordance with this subsection as the notional price for the shares of any company shall be varied in accordance with that subsection.

5C

If the amounts determined in accordance with subsection (5B) above as the appropriate notional prices for the shares of each of the companies subject to the public offer are such that, had the price for the combination of shares subject to the public offer been determined by aggregating the appropriate notional price (as so determined) for each one of the shares comprised in the combination, the price for the combination would have been different from the actual fixed price or (as the case may be) lowest successfully tendered price, then those amounts shall each be varied by multiplying them by the fraction of which—

a

the numerator is the actual fixed or lowest successfully tendered price for the combination of shares subject to the public offer; and

b

the denominator is the different price mentioned above;

and those amounts, as so varied, shall be the appropriate notional prices for the purposes of this section.

4

Where, in a case falling within subsection (1ZA) of section 68 above, subsection (1) of that section—

a

applies or applied in relation to such a benefit as is there mentioned, or

b

would so apply or have applied, had there been any such benefit,

any acquisition made on or after 16th January 1991 in pursuance of any of the offers which, in that case, fall to be regarded by virtue of subsection (1ZB) of that section as together constituting a single offer of shares to the public for the purposes of subsection (1) of that section shall be regarded for the purposes of subsection (3) above as an acquisition made in pursuance of an offer to the public.

or

b

a levy imposed in pursuance of a scheme established by rules under section 54 of the 1986 Act (compensation fund for unsatisfied claims),

7A

The Treasury may by regulations make provision for any sums paid by a company under a prescribed levy imposed under a prescribed investor protection scheme established under the rules of a prescribed recognised self-regulating organisation to be treated for the purposes of this section as part of the company’s expenses of management; and, without prejudice to the generality of the foregoing, regulations under this subsection may, in particular—

a

provide for only a prescribed part of any sums so paid to be so treated;

b

provide for sums paid before, as well as after, the coming into force of the regulations to be so treated; and

c

make different provision for different cases or in relation to different levies, schemes or organisations.

8

In this section—

• “the 1986 Act means the Financial Services Act 1986;

• “acquisition expenses means expenses falling within paragraphs (a) to (c) of subsection (1) of section 86 of the Finance Act 1989;

• “authorised person has the same meaning as it has in the 1986 Act by virtue of section 207(1) of that Act;

• “investment business has the same meaning as it has in the 1986 Act by virtue of section 1(2) of that Act;

• “investor includes a person who is an investor for the purposes of the 1986 Act;

• “investor protection scheme means a scheme established under the rules of a recognised self-regulating organisation for purposes which consist of or include the compensating of investors in cases where persons, or persons of some class or description, who are or have been authorised persons, are, or are likely to be, unable to satisfy claims in respect of any description of civil liability incurred by them in connection with their investment businesses;

• “prescribed means specified in regulations made by the Treasury under subsection (7A) above;

• “recognised self-regulating organisation has the same meaning as it has in the 1986 Act;

and other expressions have the same meaning as in Chapter I of Part XII.

438A Pension business: payments on account of tax credits and deducted tax.

Schedule 19AB shall have effect.

3A

Subsection (3B) below applies in the case of a dividend or interest payable in respect of any security (other than a qualifying certificate of deposit) which is quoted, or capable of being quoted, on a recognised stock exchange at the time the dividend or interest becomes payable.

3B

Where the amount payable by way of dividend or interest represents more than a reasonable commercial return for the use of the principal to which the security relates, the amount deductible in respect of the dividend or interest under subsection (3)(a) above shall not exceed an amount equal to the amount which would have represented a reasonable commercial return for the use of that principal.

3C

For the purposes of subsection (3B) above, no amount shall be regarded as representing the principal to which a security relates in so far as it exceeds any new consideration which has been received by the society for the issue of the security.

4A

For the purposes of subsection (3) above, where a purchase or sale is effected as a direct result of the exercise of a qualifying option, it shall be treated as effected at the current market price if the terms under which the first buyer acquired the option, or, as the case may be, became subject to it, were arm’s length terms.

4B

For the purposes of subsection (4A) above an option is a “qualifying option if it would be a traded option or financial option as defined in subsection (9) of section 137 of the 1979 Act were the reference in paragraph (b) of that subsection to the time of the abandonment or other disposal a reference to the time of exercise.

4C

In subsection (4A) above the reference to arm’s length terms is to terms—

a

agreed between persons dealing at arm’s length, or

b

not so agreed, but nonetheless such as might reasonably be expected to have been agreed between persons so dealing.

2A

Subsection (1) above shall not apply in prescribed circumstances if—

a

the first buyer is—

i

a prescribed recognised clearing house, or

ii

a member, of a prescribed class or description, of a prescribed recognised investment exchange, and

b

the subsequent sale is carried out by the first buyer after a prescribed date and in the ordinary course of his business.

7

For the purposes of subsection (2A) above—

• “prescribed means prescribed in regulations made by the Treasury;

• “recognised clearing house means a recognised clearing house within the meaning of the Financial Services Act 1986;

• “recognised investment exchange means a recognised investment exchange within the meaning of that Act.

2A

Subject to subsection (4) below—

a

this section also applies where an arrangement in addition to those mentioned in subsections (1) and (2) above, and similar to that mentioned in subsection (2) above, is entered into as part of a chain of arrangements all having the effect of enabling A to fulfil his contract, and

b

it is immaterial how many separate arrangements there are in the chain.

736A Manufactured dividends and interest.

Schedule 23A to this Act shall have effect in relation to certain cases where under a contract or other arrangements for the transfer of shares or other securities a person is required to pay to the other party an amount representative of a dividend or payment of interest on the securities.

5

For the purposes of this section, a person entitled to charge tolls in respect of a road shall be treated as having an interest in the road.

da

for the purposes of a toll road undertaking; or

5

For the purposes of subsections (1) and (2) above, in their application to expenditure incurred on the construction of a toll road, the right to charge tolls in respect of the road shall not be treated as an interest in the road.

6

Where, in the case of expenditure incurred on the construction of a toll road, the person who incurred the expenditure—

a

was not for the purposes of subsections (1) and (2) above entitled to an interest in the road when he incurred the expenditure, but

b

was at that time entitled to charge tolls in respect of the road,

“the relevant interest means, in relation to that expenditure, the right to charge tolls in respect of the road.

5A

For the purposes of this Part, the carrying on of a toll road undertaking shall be treated as the carrying on of an undertaking by way of trade; and accordingly, references in this Part (except sections 17 and 18) to a trade shall be treated as including references to an undertaking treated by virtue of this subsection as carried on by way of trade.

5B

For the purposes of this Part, a person carrying on a toll road undertaking shall be treated as occupying for the purposes of the undertaking any toll road comprised in it.

11

In the application of this section to allowances and charges which fall to be made under the provisions of Part I, references to a trade shall be treated as including references to an undertaking treated by virtue of section 21(5A) as carried on by way of trade.

4

In the application of subsection (2) above to allowances and charges which fall to be made under the provisions of Part I, references to a trade shall be treated as including references to an undertaking treated by virtue of section 21(5A) as carried on by way of trade.

3

Subsection (2) above shall not apply where the hiring is under a hire-purchase agreement under which there is an option to purchase exercisable on the payment of a sum equal to not more than 1 per cent. of the retail price of the motor car when new.

4

In subsection (3) above “hire-purchase agreement has the meaning given by section 784(6) of the principal Act.

2A

For the purposes of subsection (2) above, a distribution ( “the relevant distribution) is made pursuant to a substitution scheme if—

a

it is made on or after 2nd May 1991 in respect of shares or securities issued or transferred pursuant to or otherwise for the purposes of a scheme or arrangements; and

b

by virtue of the scheme or arrangements a person’s entitlement to, or to any rights in, the relevant distribution arises, directly or indirectly, by way of substitution for or addition to any entitlement of his to, or any prospect of his of, a distribution in respect of shares in or securities of another company; and

c

at the time of the relevant distribution that other company is associated with the distributing company and is resident in the United Kingdom.

2B

Where a distribution is made in respect of shares the issue or transfer of which constituted or formed part of an exempt distribution, within the meaning of section 213 (demergers), the distribution in respect of the shares shall not be regarded for the purposes of subsection (2) above as made pursuant to a substitution scheme by reason only that the transfer or issue of the shares was carried out as part of a transaction falling within subsection (1) of that section.

84 Gifts to educational establishments.

1

This section applies where a person carrying on a trade, profession or vocation ( “the donor) makes a gift for the purposes of a designated educational establishment of—

a

an article manufactured, or of a class or description sold, by the donor in the course of his trade which qualifies as machinery or plant in the hands of the educational establishment; or

b

an article used by the donor in the course of his trade, profession or vocation—

i

which, for the purposes of Part II of the 1990 Act (capital allowances for machinery and plant), constitutes machinery or plant used by him wholly or partly in the course of that trade, profession or vocation; and

ii

in respect of which he has claimed an allowance under that Part of that Act.

2

For the purposes of this section, an article “qualifies as machinery or plant in the hands of an educational establishment if, and only if, it is an article such that—

a

were the activities carried on by the educational establishment regarded as a trade carried on by a body of persons, and

b

had that body, at the time of the gift, incurred capital expenditure wholly and exclusively on the provision of an identical article for the purposes of those activities, and

c

had the identical article belonged to that body in consequence of the incurring of that expenditure,

the identical article would be regarded for the purposes of Part II of the 1990 Act as machinery or plant provided by the body for the purposes of that trade.

3

Where this section applies—

a

if the gift is of an article falling within paragraph (a) of subsection (1) above, then, for the purposes of the Tax Acts, no amount shall be required to be brought into account as a trading receipt of the donor in consequence of his disposal of that article from trading stock; and

b

if the gift is of an article falling within paragraph (b) of that subsection, subsection (6) of section 24 of the 1990 Act shall not require the donor to bring into account any disposal value in respect of the article for the purposes of that section;

but this subsection shall not apply unless, within two years of making the gift, the donor makes a claim for relief under this subsection, specifying the article given and the name of the educational establishment in question.

4

In any case where—

a

relief is given under subsection (3) above in respect of the gift of an article, and

b

any benefit received in any chargeable period by the donor or any person connected with him is in any way attributable to the making of that gift,

the donor shall in respect of that chargeable period be charged to tax under Case I or Case II of Schedule D or, if he is not chargeable to tax under either of those Cases for that period, under Case VI of Schedule D on an amount equal to the value of that benefit.

5

In this section “designated educational establishment means any educational establishment designated, or of a category designated,—

a

as respects Great Britain, in regulations made by the Secretary of State; or

b

as respects Northern Ireland, in regulations made by the Department of Education for Northern Ireland;

and any such regulations may make different provision for different areas.

6

If any question arises as to whether a particular establishment falls within a category designated in regulations under subsection (5) above, the Board shall refer the question for decision—

a

in the case of an establishment in Great Britain, to the Secretary of State, or

b

in the case of an establishment in Northern Ireland, to the Department of Education for Northern Ireland.

7

The power of the Secretary of State to make regulations under subsection (5) above shall be exercisable by statutory instrument; and a statutory instrument containing any such regulations shall be subject to annulment in pursuance of a resolution of the House of Commons.

8

Regulations made under subsection (5) above for Northern Ireland—

a

shall be a statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979; and

b

shall be subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954.

9

Section 839 applies for the purposes of subsection (4) above.

2A

Fees fall within this subsection if—

a

they are paid by the employee in pursuance of an arrangement under which a bona fide co-operative society agrees, or the members of such a society agree, to act as agent of the employee in connection with the employment,

b

they are calculated as a percentage of the emoluments of the employment or as a percentage of part of those emoluments, and

c

they are defrayed out of the emoluments of the employment falling to be charged to tax for the year concerned.

3A

Subsection (3) of section 1 of the Industrial and Provident Societies Act 1965 (co-operative society does not include profit-making society) shall apply for the purposes of subsection (2A)(a) above as it applies for the purposes of that section.

4A

Subject to subsection (4) above, a deduction by virtue of this section as regards a particular employment and a particular year of assessment may be based on fees falling within subsection (2) above or fees falling within subsection (2A) above, or both.

393A Losses: set off against profits of the same, or an earlier, accounting period.

1

Subject to section 492(3), where in any accounting period ending on or after 1st April 1991 a company carrying on a trade incurs a loss in the trade, then, subject to subsection (3) below, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against profits (of whatever description)—

a

of that accounting period, and

b

if the company was then carrying on the trade and the claim so requires, of preceding accounting periods falling wholly or partly within the period specified in subsection (2) below;

and, subject to that subsection and to any relief for an earlier loss, the profits of any of those accounting periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.

2

The period referred to in paragraph (b) of subsection (1) above is the period of three years immediately preceding the accounting period in which the loss is incurred; but the amount of the reduction that may be made under that subsection in the profits of an accounting period falling partly before the beginning of that period shall not exceed a part of those profits proportionate to the part of the accounting period falling within that period.

3

Subsection (1) above shall not apply to trades falling within Case V of Schedule D; and a loss incurred in a trade in any accounting period shall not be relieved under that subsection unless—

a

the trade is one carried on in the exercise of functions conferred by or under any enactment (including an enactment contained in a local or private Act), or

b

it is shown that for that accounting period the trade was being carried on on a commercial basis and with a view to the realisation of gain in the trade or in any larger undertaking of which the trade formed part;

but this subsection is without prejudice to section 397.

4

For the purposes of subsection (3) above—

a

the fact that a trade was being carried on at any time so as to afford a reasonable expectation of gain shall be conclusive evidence that it was then being carried on with a view to the realisation of gain; and

b

where in an accounting period there is a change in the manner in which a trade is being carried on, it shall be treated as having throughout the accounting period been carried on in the way in which it was being carried on by the end of that period.

5

A claim under subsection (1) above may require that capital allowances in respect of the trade, being allowances that fall—

a

to be made to the company by way of discharge or repayment of tax, and

b

to be so made for an accounting period ending on or after 1st April 1991,

shall (so far as they cannot be otherwise taken into account so as to reduce or relieve any charge to corporation tax in respect of that, or any earlier, accounting period) be added to the loss incurred by the company in that accounting period or, if the company has not incurred a loss in the period, shall be treated as a loss so incurred.

6

For the purposes of subsection (5) above, the allowances for any period shall not be treated as including amounts carried forward from an earlier period.

7

Where a company ceases to carry on a trade, subsection (9) of section 393 shall apply in computing for the purposes of this section a loss in the trade in the accounting period in which the cessation occurs as it applies in computing a loss in an accounting period for the purposes of subsection (1) of that section.

8

Relief shall not be given by virtue of subsection (1)(b) above in respect of a loss incurred in a trade so as to interfere with any relief under section 338 in respect of payments made wholly and exclusively for the purposes of that trade.

9

For the purposes of this section—

a

the amount of a loss incurred in a trade in an accounting period shall be computed in the same way as trading income from the trade in that period would have been computed;

b

“trading income means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; and

c

references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.

10

A claim under subsection (1) above may only be made within the period of two years immediately following the accounting period in which the loss is incurred or within such further period as the Board may allow.

11

In any case where—

a

by virtue of section 62B of the 1990 Act (post-cessation abandonment expenditure related to offshore machinery or plant) the qualifying expenditure of the company for the chargeable period related to the cessation of its ring fence trade is treated as increased by any amount, or

b

by virtue of section 109 of that Act (restoration expenditure incurred after cessation of trade of mineral extraction) any expenditure is treated as qualifying expenditure incurred by the company on the last day on which it carried on the trade,

then, in relation to any claim under subsection (1) above to the extent that it relates to an increase falling within paragraph (a) above or to expenditure falling within paragraph (b) above, subsection (10) above shall have effect with the substitution of “five years” for “two years”.

3A

The Treasury may by order substitute for any figure for the time being specified in this section such greater figure as may be specified in the order; and any amendment made in exercise of the power conferred by this subsection shall have effect in relation to such income or gains as may be specified in the order.

7

In using the prescribed tables of mortality to determine—

a

the expected term of an annuity for the purposes of subsection (2)(a) above, or

b

the actuarial value of any annuity payments for the purposes of subsection (4)(c) above,

the age, as at the date when the first of the annuity payments begins to accrue, of a person during whose life the annuity is payable shall be taken to be the number of years of his age at his last birthday preceding that date.

8

In any case where it is not possible to determine the expected term of an annuity for the purposes of subsection (2)(a) above by reference to the prescribed tables of mortality, that term shall for those purposes be such period as may be certified by the Government Actuary or the Deputy Government Actuary.

9

In any case where it is not possible to determine the actuarial value of any annuity payments for the purposes of subsection (4)(c) above by reference to the prescribed tables of mortality, that value shall for those purposes be such amount as may be certified by the Government Actuary or the Deputy Government Actuary.

5E

For the purposes of sub-paragraph (5)(b) above, the amount to which the loan creditor is entitled by way of interest—

a

shall not be treated as depending to any extent on the results of the company’s business or any part of it by reason only of the fact that the terms of the loan provide for the rate of interest to be reduced in the event of the results of the company’s business or any part of it improving, and

b

shall not be treated as depending to any extent on the value of any of the company’s assets by reason only of the fact that the terms of the loan provide for the rate of interest to be reduced in the event of the value of any of the company’s assets increasing.

5F

Sub-paragraph (5H) below applies where—

a

a person makes a loan to a company on the basis mentioned in sub-paragraph (5G) below for the purpose of facilitating the acquisition of land, and

b

none of the land which the loan is used to acquire is acquired with a view to resale at a profit.

5G

The basis referred to above is that—

a

the whole of the loan is to be applied in the acquisition of land by the company or in meeting the incidental costs of obtaining the loan,

b

the payment of any amount due in connection with the loan to the person making it is to be secured on the land which the loan is to be used to acquire, and

c

no other security is to be required for the payment of any such amount.

5H

For the purposes of sub-paragraph (5)(b) above, the amount to which the loan creditor is entitled by way of interest shall not be treated as depending to any extent on the value of any of the company’s assets by reason only of the fact that the terms of the loan are such that the only way the loan creditor can enforce payment of an amount due is by exercising rights granted by way of security over the land which the loan is used to acquire.

5I

In sub-paragraph (5G)(a) above the reference to the incidental costs of obtaining the loan is to any expenditure on fees, commissions, advertising, printing or other incidental matters wholly and exclusively incurred for the purpose of obtaining the loan or of providing security for it.

a

transactions in shares, stock, futures contracts, options contracts or securities of any description not mentioned in this paragraph, but excluding futures contracts or options contracts relating to land,

3A

For the purposes of subsection (3) above a contract is not prevented from being a futures contract or an options contract by the fact that any party is or may be entitled to receive or liable to make, or entitled to receive and liable to make, only a payment of a sum (as opposed to a transfer of assets other than money) in full settlement of all obligations.

99A Certificates of non-liability to income tax.

If a person who gives a certificate of non-liability to income tax in pursuance of regulations under section 477A of the principal Act (building societies) or section 480B of that Act (deposit-takers)—

a

gives the certificate fraudulently or negligently, or

b

fails to comply with any undertaking contained in the certificate in pursuance of the regulations,

he shall be liable to a penalty not exceeding £3,000.