Finance Act 1993

1993 c. 34

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

[27th July 1993]

Most Gracious Sovereign,

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

Part I Customs and Excise and Value Added Tax

Chapter I General

Alcoholic liquor duties

I11 Rates of duty.

1

In section 36 of the M1Alcoholic Liquor Duties Act 1979 (beer), as that section has effect apart from section 7(1) of the M2Finance Act 1991, for “£1.108” there shall be substituted “ £1.163 ”.

2

For the Table of rates of duty in Schedule 1 to that Act (wine and made-wine) there shall be substituted the Table in Schedule 1 to this Act.

3

In section 62(1) of that Act (cider) for “£21.32” there shall be substituted “ £22.39 ”.

4

This section shall be deemed to have come into force at 6 o’clock in the evening of 16th March 1993.

I22 Beer duty: rate for new regime.

1

In section 36(1) of the M3Alcoholic Liquor Duties Act 1979 (beer duty), as substituted by section 7(1) of the M4Finance Act 1991, for “£10.60” there shall be substituted “ £10.45 ”.

2

This section shall be deemed to have come into force on 1st June 1993.

3 Low strength beer.

1

In section 1 of the Alcoholic Liquor Duties Act 1979 (alcoholic liquors dutiable under that Act) in subsection (3) (beer) for “1.2 per cent.” there shall be substituted “ 0.5 per cent. ”.

2

In section 36 of that Act (beer duty), as substituted by section 7(1) of the Finance Act 1991, after subsection (1) there shall be inserted the following subsection—

1A
No duty shall be chargeable under subsection (1) above on beer which is of a strength of 1.2 per cent. or less; but any such beer shall in all other respects be treated as if it were chargeable with a duty of excise.

3

This section shall apply in relation to liquor which is produced in or imported into the United Kingdom, or removed into the United Kingdom from the Isle of Man, on or after the day on which this Act is passed.

I34 Beer duty: abolition of certain reliefs, etc.

1

The Alcoholic Liquor Duties Act 1979 shall be amended as follows.

2

In subsection (2) of section 42 (drawback on exportation etc. of beer)—

a

paragraph (a) (drawback on removal to excise warehouse) shall be omitted,

b

in paragraph (b) the words “or removal to the Isle of Man” shall be omitted,

c

also in paragraph (b) for “any such beer” there shall be substituted “ any beer to which this section applies ”, and

d

for “exported, removed or shipped” there shall be substituted “ exported or shipped ”.

3

In subsections (3) and (4) of that section the word “remove,”, in each place where it occurs, shall be omitted.

4

Section 43 (warehousing of beer for exportation, etc.) shall cease to have effect.

5

In section 45(1) (repayment of duty on beer used in the production or manufacture of other beverages etc.)—

a

at the end of paragraph (a) there shall be inserted “ or ”, and

b

paragraph (b) shall be omitted.

6

Section 51 (power to require production of books by brewers for sale) shall cease to have effect.

7

Subsections (2)(a) and (c) and (4) to (6) above shall come into force on 1st September 1993.

8

Subsections (2)(b) and (d) and (3) above shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

5 Blending of alcoholic liquors.

1

In Part VI of the M5Alcoholic Liquor Duties Act 1979 the following section shall be inserted before section 67—

66A Blending of alcoholic liquors.
1
Subject to subsections (4) to (6) below, a person shall not blend two or more alcoholic liquors—
a
each of which is of a kind mentioned in paragraphs (a) to (e) of section 1(1) above, but
b
not all of which fall within the same one of those paragraphs,
except in an excise warehouse or on premises which, in relation to the liquors blended, are for the time being permitted premises.
2
Subject to subsections (4) to (6) below, a person shall not blend two or more alcoholic liquors which—
a
fall within the same paragraph of section 1(1) above, but
b
are not all of the same alcoholic strength,
except in an excise warehouse or on premises which, in relation to the liquors blended, are for the time being permitted premises.
3
In relation to the blending of particular alcoholic liquors—
a
if the liquor which is the product of the blending is beer, permitted premises are premises which are registered under section 41A above and premises in respect of which a person is registered under section 47 above;
b
if the liquor which is the product of the blending is wine, permitted premises are premises in respect of which a licence under section 54(2) above is held;
c
if the liquor which is the product of the blending is made-wine, permitted premises are premises in respect of which a licence under section 55(2) above is held;
d
if the liquor which is the product of the blending is cider, permitted premises are premises in respect of which a person is registered under section 62 above.
4
Subsections (1) and (2) above do not apply unless the blending is done with a view to offering for sale the liquor which is the product of the blending.
5
Subsections (1) and (2) above do not apply where the liquor which is the product of the blending is intended for consumption on the premises on which the blending takes place.
6
The Commissioners may direct that subsections (1) and (2) above shall not apply to the blending of alcoholic liquors in such circumstances as are specified in the direction.
7
Where a person contravenes subsection (1) or (2) above, the following shall be liable to forfeiture—
a
the liquor which is the product of the blending;
b
all such vessels, utensils and materials for the blending of alcoholic liquors as are found in his possession.
8
In this section any reference to blending liquors includes a reference to otherwise mixing them.

2

In subsection (5) of section 55 of that Act (exemption for certain producers of made-wine from requirement to hold excise licence) before paragraph (a) there shall be inserted the following paragraph—

aa
he does not blend or otherwise mix two or more alcoholic liquors to which paragraphs (a) and (b) of section 66A(1) below or paragraphs (a) and (b) of section 66A(2) below apply;

3

In that section—

a

paragraph (e) of subsection (5) and the word “and” immediately preceding that paragraph shall be omitted, and

b

subsection (5A) shall be omitted.

4

This section shall apply in relation to the blending or other mixing of alcoholic liquors on or after the day on which this Act is passed.

6 Mixing of wine and spirits in excise warehouse.

1

In subsection (1) of section 58 of the M6Alcoholic Liquor Duties Act 1979 (mixing of wine and spirits in excise warehouse)—

a

for “6 litres” there shall be substituted “ 12 litres ”,

b

for “except as provided by subsection (2) below” there shall be substituted “ by virtue of this section ”, and

c

for “23 per cent.” there shall be substituted “ 22 per cent. ”.

2

Subsection (2) of that section shall be omitted.

3

This section shall apply in relation to mixing done on or after the day on which this Act is passed.

7 Sparkling wine or made-wine.

1

In Schedule 1 to the Alcoholic Liquor Duties Act 1979 (rates of duty on wine and made-wine), for paragraphs 1 and 2 there shall be substituted the following paragraphs—

1
Paragraphs 2 and 3 below apply for the purposes of this Act.
2
1
Wine or made-wine which is for the time being in a closed container is sparkling if, due to the presence of carbon dioxide or any other gas, the pressure in the container, measured at a temperature of 20°C, is not less than 3 bars in excess of atmospheric pressure.
2
Wine or made-wine which is for the time being in a closed container is sparkling regardless of the pressure in the container if the container has a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening.
3
Wine or made-wine which is not for the time being in a closed container is sparkling if it has characteristics similar to those of wine or made-wine which has been removed from a closed container and which, before removal, fell within sub-paragraph (1) above.
3
1
Wine or made-wine shall be regarded as having been rendered sparkling if, as a result of aeration, fermentation or any other process, it either falls within paragraph 2(1) above or takes on such characteristics as are referred to in paragraph 2(3) above.
2
Wine or made-wine which has not previously been rendered sparkling by virtue of sub-paragraph (1) above shall be regarded as having been rendered sparkling if it is transferred into a closed container which has a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening.
3
Wine or made-wine which is in a closed container and has not previously been rendered sparkling by virtue of sub-paragraph (1) or (2) above shall be regarded as having been rendered sparkling if the stopper of its container is exchanged for a stopper of a kind mentioned in sub-paragraph (2) above.

2

This section shall apply in relation to wine and made-wine which is produced in or imported into the United Kingdom, or removed into the United Kingdom from the Isle of Man, on or after the day on which this Act is passed.

F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hydrocarbon oil duties

I49 Rates of duty.

1

In section 6(1) of the M7Hydrocarbon Oil Duties Act 1979 for “£0.2779” (duty on light oil) and “£0.2285” (duty on heavy oil) there shall be substituted “ £0.3058 ” and “ £0.2514 ” respectively.

2

In section 11(1) of that Act (rebate on heavy oil) for “£0.0095” (fuel oil) and “£0.0135” (gas oil) there shall be substituted “ £0.0105 ” and “ £0.0149 ” respectively.

3

In section 13A(1) of that Act (rebate on unleaded petrol) for “£0.0437” there shall be substituted “ £0.0482 ”.

4

In section 14(1) of that Act (rebate on light oil for use as furnace fuel) for “£0.0095” there shall be substituted “ £0.0105 ”.

5

This section shall be deemed to have come into force at 6 o’clock in the evening of 16th March 1993.

10 Mineral oil fuel substitutes.

1

The Hydrocarbon Oil Duties Act 1979 (“the 1979 Act”) shall have effect in relation to such cases as may be specified in an order made by the Treasury as if references in that Act to hydrocarbon oil or to road fuel gas included references to any mineral oil which is designated by that order as a substance which is to be treated for the purposes of that Act as the equivalent of hydrocarbon oil or, as the case may be, of road fuel gas.

2

The Treasury may by order provide, in relation to any substance which by virtue of this section is to be treated for the purposes of the 1979 Act as the equivalent of hydrocarbon oil, for that substance to be treated for the purposes of such of the provisions of that Act as may be specified in the order as if it fell within F2such description of hydrocarbon oil as may be so specified—

3

In exercising their powers under this section, the Treasury shall so far as practicable secure that a mineral oil which is intended for, or capable of being put to, a particular use is treated for the purposes of the 1979 Act as if it were F3hydrocarbon oil of the description to which, when put to that use, it is most closely equivalent.

4

In this section “mineral oil” means any substance which—

a

falls within the definition of mineral oil in Article 2.1 of the Directive of the Council of the European Communities dated 19th October 1992 No.92/81/EEC (directive on the harmonisation of the structures of excise duties on mineral oils), as amended by the Directive of the Council dated 14th December 1992 No.92/108/EEC; and

b

is not, apart from this section, hydrocarbon oil or road fuel gas within the meaning of the 1979 Act.

5

The power of the Treasury to make an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons; and any such order may make different provision for different cases and different substances.

6

No duty of excise shall be charged by virtue of section 7 of the 1979 Act (duty on petrol substitutes and power methylated spirits) on any substance on which duty is charged under that Act by virtue of an order under this section.

11 Other fuel substitutes.

1

After section 6 of the M8Hydrocarbon Oil Duties Act 1979 there shall be inserted the following section—

6A Fuel substitutes.
1
A duty of excise shall be charged on the setting aside for a chargeable use by any person, or (where it has not already been charged under this section) on the chargeable use by any person, of any liquid which is not hydrocarbon oil.
2
In this section “chargeable use” in relation to any substance means the use of that substance—
a
as fuel for any engine, motor or other machinery; or
b
as an additive or extender in—
i
any substance on which duty is charged by virtue of paragraph (a) above; or
ii
any hydrocarbon oil which is or is to be used as mentioned in that paragraph.
3
The rate of the duty under this section shall be prescribed by order made by the Treasury.
4
In the following provisions of this Act references to hydrocarbon oil shall be construed as including references to any substance on which duty is charged under this section; and, accordingly, references to duty on hydrocarbon oil shall be construed, where a substance is to be treated as such oil, as including references to duty under this section.
5
The Treasury may by order provide for any substance on which duty is charged under this section to be treated for the purposes of such of the following provisions of this Act as may be specified in the order as if it fell within the description of such one or more of the following as may be so specified, that is to say—
a
heavy oil or light oil;
b
aviation gasoline;
c
fuel oil or gas oil, as defined in section 11(2) below; and
d
unleaded petrol, as defined in section 13A(2) below.
6
In exercising their powers under this section, the Treasury shall so far as practicable secure—
a
that a substance set aside for use or used as mentioned in subsection (2)(a) above is—
i
charged with duty at the same rate as, and
ii
otherwise treated for the purposes of the following provisions of this Act as if it were,
the substance falling within the descriptions specified in subsection (5) above to which, when put to that use, it is most closely equivalent; and
b
that a substance set aside for use or used as an additive or extender in any substance is—
i
charged with duty at the same rate as, and
ii
otherwise treated for the purposes of the following provisions of this Act as if it were,
the substance in which it is an additive or extender.
7
For the purposes of this section “liquid” does not include any substance which is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars.
8
The power of the Treasury to make an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
9
An order under this section—
a
may make different provision for different cases and for different substances;
b
may prescribe the rate of duty under this section in respect of any substance by reference to the rate of duty under this Act in respect of any other substance; and
c
in making different provision for different substances, may define a substance by reference to the use for which it is set aside or the use to which it is put.

2

Sections 4, 7 and 16 of that Act (petrol substitutes and power methylated spirits) shall cease to have effect.

3

In section 22(1) of that Act (offence of using petrol substitutes on which duty has not been paid), for the words from the beginning to the word “shall”, in the first place where it occurs, there shall be substituted—

A person who—
a
puts to a chargeable use (within the meaning of section 6A above) any liquid which is not hydrocarbon oil; and
b
knows or has reasonable cause to believe that there is duty charged under section 6A above on that liquid which has not been paid and is not lawfully deferred,
shall

4

In section 1(1)(b) of the M9Excise Duties (Surcharges or Rebates) Act 1979 (surcharges or rebates in respect of excise duties on hydrocarbon oil etc.), for paragraph (b) there shall be substituted the following paragraph—

b
those chargeable by virtue of the Hydrocarbon Oil Duties Act 1979;

TABLE
1. Cigarettes
An amount equal to 20 per cent. of the retail price plus £48.75 per thousand cigarettes.
2. Cigars
£72.30 per kilogram.
3. Hand-rolling tobacco
£76.29 per kilogram.
4. Other smoking tobacco and chewing tobacco
£31.93 per kilogram.

2

This section shall be deemed to have come into force at 6 o’clock in the evening of 16th March 1993.

14 Hand-rolling tobacco.

1

In the Tobacco Products Duty Act 1979, section 1 (definition of tobacco products) shall be amended as follows.

2

In subsection (2) (definition of hand-rolling tobacco) after paragraph (a) there shall be inserted—

aa
which is of a kind used for making into cigarettes; or

3

In paragraph (b) of subsection (2) (more than 25 per cent. by weight of the tobacco particles have a width of less than 0.6 mm) for “0.6” there shall be substituted “ 1 ”.

4

The following subsection shall be inserted after subsection (2)—

2A
For the purposes of subsection (2)(aa) above the use for making into cigarettes must amount to more than occasional use but need not amount to common use.

5

In subsection (3) (power to amend definitions) after “(2)” there shall be inserted “ or (2A) ”.

Gaming machine licence duty

F415. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 Small-prize machines.

1

The Betting and Gaming Duties Act 1981 shall be amended as follows.

2

In section 21 (gaming machine licences) in subsection (1) (licence required for machine other than a two-penny machine) for “a two-penny machine” there shall be substituted “ an excepted machine ”.

3

In that section the following subsection shall be inserted after subsection (3)—

3A
For the purposes of this section an excepted machine is—
a
a two-penny machine, or
b
a five-penny machine which is a small-prize machine.

4

In section 22 (charge to duty)—

a

in subsection (1) for the words from “by reference” to the end of the subsection there shall be substituted “ in accordance with section 23 below ”;

F5b

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

F55

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

6

For subsection (4) of section 25 (meaning of “gaming machine”) there shall be substituted the following subsections—

4
Subject to subsection (5) below, for the purposes of determining whether a machine is a gaming machine it is immaterial whether it is capable of being played by only one person at a time, or is capable of being played by more than one person.
5
For the purposes of sections 21 to 24 above a machine (the actual machine) which two or more persons can play simultaneously (whether or not participating with one another in the same game) shall, instead of being treated as one machine, be treated as if it were a number of machines (accountable machines) equal to the number of persons who can play the actual machine simultaneously.
6
Subsection (5) above does not apply to a machine which is a two-penny machine, or is both a small-prize machine and a five-penny machine.
7
If the actual machine is a small-prize machine but not a five-penny machine, the accountable machines shall be taken to be small-prize machines which are not five-penny machines.
8
If the actual machine is not a small-prize machine, the accountable machines shall be taken not to be small-prize machines, and in such a case—
a
if the actual machine is a five-penny machine, the accountable machines shall be taken to be five-penny machines;
b
if the actual machine is not a five-penny machine, the accountable machines shall be taken not to be five-penny machines.
9
For the purposes of subsection (5) above the number of persons who can play a particular machine simultaneously shall be determined by reference to the number of individual playing positions provided on the machine.

7

In section 26(2) (interpretation) the following definition shall be inserted after the definition of “two-penny machine”—

“five-penny machine” means a gaming machine which can only be played by the insertion into the machine of a coin or coins of a denomination, or aggregate denomination, not exceeding 5p;

F68

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

9

This section shall apply in relation to licences for any period beginning on or after 1st November 1993.

Vehicles excise duty

17 Rates of duty: general.

F71

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

F72

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

3

In Schedule 2 (annual rate of duty on hackney carriages) in the Table set out in Part II—

F8a

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

F9b

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

F94

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

F95

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

F106

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

7

In Schedule 5 (annual rate of duty on vehicles not falling within Schedules 1 to 4) in the Table set out in Part II—

F11a

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

F12b

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

F118

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

F1318. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1419. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20 Old bicycles.

F151

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

F152

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

F163

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

F154

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

F1721. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

F29122 Mutual recovery and disclosure of information.

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

F1823. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II Lottery Duty

The duty

I724 Lottery duty.

1

Subject to subsections (3) and (4) below, a duty of excise called “lottery duty” is chargeable—

a

on the taking in the United Kingdom of a ticket or chance in a lottery, and

b

in such cases as may be determined by regulations, on the taking outside the United Kingdom of a ticket or chance in a lottery promoted in the United Kingdom.

2

Regulations may make provision for determining when and where the taking of a ticket or chance in a lottery is to be treated as occurring for the purposes of this Chapter.

3

Lottery duty is not chargeable in respect of a lottery that constitutes a game of bingo (or any version of bingo, by whatever name called).

4

Lottery duty is not chargeable in respect—

a

of a lottery promoted as an incident of an exempt entertainment within the meaning of the M12Lotteries and Amusements Act 1976 or the M13Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985;

b

of a private lottery within the meaning of that Act or Order;

c

of a society’s lottery within the meaning of that Act or Order in respect of which the conditions set out in section 5(3) of that Act or Article 135(1) of that Order are satisfied;

d

of a local lottery within the meaning of that Act in respect of which the conditions set out in section 6(2) of that Act are satisfied;

e

of a lottery promoted in accordance with the M14Art Unions Act 1846.

5

The Treasury may by order amend subsection (4) above so as to add to the descriptions of lottery for the time being mentioned in that subsection, so as to omit any of them or so as to substitute a different description of lottery for any of them.

25 Amount of duty.

1

The amount of the lottery duty chargeable on the taking of a ticket or chance in a lottery is equal to 12 per cent. of the value of the consideration given for the ticket or chance.

2

Subject to subsection (3) below, the aggregate of everything paid or given by (or debited to the account of) the person taking the ticket or chance for, on account of, or in connection with, the ticket or chance shall be taken to be the consideration given for it.

3

If a price is shown on a lottery ticket or any other document providing evidence of the taking of a ticket or chance in a lottery and—

a

the consideration given for the ticket or chance is of lesser value than the price shown (or is of no value), or

b

no consideration is given for the ticket or chance,

consideration to the value of the price shown shall be taken to be given for the ticket or chance.

26 Time for payment.

1

The lottery duty chargeable on the taking of a ticket or chance in a lottery becomes due and (subject to any regulations under subsection (2) below) payable at the time the ticket or chance is taken.

2

Regulations may provide for the payment of any lottery duty due in respect of a lottery of a description specified in the regulations to be deferred, subject to any conditions or requirements that may be imposed by or under the regulations.

3

Regulations may require payments (of amounts determined by or under the regulations) to be made on account of any lottery duty that may become due in respect of a lottery of a description specified in the regulations that is being or is to be promoted.

27 Persons liable for duty.

1

Any lottery duty or payment on account of lottery duty that under section 26 above or regulations under that section is payable in respect of a lottery shall be paid (subject to any regulations under subsection (2) below) by the promoter of the lottery.

2

Regulations may require any lottery duty or payment on account of lottery duty that is payable in respect of a lottery of a description specified in the regulations to be paid by a person specified in the regulations (being a person who occupies or has occupied a position of responsibility in relation to the lottery) instead of by the promoter.

3

Any lottery duty that is payable in respect of a lottery may be recovered jointly and severally from—

a

the promoter of the lottery,

b

any other person who occupies or has occupied a position of responsibility in relation to the lottery or who has or has had any degree of control over any of its proceeds, and

c

where the promoter or a person within paragraph (b) above is a body corporate, any director of that body corporate.

4

F19Where a persondoes not make a payment that he is required to make by subsection (1) above or regulations under subsection (2) above at the time the payment becomes payable F20his failure so to make the payment shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount which has not been paid and shall also attract daily penalties..

Administration and enforcement

28 General.

1

Lottery duty shall be under the care and management of the Commissioners.

2

Regulations may provide for any matter for which provision appears to the Commissioners to be necessary or expedient for the administration or enforcement of lottery duty or for the protection of the revenue derived from lottery duty.

3

F21Where a person contravenes or does not comply with any regulations under subsection (2) above F22his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties)..

a lottery in relation to which he is the chargeable person is being promoted at the time they make that determination,

they shall not remove him from the register until the promotion of that lottery has come to an end.

7

If subsection (1) above is contravened in relation to a lottery at any time during its promotion, the chargeable person is guilty of an offence and liable—

a

on summary conviction, to a penalty of the statutory maximum or to imprisonment for a term not exceeding six months, or to both, or

b

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

8

F23Where a person contravenes or fails to comply with any requirements imposed by regulations under subsection (3)(c) above F24his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties)..

30 Application of revenue trade provisions of CEMA 1979.

1

Section 1(1) of the M15Customs and Excise Management Act 1979 (interpretation) shall be amended in accordance with subsections (2) and (3) below.

2

In the definition of “the revenue trade provisions of the customs and excise Acts”—

a

the word “and” at the end of paragraph (b) shall be omitted, and

b

at the end there shall be added

; and
d
the provisions of Chapter II of Part I of the Finance Act 1993;

3

In paragraph (a) of the definition of “revenue trader”—

a

the word “or” at the end of sub-paragraph (i) shall be omitted,

b

after sub-paragraph (i) there shall be inserted—

i
the buying, selling, importation, exportation, dealing in or handling of tickets or chances on the taking of which lottery duty is or will be chargeable; or

c

in sub-paragraph (ii) after “activities” there shall be inserted “ as are mentioned in sub-paragraph (i) or (ia) above ”.

4

In section 117 of the M16Customs and Excise Management Act 1979 (execution and distress against revenue traders) after subsection (1) there shall be inserted—

1A
In subsection (1) above as it applies in relation to a sum owing by a revenue trader in respect of lottery duty or of a relevant penalty—
a
references to goods liable to any excise duty include lottery tickets on the taking of which lottery duty will be chargeable, and
b
“the trade in respect of which the duty is imposed” includes any trade or business carried on by the revenue trader that consists of or includes the buying, selling, importation, exportation, dealing in or handling of tickets or chances on the taking of which lottery duty is or will be chargeable.

31 General offences.

is sufficient evidence of that fact until the contrary is proved.

2

A photograph of any document furnished to the Commissioners for the purposes of this Chapter and certified by them to be such a photograph is admissible in any proceedings, whether civil or criminal, to the same extent as the document itself.

3

Any document purporting to be a certificate under subsection (1) or (2) above shall be taken to be such a certificate until the contrary is proved.

36 Duty a preferential debt in insolvency.

1

In section 386(1) of the M17Insolvency Act 1986 (preferential debts) after “beer duty” there shall be inserted “ , lottery duty ”.

2

In Schedule 6 to that Act (categories of preferential debts) in Category 2 (debts due to Customs and Excise) after paragraph 5A there shall be inserted—

5B
Any amount which is due by way of lottery duty from the debtor at the relevant date and which became due within the period of 12 months next before that date.

3

In Schedule 3 to the M18Bankruptcy (Scotland) Act 1985 (list of preferred debts) at the end of paragraph 2 (debts due to Customs and Excise) there shall be added—

5
Any amount which is due by way of lottery duty from the debtor at the relevant date and which became due within the period of 12 months next before that date.

4

In Article 346(1) of the M19Insolvency (Northern Ireland) Order 1989 (preferential debts) after “beer duty” there shall be inserted “ , lottery duty ”.

5

In Schedule 4 to that Order (categories of preferential debts) in Category 2 (debts due to Customs and Excise) after paragraph 5A there shall be inserted—

5B
Any amount which is due by way of lottery duty from the debtor at the relevant date and which became due within the period of 12 months next before that date.

5

The Secretary of State shall notify the Commissioners in writing if he designates a person under subsection (4) above.

Supplementary

38 Regulations and orders.

1

Any regulations under this Chapter may make—

a

different provision for different cases or circumstances, and

b

incidental, supplemental or consequential provision.

2

Any power to make regulations or orders under this Chapter is exercisable by statutory instrument.

3

Subject to subsection (4) below, a statutory instrument containing such regulations or an order under section 24(5) above is subject to annulment in pursuance of a resolution of the House of Commons.

4

An order under section 24(5) above that will result in lottery duty becoming chargeable in respect of any description of lottery shall not be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, the House of Commons.

39 Disapplication of pool betting duty.

In section 6 of the M20Betting and Gaming Duties Act 1981 (pool betting duty)—

F25a

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

b

subsection (4) shall cease to have effect.

40 Interpretation etc.

1

In this Chapter—

“the Commissioners” means the Commissioners of Customs and Excise,
“document” includes a document of any kind whatsoever and, in particular, a record kept by means of a computer,
“promotion”, in relation to a lottery, includes the conduct of the lottery (and “promoted” is to be read accordingly), and
“regulations” means regulations made by the Commissioners.

2

This Chapter applies in relation to lotteries promoted on behalf of the Crown in pursuance of any enactment as it applies in relation to lotteries not so promoted.

3

The imposition by this Chapter of lottery duty does not make lawful anything that is unlawful apart from this Chapter.

P241 Commencement.

This Chapter shall come into force on such day as the Commissioners may by order appoint, and different days may be appointed for different provisions or for different purposes.

Chapter III Value Added Tax

F2642. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2743. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2844. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2945. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3046. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3248. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3349. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3450. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II Income Tax, Corporation Tax and Capital Gains Tax

Chapter I General

Income tax: charge, rates and allowances

51 Charge and rates of income tax for 1993-94.

1

Income tax shall be charged for the year 1993-94, and for that year—

a

the lower rate shall be 20 per cent.,

b

the basic rate shall be 25 per cent., and

c

the higher rate shall be 40 per cent.

2

For the year 1993-94 section 1(2) of the Taxes Act 1988 shall apply as if—

a

the amount specified in paragraph (aa) were £2,500 (the lower rate limit), and

b

the amount specified in paragraph (b) were £23,700 (the basic rate limit);

and accordingly section 1(4) of that Act (indexation) shall not apply for the year 1993-94.

52 Personal and married couple’s allowances.

Sections 257 and 257A of the Taxes Act 1988 (personal and married couple’s allowances) shall apply for the year 1993-94 as if the amounts specified in them were the same as the amounts specified in them as they apply for the year 1992-93, and accordingly section 257C(1) of that Act (indexation) shall not apply for the year 1993-94.

Corporation tax charge and rate

53 Charge and rate of corporation tax for 1993.

Corporation tax shall be charged for the financial year 1993 at the rate of 33 per cent.

54 Small companies.

For the financial year 1993—

a

the small companies’ rate shall be 25 per cent., and

b

the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fiftieth.

Interest: general

55 Relief for interest.

For the year 1993-94 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.

F3556. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57 Temporary relief for interest payments.

F361

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

F362

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

3

In section 365 of that Act (relief on interest on loans to buy a life annuity), after subsection (1) there shall be inserted the following subsections—

1A
Where, in the case of any loan—
a
the condition specified in subsection (1)(d) above would not (apart from this subsection) be fulfilled with respect to any land by reason of its having ceased at any time to be used by a particular person as his only or main residence; and
b
the intention at that time of the person to whom the loan was made, or of each of the annuitants owning an estate or interest in that land, was to take steps, before the end of the period of 12 months after the day on which it ceased to be so used, with a view to the disposal of his estate or interest,
that condition shall be treated in relation to interest on that loan as continuing to be fulfilled with respect to the land from that time until the end of that period or (if sooner) the abandonment by that person or any of those annuitants of his intention to dispose of his estate or interest.
1B
If it appears to the Board reasonable to do so, having regard to all the circumstances of a particular case, they may direct that in relation to that case subsection (1A) above shall have effect as if for the reference to 12 months there were substituted a reference to such longer period as meets the circumstances of that case.

F364

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

5

This section shall have effect in relation to payments of interest made on or after 16th March 1993 (whenever falling due).

F366

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

F377

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

58 Overclaims in respect of deductions of mortgage interest.

1

After subsection (6) of section 369 of the Taxes Act 1988 (recovery of amount treated as paid by recipient of interest paid subject to a deduction under that section) there shall be inserted the following subsection—

7
The following provisions of the Management Act, namely—
a
section 29(3)(c) (excessive relief),
b
section 30 (tax repaid in error etc.),
c
section 88 (interest), and
d
section 95 (incorrect return or accounts),
shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as a relief which was not due.

2

This section shall not apply in relation to any payment if the payment, or the claim on which it is made, was made before the day on which this Act is passed.

59 Interest payments to persons not ordinarily resident in UK.

In section 349 of the Taxes Act 1988 (annual interest etc.) in subsection (3) (exceptions from requirement to deduct tax from interest payments) at the end of paragraph (g) there shall be inserted “ or ” and after that paragraph there shall be inserted the following paragraph—

h
to any payment in respect of which a liability to deduct income tax would, but for section 481(5)(k), be imposed by section 480A(1).

F3860. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest etc. on debts between associated companies

F3961. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4062. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4162A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4263. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F43 C164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F44 C265. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4566. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charitable donations

67 Donations from companies and individuals.

1

In section 339 of the Taxes Act 1988 (charges on income: donations to charity) in subsection (3A) (payment by close company not a qualifying donation if less than £400 after deducting income tax) for “£400” there shall be substituted “ £250 ”.

2

In section 25 of the M21Finance Act 1990 (donations to charity by individuals) in subsection (2)(g) (gift must be not less than £400 to be a qualifying donation) for “£400” there shall be substituted “ £250 ”.

3

Subsection (1) above shall apply in relation to payments made on or after 16th March 1993.

4

Subsection (2) above shall apply in relation to gifts made on or after 16th March 1993.

F28868 Payroll deduction schemes.

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

69 Contributions to agent’s expenses.

The following section shall be inserted after section 86 of the Taxes Act 1988—

86A Charitable donations: contributions to agent’s expenses.
1
This section applies where—
a
a person (the employer) is liable to make to any individual payments from which income tax falls to be deducted by virtue of section 203 and regulations under that section, and
b
the employer withholds sums from those payments in accordance with a scheme falling within subsection (3) of section 202 and pays the sums to an agent (within the meaning of subsection (4)(a) of that section).
2
Any relevant expenditure incurred by the employer on or after 16th March 1993—
a
shall be deducted in computing for the purposes of Schedule D the profits or gains of a trade, profession or vocation carried on by the employer, or
b
if the employer is an investment company or a company in the case of which section 75 applies by virtue of section 76, shall be treated as expenses of management.
3
Relevant expenditure is expenditure incurred in making to the agent any payment in respect of expenses which have been or are to be incurred by the agent in connection with his functions under the scheme.

Benefits in kind

70 Car benefits: 1993-94.

1

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

Part I Tables of Flat Rate Cash Equivalents
Table ACars with an original market value up to £19,250 and having a cylinder capacity
Cylinder capacity of car in cubic centimetres
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
1,400 or less
£2,310
£1,580
More than 1,400 but not more than 2,000
£2,990
£2,030
More than 2,000
£4,800
£3,220
Table BCars with an original market value up to £19,250 and not having a cylinder capacity
Original market value of car
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
Less than £6,000
£2,310
£1,580
£6,000 or more but less than £8,500
£2,990
£2,030
£8,500 or more but not more than £19,250
£4,800
£3,220
Table CCars 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
£6,210
£4,180
More than £29,000
£10,040
£6,660

Cylinder capacity of car in cubic centimetres	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
1,400 or less	£2,310	£1,580
More than 1,400 but not more than 2,000	£2,990	£2,030
More than 2,000	£4,800	£3,220

Original market value of car	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
Less than £6,000	£2,310	£1,580
£6,000 or more but less than £8,500	£2,990	£2,030
£8,500 or more but not more than £19,250	£4,800	£3,220

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	£6,210	£4,180
More than £29,000	£10,040	£6,660

2

This section shall have effect for the year 1993-94.

71 Car fuel: 1993-94.

1

In section 158 of the Taxes Act 1988 (car fuel) for the Tables in subsection (2) (tables of cash equivalents) there shall be substituted—

TABLE A
Cylinder capacity of car in cubic centimetres
Cash equivalent
1,400 or less
£600
More than 1,400 but not more than 2,000
£760
More than 2,000
£1,130
TABLE AB
Cylinder capacity of car in cubic centimetres
Cash equivalent
2,000 or less
£550
More than 2,000
£710
TABLE B
Original market value of car
Cash equivalent
Less than £6,000
£600
£6,000 or more but less than £8,500
£760
£8,500 or more
£1,130

Cylinder capacity of car in cubic centimetres	Cash equivalent
1,400 or less	£600
More than 1,400 but not more than 2,000	£760
More than 2,000	£1,130

Cylinder capacity of car in cubic centimetres	Cash equivalent
2,000 or less	£550
More than 2,000	£710

Original market value of car	Cash equivalent
Less than £6,000	£600
£6,000 or more but less than £8,500	£760
£8,500 or more	£1,130

2

In subsection (5) of that section (reductions in cash equivalents) the words “or 3” shall be omitted.

3

This section shall have effect for the year 1993-94.

72 Car and car fuel benefits: 1994-95 onwards.

Schedule 3 to this Act (which contains provisions, having effect for the year 1994-95 and subsequent years of assessment, about cars available for private use and car fuel) shall have effect.

F28773 Vans.

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

F28774 Heavier commercial vehicles.

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

F28775 Sporting and recreational facilities.

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

F28776 Removal expenses and benefits.

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

Taxation of distributions etc.

77 Application of lower rate.

F461

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

F462

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

3

In section 249 of that Act (issues of share capital treated as income)—

a

in subsection (4)—

i

for the words “basic rate”, in each place where they occur, there shall be substituted “ lower rate ”; and

ii

in paragraph (c), for “which is not chargeable at the lower rate and” there shall be substituted “ to which (without prejudice to paragraph (a) above) section 207A shall be taken to apply as it applies to income chargeable under Schedule F, but shall be treated ”;

F483

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

80 Transitional relief for charities etc.

1

In any case where—

a

a qualifying distribution is made on or after 6th April 1993 and before 6th April 1997 by a company resident in the United Kingdom;

b

the recipient of the distribution is a section 505 body; and

c

the section 505 body is entitled to the payment of a tax credit in respect of the distribution,

the section 505 body, on a claim made under this section to the Board, shall (in addition to its entitlement to payment of the tax credit) be entitled to be paid by the Board out of money provided by Parliament an amount determined in accordance with subsection (2) below.

2

The amount referred to in subsection (1) above is an amount equal to—

a

one-fifteenth of the amount or value of the distribution if the distribution is made on or after 6th April 1993 and before 6th April 1994;

b

one-twentieth of that amount or value if the distribution is made on or after 6th April 1994 and before 6th April 1995;

c

one-thirtieth of that amount or value if the distribution is made on or after 6th April 1995 and before 6th April 1996;

d

one-sixtieth of that amount or value if the distribution is made on or after 6th April 1996 and before 6th April 1997.

3

For the purposes of this section each of the following is a section 505 body—

a

any charity (as defined in section 506(1) of the Taxes Act 1988);

b

each of the bodies mentioned in section 507 of that Act (heritage bodies);

c

any Association of a description specified in section 508 of that Act (scientific research organisations).

4

Any entitlement of a section 505 body to a payment under the preceding provisions of this section shall be subject to a power of the Board to determine (whether before or after any payment is made) that, having regard to the operation in relation to the qualifying distribution in question of section 235, 237 or 703 of the Taxes Act 1988 (distributions of exempt funds, bonus issues and tax avoidance provisions), that body is to be treated as if it had had no entitlement to that payment or to so much of it as they may determine.

5

No claim may be made under this section later than two years after the end of the chargeable period of the section 505 body in which the distribution is made.

6

An appeal may be brought against any decision of the Board under this section by giving written notice to the Board within thirty days of receipt of written notice of the decision.

7

An appeal under this section shall lie to the Special Commissioners, and the provisions of the M24Taxes Management Act 1970 relating to appeals under the Tax Acts shall apply to an appeal under this section as they apply to those appeals.

8

Any payment of an amount under this section shall be treated for the purposes of section 252 of the Taxes Act 1988 (rectification of excessive set-off etc. of ACT or tax credit) as a payment of tax credit.

F4981. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chargeable gains

82 Annual exempt amount for 1993-94.

For the year 1993-94 section 3 of the M25Taxation of Chargeable Gains Act 1992 (annual exempt amount) shall have effect as if the amount specified in subsection (2) were £5,800, and accordingly subsection (3) of that section (indexation) shall not apply for that year.

83 Annual exempt amount: indexation for 1994-95 onwards.

1

In section 3(3) of the M26Taxation of Chargeable Gains Act 1992 (indexation of annual exempt amount) for “December” (in each place) there shall be substituted “ September ”.

2

This section shall have effect for the year 1994-95 and subsequent years of assessment.

84 Re-organisations etc. involving debentures.

1

In section 117 of the Taxation of Chargeable Gains Act 1992 (meaning of qualifying corporate bond), after subsection (6) there shall be inserted the following subsection—

6A
For the purposes of this section “corporate bond” also includes, except in relation to a person who acquires it on or after a disposal in relation to which section 115 has or has had effect in accordance with section 116(10)(c), any debenture issued on or after 16th March 1993 which is not a security (as defined in section 132) but—
a
is issued in circumstances such that it would fall by virtue of section 251(6) to be treated for the purposes of section 251 as such a security; and
b
would be a corporate bond if it were a security as so defined.

2

In section 251 of that Act (general provisions in relation to debts), after subsection (5) there shall be inserted the following subsection—

6
For the purposes of this section a debenture issued by any company on or after 16th March 1993 shall be deemed to be a security (as defined in section 132) if—
a
it is issued on a reorganisation (as defined in section 126(1)) or in pursuance of its allotment on any such reorganisation;
b
it is issued in exchange for shares in or debentures of another company and in a case unaffected by section 137 where one or more of the conditions mentioned in paragraphs (a) to (c) of section 135(1) is satisfied in relation to the exchange;
c
it is issued under any such arrangements as are mentioned in subsection (1)(a) of section 136 and in a case unaffected by section 137 where section 136 requires shares or debentures in another company to be treated as exchanged for, or for anything that includes, that debenture; or
d
it is issued in pursuance of rights attached to any debenture issued on or after 16th March 1993 and falling within paragraph (a), (b) or (c) above.

3

This section shall have effect in relation to any chargeable period ending on or after 16th March 1993 but, in relation to any accounting period of a company which began before 6th April 1992, this section shall have effect as if the references in this section, and in the amendments made by this section, to provisions of the Taxation of Chargeable Gains Act 1992 were references to such of the provisions of the M27Capital Gains Tax Act 1979 and the M28Finance Act 1984 as correspond to those provisions and have effect in relation to that accounting period.

85 Personal equity plans.

After subsection (3) of section 151 of the Taxation of Chargeable Gains Act 1992 (personal equity plans) there shall be inserted the following subsection—

4
Regulations under this section may include provision which, for cases where a person subscribes to a plan by transferring or renouncing shares or rights to shares—
a
modifies the effect of this Act in relation to their acquisition and their transfer or renunciation; and
b
makes consequential modifications of the effect of this Act in relation to anything which (apart from the regulations) would have been regarded on or after their acquisition as an indistinguishable part of the same asset.

86 Roll-over relief.

1

In section 155 of the M29Taxation of Chargeable Gains Act 1992 (classes of assets for the purposes of roll-over relief), after Class 5 there shall be inserted—

CLASS 6
Ewe and suckler cow premium quotas (that is, rights in respect of any ewes or suckler cows to receive payments by way of any subsidy entitlement to which is determined by reference to limits contained in a Community instrument).

2

The Treasury may by order made by statutory instrument amend that section so as to add one or more further classes of assets to the classes specified in that section.

F50Any such order may make such consequential amendments of Schedule 7AB as appear to the Treasury to be appropriate.

3

A statutory instrument containing an order under subsection (2) above shall be subject to annulment in pursuance of a resolution of the House of Commons.

4

Subsection (1) above shall apply where the disposal of the old assets (or an interest in them) or the acquisition of the new assets (or an interest in them) is on or after 1st January 1993; but, in relation to any accounting period of a company which began before 6th April 1992, subsection (1) above shall have effect as if the inserted class were numbered 5 and were inserted after Class 4 in section 118 of the M30Capital Gains Tax Act 1979.

87 Relief on retirement or re-investment.

1

Schedule 7 to this Act (which amends the provisions of the Taxation of Chargeable Gains Act 1992 with respect to retirement relief and makes new provision in relation to relief on the re-investment of certain gains) shall have effect.

2

This section and that Schedule shall have effect in relation to any disposal made on or after 16th March 1993.

88 Restriction on set-off of pre-entry losses.

1

After section 177 of the Taxation of Chargeable Gains Act 1992 there shall be inserted the following section—

177A Restriction on set-off of pre-entry losses.
Schedule 7A to this Act (which makes provision in relation to losses accruing to a company before the time when it becomes a member of a group of companies and losses accruing on assets held by any company at such a time) shall have effect.

2

The Schedule set out in Schedule 8 to this Act shall be inserted after Schedule 7 to that Act.

3

This section and that Schedule—

a

shall apply for the calculation of the amount to be included in respect of chargeable gains in a company’s total profits for any accounting period ending on or after 16th March 1993; but

b

shall so apply only in relation to the deduction from chargeable gains accruing on or after 16th March 1993 of amounts in respect of, or of amounts carried forward in respect of—

i

pre-entry losses accruing before it became a member of the relevant group to a company whose membership of that group began or begins at a time on or after 1st April 1987; and

ii

losses accruing on the disposal of any assets so far as it is by reference to such a company that the assets fall to be treated as being or having been pre-entry assets or assets incorporating a part referable to pre-entry assets.

4

In relation to accounting periods beginning before 6th April 1992 this section and that Schedule shall have effect as if—

a

the section and Schedule inserted by subsections (1) and (2) above were inserted in the M31Capital Gains Tax Act 1979; and

b

references in the Schedule so inserted to provisions of the M32Taxation of Chargeable Gains Act 1992 were references to such of the provisions of that Act of 1979 or of any other enactment as correspond to the provisions referred to and have effect in relation to that accounting period.

89 De-grouping charges.

1

In section 179(4) of the Taxation of Chargeable Gains Act 1992 (time at which de-grouping charges accrue), for the words from “as follows” onwards there shall be substituted

at whichever is the later of the following, that is to say—
a
the time immediately after the beginning of the accounting period of that company in which or, as the case may be, at the end of which the company ceases to be a member of the group; and
b
the time when under subsection (3) above it is treated as having reacquired the asset;
and subsection (2) of section 409 of the Taxes Act (group relief) shall require any apportionment under that subsection to be made accordingly but shall not require any reference in this subsection to an accounting period to have effect for any of the purposes specified in subsection (3) of that section as a reference to any accounting period other than a true accounting period.

2

This section shall have effect in relation to accounting periods ending after the day appointed for the purposes of section 180(1)(b) of that Act.

F5190. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91 Deemed disposals of unit trusts by insurance companies.

1

Section 212 of the Taxation of Chargeable Gains Act 1992 (annual deemed disposal by insurance companies of unit trusts) shall have effect in relation to accounting periods beginning on or after 1st January 1993; and neither that section nor section 46 of the M33Finance Act 1990 (which is consolidated in that section) shall have effect in relation to any earlier accounting period in relation to which either of them would have applied apart from this subsection.

2

In relation to any accounting period beginning on or after 1st January 1993—

a

section 432A of the Taxes Act 1988 shall have effect with the omission of subsection (10) (which disapplies the apportionment rules in that section in the case of a deemed disposal under section 212 of that Act of 1992); and

b

that section 212 shall have effect with the omission, in subsection (2), of the words from “and in relation to” onwards and of subsections (3), (4) and (6) (which provide for a different apportionment rule in the case of the deemed disposal).

3

In subsection (7) of that section 212, in the words after paragraph (b) (application of definitions in the Taxes Act 1988), for “and 214” there shall be substituted “ to 214A ”.

4

After section 213(1) of that Act of 1992 (spreading of gains and losses), there shall be inserted the following subsection—

1A
Subsection (1) above shall not apply to chargeable gains or allowable losses except so far as they are gains or losses which—
a
are referable to basic life assurance and general annuity business; or
b
would (apart from that subsection) be taken into account in computing the profits of any business treated as a separate business under section 458 of the Taxes Act;
and that subsection shall apply separately in relation to the gains and losses falling within paragraph (a) above and those falling within paragraph (b) above for the purpose of determining what chargeable gains or allowable losses so referable are to be treated as accruing under that subsection and what chargeable gains or allowable losses to be so taken into account are to be treated as so accruing.

5

Section 214 of that Act of 1992 shall have effect with the omission of subsections (3) to (5) (run-off relief), and after that section there shall be inserted the following section—

214A Further transitional provisions.
1
This section applies where within two years after the end of an accounting period beginning on or after 1st January 1993 ( “the relevant period”)—
a
an insurance company makes a claim for the purposes of this section in relation to that period; and
b
that period is one of the company’s first eight accounting periods after the end of 1992.
2
Where this section applies, section 213 shall have effect as if—
a
the amount of the chargeable gains which—
i
apart from that section and this section, would be treated as accruing on disposals deemed by virtue of section 212 to have been made at the end of the relevant period, and
ii
satisfy the condition specified in paragraph (a) of section 213(1A),
were reduced by the protected proportion of that amount; and
b
an amount equal to the appropriate part of that reduction were (subject to section 213) a chargeable gain satisfying that condition and accruing at the end of each of the accounting periods in which the reduction is to be taken into account.
3
For the purposes of subsection (2) above the protected proportion, in relation to the relevant period, of the amount mentioned in paragraph (a) of that subsection shall be an amount equal to the amount calculated in accordance with the following formula—
$(A + \frac{Bx C}{D}) x \frac{E}{F} x \frac{G}{8}$
4
In subsection (3) above—
A is so much of the amount mentioned in subsection (2)(a) above as represents chargeable gains on section 212 assets which at the end of the relevant period were linked solely to the basic life assurance and general annuity business of the company in question;
B is so much of the amount so mentioned as represents chargeable gains on linked section 212 assets which at the end of that period were partially linked to that business;
C is the amount of such of the closing liabilities at the end of that period of the company’s basic life assurance and general annuity business as were liabilities in respect of benefits to be determined by reference to the value of linked section 212 assets which were then partially linked to that business;
D is the amount of all the closing liabilities of the company at the end of that period which were long term business liabilities in respect of benefits to be so determined;
E is the amount of such of the closing liabilities of the company on the relevant date as were relevant linked liabilities in respect of benefits determined by reference to linked section 212 assets;
F is the amount of all the closing liabilities on the relevant date of the company’s basic life assurance and general annuity business which were liabilities in respect of such benefits; and
G is the number of accounting periods in the first nine accounting periods of the company after the end of 1992 which remain after the end of the relevant period or, as the case may be, which would so remain apart from any cessation of the carrying on of any business of the company;
and for the purposes of this subsection the relevant date is, subject to subsection (7) below, the time of the first disposal which is deemed to have been made by the company in question under section 212.
5
For the purposes of this section and subject to subsection (6) below—
a
a reduction made under subsection (2) above in relation to the accounting period of any company shall be taken into account in every succeeding accounting period of that company which is included in the first nine accounting periods of that company after the end of 1992; and
b
in relation to any accounting period in which a reduction is to be taken into account, the appropriate part of the reduction is—
i
if that is the only accounting period in which it falls to be taken into account, the whole of the reduction; and
ii
in any other case, the amount of the reduction divided by the number of the accounting periods after the period in which the reduction is made in which the reduction falls to be taken into account or, as the case may be, would so fall apart from any cessation of the carrying on of any business of the company.
6
Subject to subsection (7) below, where a company ceases to carry on long term business before the end of the first nine accounting periods after the end of 1992, the appropriate part of any reduction in relation to the accounting period ending with the cessation shall be such as to secure that the whole of the reduction has been taken into account under subsection (2)(b) above.
7
Where at any time on or after 1st January 1993 there is a transfer of the whole or part of the long term business of an insurance company ( “the transferor”) to another company ( “the transferee”) in accordance with a scheme sanctioned by a court under section 49 of the M34Insurance Companies Act 1982, this section shall have effect so that—
a
the relevant date for the purposes of subsection (4) above shall be determined in relation to any disposal deemed to have been made after the transfer—
i
by the transferee, or
ii
in a case where the transfer is of part of the transferor’s long term business, by the transferee or the transferor,
as if there had been no deemed disposals under section 212 before the transfer; and
b
any reduction which (on the assumption that the transferor had continued to carry on the transferred business) would have fallen to be taken into account under subsection (2)(b) above shall be taken into account instead in relation to the transferee.
8
Where the transfer is of part only of the transferor’s long term business, subsection (7)(b) above shall apply only to such part of any reduction to which it would otherwise apply as is appropriate.
9
Any question arising as to the operation of subsection (8) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and transferee shall be entitled to appear and be heard or to make representations in writing.
10
This section shall have effect in relation to any cases in which there is such a transfer as is mentioned in subsection (7) above as if the accounting periods to be taken into account in any calculation for the purposes of this section of the number of accounting periods of the transferee after the end of 1992, and the only accounting periods in relation to which any reduction is to be taken into account under paragraph (b) of that subsection, were—
a
the accounting periods of the transferor which began on or after 1st January 1993 and ended on or before the day of the transfer (including any which, by reference to a transfer in relation to which the transferor is a transferee, are taken into account in accordance with this subsection as accounting periods of the transferor); and
b
the accounting periods of the transferee ending after the day of the transfer,
and this section shall have effect in relation to such a reduction as if the first accounting period of the transferee to end after the day of the transfer began with the day after the transfer.
11
For the purposes of this section assets shall be taken to be partially linked to a company’s basic life assurance and general annuity business if they are not linked solely to that business and are neither—
a
linked solely to any pension business or long term business of that company other than life assurance business; nor
b
assets of the company’s overseas life assurance fund;
and subsection (1) of section 214 shall apply for the purposes of this section as it applies for the purposes of that section.
12
Subject to subsection (10) above, the references in this section, in relation to any company, to the first eight accounting periods of a company after the end of 1992 are references to the first accounting period of that company to begin on or after 1st January 1993 and to the succeeding seven accounting periods of that company, and references to the first nine accounting periods of a company after the end of 1992 shall be construed accordingly.

6

In section 214(6)(a) of that Act of 1992 (replacement relief), after “1989” there shall be inserted “ and before the time when it is first deemed under section 212 to have made a disposal of any assets ”.

Corporation tax: currency

F52 C392 The basic rule: sterling to be used.

1

Where a company carries on a business, the profits or losses of the business for an accounting period shall for the purposes of corporation tax be computed and expressed in sterling; but this is subject to F53sections 93 and 93A below.

2

In this section—

“losses” includes management expenses and any allowances falling to be made under F54section 19 or 253 of the Capital Allowances Act ;
“profits” includes gains, income and any charges falling to be made under F54section 19 or 253 of that Act.

C4F5693F55Use of currency other than sterling: accounts as a whole etc in foreign currency.

1

taking—

i

in a case where the first condition is fulfilled, the sterling equivalent, or

ii

in a case where the second condition is fulfilled, the equivalent in the first currency,

of the amount found by applying paragraph (a) above.

5

In a case where the second condition is fulfilled, effect shall be given to subsection (4) above before effectis given to section 93(4) above.

6

In the application for the purposes of subsection (4)(a) above of—

a

section 578A(2) or (3) of the Taxes Act 1988, or

b

section 43(3), 74(2), 75(1), 76(2), (3) or (4), 99(1), (2) or (3) or 208(1) of the Capital Allowances Act,

it shall be assumed that any sterling amount mentioned in any of those sections is its equivalent expressed in the relevant foreign currency.

7

Where for any accounting period—

a

the accounts of the company, so far as relating to a part of its business, are prepared, using the closing rate/net investment method, from financial statements and records prepared in a currency which is not sterling and, where the second condition is fulfilled, is not the first currency, or

b

in the case of a company which is not resident in the United Kingdom, its return of accounts for its F296permanent establishment in the United Kingdom, so far as relating to a part of the company’s business, is prepared, using that method, from such financial statements and records,

then, if different such financial statements and records are prepared in different currencies, the company shall be treated for the purposes of this section as having a separate part of a separate business for each such different currency (and this section shall accordingly apply separately in relation to each such part).

8

In this section, “part of a business” includes any collection of assets and liabilities.

9

In this section, unless the context otherwise requires—

“accounts” has the same meaning as in section 93 above;
“the closing rate/net investment method” means the method so called as described under the title “Foreign currency translation” in the Statement of Standard Accounting Practice issued in April 1983 by the Institute of Chartered Accountants in England and Wales;
“losses” has the same meaning as in section 92 above, except that it does not include allowable losses within the meaning of the Taxation of Chargeable Gains Act 1992;
“profits” has the same meaning as in section 92 above, except that it does not include chargeable gains within the meaning of that Act;
“the relevant foreign currency” means the currency in which the financial statements and records mentioned in subsection (2) or, as the case may be, (3) above are prepared;
“return of accounts” has the same meaning as in section 93 above.

C694AAF66 Rules for ascertaining currency equivalents: general

1

Where any receipt or expense, or the value of any asset, liability or derivative contract, of a company—

a

is to be taken into account in making a computation under subsection (1) of section 92 above for an accounting period, and

b

is denominated in a currency other than sterling,

it shall be translated into its sterling equivalent by reference to a rate determined in accordance with subsection (4) below.

2

Where the amount of any receipt or expense, or the value of any asset, liability or derivative contract, of a company—

a

falls to be brought into account for the purposes of the accounts mentioned in paragraph (a), or the return of accounts mentioned in paragraph (b), of subsection (2) of section 93 above,

b

is denominated in a currency other than the relevant foreign currency, within the meaning of that section, and

c

accordingly falls to be translated into the relevant foreign currency,

the amount or value shall for the purposes of that section be translated from the currency mentioned in paragraph (b) above into the relevant foreign currency by reference to a rate determined in accordance with subsection (4) below.

3

Where, for any purpose of any provision of section 93A(4) or (6) above, any profit or loss denominated in one currency falls to be translated into its equivalent expressed in another currency, the translation shall be made by reference to a rate determined in accordance with subsection (4) below.

4

The rate is—

a

the rate used in the preparation of the accounts of the company for the accounting period in question, if that rate is an arm’s length exchange rate for the relevant day, or

b

in any other case, the London closing exchange rate for the relevant day.

5

The reference in subsection (4)(a) above to the exchange rate used in the preparation of the accounts of the company includes a reference to any exchange rate implied by a derivative contract whose underlying subject matter is currency.

6

Nothing in this section affects the operation of Chapter 4 of Part 17 of the Taxes Act 1988 (controlled foreign companies).

7

Nothing in paragraph 88 of Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters) shall be taken to prevent an amount being translated under this section for an accounting period by reference to an exchange rate which was not the exchange rate used to translate that amount for the purposes of the Corporation Tax Acts for another accounting period (whether of the same or a different company).

8

In this section—

“accounts” has the same meaning as in section 93 above;
“arm’s length exchange rate” means such exchange rate as might reasonably be expected to be agreed between persons dealing at arm’s length;
“derivative contract” shall be construed in accordance with Schedule 26 to the Finance Act 2002;
“the relevant day”—
1. a
  where the rate used in the preparation of the accounts is an exchange rate for a particular day, means that day; and
2. b
  where the rate used in the preparation of the accounts is an average rate for a number of days, means each of those days;
“underlying subject matter”, in relation to a derivative contract, shall be construed in accordance with Schedule 26 to the Finance Act 2002.

C794ABF67 Rules for ascertaining sterling equivalent for section 93(4) or (5)

1

Where the amount of any receipt or expense, or the value of any asset, liability or derivative contract, of a company falls to be translated into its sterling equivalent for the purposes of section 93(4) or (5) above, the translation shall be made by reference to a rate which is an arm’s length exchange rate for the appropriate day.

2

For the purposes of subsection (1) above, the “appropriate day” is the day the rate for which would have been used if the accounts, or return of accounts, of the company were translated into sterling in accordance with generally accepted accounting practice in relation to foreign currency translation.

3

Nothing in this section affects the operation of Chapter 4 of Part 17 of the Taxes Act 1988 (controlled foreign companies).

4

5

In this section—

“accounts” has the same meaning as in section 93 above;
“arm’s length exchange rate” has the same meaning as in section 94AA;
“derivative contract” shall be construed in accordance with Schedule 26 to the Finance Act 2002.

any receipt or expense which is to be taken into account in making a calculation for the purposes of subsection (4)(a) or (b) of section 93 above, and is denominated in a currency other than the relevant foreign currency; and

b

any such sterling amount as is referred to in subsection (5) of that section,

shall be translated into its equivalent expressed in the relevant foreign currency by reference to the London closing exchange rate for the relevant day.

5

Where section 93 above applies by virtue of the first condition mentioned in that section, then, as regards the business or part of the business, the company—

a

may elect, by a notice given to an officer of the Board, that as from the first day of the accounting period in which the notice is given, an average arm’s length exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned; and

b

may withdraw such an election, by a notice so given, as from the first day of the first accounting period beginning on or after the date of the notice.

6

Where an election under subsection (5) above is withdrawn, no further election may be made under that subsection so as to take effect before the third anniversary of the day on which the withdrawal takes effect.

7

Where—

a

section 93 above applies by virtue of the second condition mentioned in that section; and

b

the accounts of the company, so far as relating to the business or part of the business, are prepared by reference to an average arm’s length exchange rate,

that exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned.

8

In this section—

“accounts” has the same meaning as in section 93 above;
“arm’s length exchange rate” means such exchange rate as might reasonably be expected to be agreed between persons dealing at arm’s length;
“average arm’s length exchange rate”, in relation to a period, means the rate which represents an appropriate average of arm’s length exchange rates for the period;
“the relevant day” means—
1. a
  for the purposes of subsections (1), (2) and (4)(a) above, the day on which the company becomes entitled to the receipt or incurs (or is treated as incurring) the expense;
2. b
  for the purposes of subsection (3) above, the last day of the accounting period in question;
3. c
  for the purposes of subsection (4)(b) above, the day on which the company incurs the capital expenditure.

9

Nothing in this section affects the operation of Chapter IV of Part VII of the Taxes Act 1988 (controlled foreign companies) or Chapter II of this Part.

10

Nothing in paragraph 88 of Schedule 18 to the M39Finance Act 1998 (company tax returns, assessments and related matters) shall be taken to prevent any amount which is taken to be conclusively determined for the purposes of the Corporation Tax Acts from being translated under this section by reference to an exchange rate which was not used to determine the amount which can no longer be altered.

“oil” means such substance as falls within the meaning of oil contained in section 502(1) of the Taxes Act 1988 and is not gas;

b

“gas” means such substance as falls within the meaning of oil contained in section 502(1) of the Taxes Act 1988 and is gas of which the largest component by volume, measured at a temperature of 15 degrees centigrade and a pressure of one atmosphere, is methane or ethane or a combination of those gases.

F72 C1195 Currency to be used: supplementary.

1

Regulations under section 93 or 94 above may include—

a

provision that an election may in prescribed circumstances have effect from a time before it is made;

b

provision that prescribed conditions shall be treated as fulfilled in prescribed circumstances (subject to any provision under paragraph (c) below);

c

provision that prescribed conditions shall be treated as not having been fulfilled if the inspector notifies the company that he is not satisfied that they are fulfilled;

d

provision for an appeal from the inspector’s notification;

and any provision under paragraph (c) above may allow a notification to be made after the accounting period ends.

2

The power to make regulations under section 93 or 94 above shall be exercisable by the Treasury by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

3

In sections 93 and 94 above “prescribed” means prescribed by regulations made under the section concerned.

4

Where as regards a trade and for an accounting period—

a

an election is made under regulations made under section 93 above, or

b

an election is made under regulations made under section 94 above,

no election may be made as regards the trade for the period under regulations made under the other section.

5

For the purposes of sections 93 and 94 above the ecu shall be regarded as a currency other than sterling; and the reference here to the ecu is to the European currency unit as defined for the time being in Council Regulation No. 3180/78/EEC or in any Community instrument replacing it.

6

Sections 92 to F7394A above apply in relation to any accounting period beginning on or after the day appointed under section 165(7)(b) below.

F7496 Foreign companies: trading currency.

1

In Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies) the following paragraph shall be inserted after paragraph 4—

4A
1
Sub-paragraph (2) below applies where—
a
the company carries on a trade, and
b
the currency used in the accounts of the company for an accounting period is a currency other than sterling.
2
It shall be assumed that by virtue of regulations under section 93 of the Finance Act 1993 (corporation tax: currency to be used) the basic profits or losses of the trade for the accounting period are to be computed and expressed for the purposes of corporation tax in the currency used in the accounts of the company for the period.
3
References in this paragraph to the accounts of a company—
a
are to the accounts which the company is required by the law of its home State to keep, or
b
if the company is not required by the law of its home State to keep accounts, are to the accounts of the company which most closely correspond to the individual accounts which companies formed and registered under the M40Companies Act 1985 are required by that Act to keep;
and for the purposes of this paragraph the home State of a company is the country or territory under whose law the company is incorporated.
4
The reference in sub-paragraph (2) above to the basic profits or losses of the trade for the accounting period shall be construed in accordance with section 93 of the Finance Act 1993.

2

This section applies in relation to any accounting period beginning on or after the day appointed under section 165(7)(b) below.

Overseas life insurance companies

97 Modification of Taxes Act 1988.

1

The following shall be inserted after section 444A of the Taxes Act 1988—

Provisions applying in relation to overseas life insurance companies
444B Modification of Act in relation to overseas life insurance companies.
Schedule 19AC (which makes modifications of this Act in relation to overseas life insurance companies) shall have effect.

2

Schedule 9 to this Act (which inserts Schedule 19AC into that Act and makes further provision) shall have effect.

98 Modification of section 440 of Taxes Act 1988.

1

The following section shall be inserted after section 444B of the Taxes Act 1988—

444C Modification of section 440.
1
Where the company mentioned in section 440(1) is an overseas life insurance company, section 440 shall have effect with the modifications in subsections (2) and (3) below.
2
Subsection (4) shall be treated as if—
a
paragraph (c) were omitted;
b
in paragraphs (a), (b), (d) and (e), the words “UK assets” were substituted for the word “assets”; and
c
at the end there were inserted the following paragraphs—
f
section 11C assets;
g
non-UK assets.”
3
The following subsection shall be treated as inserted at the end of the section—
6
For the purposes of this section—
a
UK assets are—
i
section 11(2)(b) assets;
ii
section 11(2)(c) assets; or
iii
assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;
b
section 11C assets are assets—
i
(in a case where section 11C (other than subsection (9)) applies) of the relevant fund, other than UK assets; or
ii
(in a case where that section including that subsection applies) of the relevant funds, other than UK assets;
c
non-UK assets are assets which are not UK assets or section 11C assets;
and any expression used in this subsection to which a meaning is given by section 11A has that meaning.”
4
Where one or each of the companies mentioned in section 440(2) is an overseas life insurance company, section 440(2)(b) and (4) shall have effect as if for “categories”, in each place where the word occurs, there were substituted “paragraphs”.
5
Where the transferor company mentioned in section 440(2) is an overseas life insurance company, section 440 shall have effect, as regards the time immediately before the acquisition, with the modifications in subsections (2) and (3) above.
6
Where the acquiring company mentioned in section 440(2) is an overseas life insurance company, section 440 shall have effect, as regards the time immediately after the acquisition, with the modifications in subsections (2) and (3) above.

2

This section shall apply—

a

so far as section 440(1) is concerned, as regards events falling on or after the first day of the relevant accounting period of the company concerned;

b

so far as section 440(2) is concerned, as regards events falling on or after the first day of the relevant accounting period of the transferor company or on or after the first day of the relevant accounting period of the acquiring company (whichever of those days falls later).

3

For the purposes of subsection (2) above a company’s relevant accounting period is its first accounting period to begin after 31st December 1992.

F7599. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100 Income from investments attributable to BLAGAB, etc.

F761

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

2

In section 475 of that Act (tax-free Treasury securities: exclusion of interest on borrowed money), in subsection (6)—

F76a

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

b

for the words “of the life assurance fund”, in each place where they occur, there shall be substituted the words “ attributable to basic life assurance and general annuity business ”.

3

This section shall apply in relation to accounting periods beginning after 31st December 1992.

101 Modification of Finance Act 1989.

1

The following section shall be inserted after section 89 of the M41Finance Act 1989—

89A Modification of sections 83 and 89 in relation to overseas life insurance companies.
Schedule 8A to this Act (which makes modifications of sections 83 and 89 in relation to overseas life insurance companies) shall have effect.

2

Schedule 10 to this Act (which inserts Schedule 8A into that Act) shall have effect.

102 Modification of Taxation of Chargeable Gains Act 1992.

1

The following section shall be inserted after section 214A of the M42Taxation of Chargeable Gains Act 1992—

214B Modification of Act in relation to overseas life insurance companies.
Schedule 7B (which makes modifications of this Act in relation to overseas life insurance companies) shall have effect.

2

Schedule 11 to this Act (which inserts Schedule 7B into that Act) shall have effect.

103 Amendment of definition and repeals.

1

In section 431(2) of the Taxes Act 1988 (definitions), in the definition of “overseas life insurance company” for the words “having its head office outside” there shall be substituted the words “ not resident in ”.

2

The following provisions of that Act shall cease to have effect—

a

section 445 (charge to tax on investment income of overseas life insurance company);

b

section 446(1) (qualifying distributions part of profits of pension business of overseas life insurance company);

c

section 447(1), (2) and (4) (set-off of income tax and tax credits against corporation tax assessed under section 445);

d

section 448 (qualifying distributions and tax credits);

e

section 449 (double taxation agreements);

f

section 724(5) to (8) (special provisions of accrued income scheme for overseas life insurance companies);

g

section 811(2)(c) (provision about deduction of foreign tax not to affect overseas life insurance company charged under section 445);

h

paragraph 1(9) of Schedule 19AB (payments on account of tax credits in case of pension business: special provision for overseas life insurance companies).

3

Subject to subsection (4) below, this section shall apply in relation to accounting periods beginning after 31st December 1992.

F774

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

Indexation: miscellaneous

106 Earnings cap etc: no indexation in 1993-94.

The figure £75,000 shall be deemed to be the figure found for the year 1993-94, for the purposes of section 590C of the Taxes Act 1988, by virtue of section 590C(4) and (5) (indexation of earnings cap for retirement benefits schemes and certain other figures).

107 Indexation of allowances etc. for 1994-95 onwards.

1

The Taxes Act 1988 shall be amended as mentioned in subsections (2) to (6) below.

2

In section 1—

a

in subsection (4) (indexation of income tax bands) for “December” (in each place) there shall be substituted “ September ”;

b

subsection (5) (no change required for PAYE before 18th May) shall be omitted.

3

In section 257C—

a

in subsection (1) (indexation of personal allowance and married couple’s allowance) for “December” (in each place) there shall be substituted “ September ”;

b

subsection (2) (no change required for PAYE before 18th May) shall be omitted.

4

In section 590C (earnings cap for retirement benefits schemes) in subsection (5) (indexation) for “December” (in each place) there shall be substituted “ September ”.

5

In section 590C the following subsection shall be inserted after subsection (5)—

5A
If the retail prices index for the month of September preceding a year of assessment falling within subsection (4) above is not higher than it was for the previous September, the figure for that year shall be the same as the figure for the previous year of assessment.

6

In each of the provisions to which this subsection applies (provisions which refer to section 590C(4) and (5)) for “and (5)” there shall be substituted “ to (5A) ”; and this subsection applies to sections 590B(11), 592(8E), 594(7), 599(12) and 640A(4).

7

In Schedule 6 to the M47Finance Act 1989 (retirement benefits schemes) in paragraphs 20(6) and 22(5) (which refer to section 590C(4) and (5) of the Taxes Act 1988) for “and (5)” there shall be substituted “ to (5A) ”.

8

This section shall have effect for the year 1994-95 and subsequent years of assessment.

Miscellaneous provisions about reliefs

108 Counselling services for employees.

In Chapter VI of Part XIII of the Taxes Act 1988, after section 589 there shall be inserted the following sections—

589A Counselling services for employees.
1
This section applies where—
a
qualifying counselling services are provided to a person (the employee) in connection with the termination of the holding by him of any office or employment, and
b
the termination takes place on or after 16th March 1993.
2
This section also applies where—
a
subsection (1)(a) above applies, and
b
the termination takes place before 16th March 1993 but relevant expenditure is incurred on or after that date.
3
Relevant expenditure is expenditure incurred in—
a
providing the qualifying counselling services to the employee,
b
paying or reimbursing fees for the provision to the employee of the qualifying counselling services, or
c
paying or reimbursing any allowable travelling expenses incurred in connection with the provision of the qualifying counselling services to the employee.
4
No charge to tax under Schedule E shall arise in respect of—
a
the provision of the qualifying counselling services to the employee,
b
the payment or reimbursement of fees for the provision to the employee of the qualifying counselling services, or
c
the payment or reimbursement of any allowable travelling expenses incurred in connection with the provision of the qualifying counselling services to the employee.
5
Where this section applies by virtue of subsection (2) above, subsection (4) above shall apply only to the extent that the expenditure incurred in providing the services or paying or reimbursing the fees or expenses is incurred on or after 16th March 1993.
6
Subsection (4) above shall apply whether or not the person who provides the services or pays or reimburses the fees or expenses is the person under whom the employee holds or held the office or employment mentioned in subsection (1) above.
7
Subsections (8) to (10) below apply where any relevant expenditure is incurred by the person under whom the employee holds or held the office or employment mentioned in subsection (1) above (the employer).
8
If and so far as the expenditure would not, apart from this subsection, be so deductible, it shall be deductible in computing for the purposes of Schedule D the profits or gains of the trade, profession or vocation of the employer for the purposes of which the employee is or was employed.
9
If the employer carries on a business and the expenses of management of the business are eligible for relief under section 75, subsection (8) above shall have effect as if for the words from “in computing” onwards there were substituted “as expenses of management for the purposes of section 75”.
10
Where this section applies by virtue of subsection (2) above, subsections (8) and (9) above shall apply only to the extent that the expenditure is incurred on or after 16th March 1993.
589B Qualifying counselling services etc.
1
Subsections (2) to (4) below apply for the purposes of section 589A.
2
Subject to subsection (3) below, services are qualifying counselling services if—
a
the purpose, or main purpose, of their provision is to enable the employee to adjust to the termination of his holding of the office or employment mentioned in section 589A(1) or is to enable him to find other gainful employment (including self-employment) or is to enable him to do both,
b
the services consist wholly of any or all of the following, namely, giving advice and guidance, imparting or improving skills, and providing or making available the use of office equipment or similar facilities,
c
the employee has been employed by the employer full-time throughout the period of two years ending at the time when the services begin to be provided to him or, if it is earlier, at the time he ceases to be employed by the employer,
d
the opportunity to receive the services, on similar terms as to payment or reimbursement of any expenses incurred in connection with their provision, is available either generally to holders or past holders of offices or employment under the employer or to a particular class or classes of such holders or past holders, and
e
the services are provided in the United Kingdom.
3
Where paragraphs (a) to (d) of subsection (2) above are satisfied in relation to particular services but the services are provided partly in and partly outside the United Kingdom, the extent to which the services are qualifying counselling services shall be determined on a just and reasonable basis.
4
In relation to services, allowable travelling expenses are those which would be deductible under section 198—
a
on the assumption that receipt of the services is one of the duties of the employee’s office or employment, and
b
if the employee has in fact ceased to be employed by the employer, on the assumption that he continues to be employed by him.
5
Any reference in this section or section 589A to an employee being employed by an employer is a reference to the employee holding office or employment under the employer.

109 Pre-trading expenditure.

1

In subsection (1) of section 401 of the Taxes Act 1988 (which gives relief for expenditure incurred within the five years before the beginning of any trade, profession or vocation), for “five” there shall be substituted “ seven ”.

2

After subsection (1) of that section there shall be inserted the following subsection—

1A
Where—
a
a company pays any charge on income at a time before it begins to carry on any trade, and
b
the payment is made wholly and exclusively for the purposes of that trade,
that payment, to the extent that it is not deducted otherwise than by virtue of this section from any profits, shall be treated for the purposes of corporation tax as paid on the day on which the trade is first carried on by the company.

3

In section 338(5)(b) of that Act (payments not to be treated as charges on income), after “trade” there shall be inserted “ which is or is to be ”.

4

Subsections (1) and (2) above shall have effect where the time when the person begins to carry on the trade, profession or vocation falls after 31st March 1993, and subsection (3) above shall have effect in relation to payments made after that date.

110 Waste disposal expenditure.

1

In section 91A(6) of the Taxes Act 1988 (relevant licence for the purposes of restoration payments), after paragraph (b) there shall be inserted

or
c
any authorisation under the M48Radioactive Substances Act 1960 or the M49Radioactive Substances Act 1993 for the disposal of radioactive waste or any nuclear site licence under the M50Nuclear Installations Act 1965.

2

In section 91B of that Act (preparation expenditure for waste disposal), after subsection (10) there shall be inserted the following subsection—

10A
For the purposes of this section any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated as if it had been incurred by that person on the first day on which he does carry it on and in the course of doing so.

3

This section shall have effect in relation to any case where the trade in question is begun after 31st March 1993.

111 Business expansion scheme: loan linked investments.

1

After section 299 of the Taxes Act 1988 there shall be inserted the following section—

299A Loan linked investments.
1
An individual shall not be entitled to relief in respect of any shares in a company issued on or after 16th March 1993 if—
a
there is a loan made by any person, at any time in the relevant period, to that individual or any associate of his; and
b
the loan is one which would not have been made, or would not have been made on the same terms, if that individual had not subscribed for those shares or had not been proposing to do so.
2
References in this section to the making by any person of a loan to any individual or an associate of his include references—
a
to the giving by that person of any credit to that individual or any associate of his; and
b
to the assignment or assignation to that person of any debt due from that individual or any associate of his;
and the references in section 307(6)(ca) to the making of a loan shall be construed accordingly.

2

In sections 289(12)(a) and 310(1) and (10)(a) of that Act (definition of “the relevant period” and information provisions), after “299,”, in each case, there shall be inserted “ 299A, ”.

3

In section 307(6) of that Act (reckonable date for the purposes of interest on relief that is withdrawn), after paragraph (c) there shall be inserted the following paragraph—

ca
in the case of relief withdrawn by virtue of section 299A in consequence of the making of any loan after the grant of the relief, the date of the making of the loan;

4

This section shall apply in relation to any case in which the claim for relief is made on or after 16th March 1993.

112 Employers’ pension contributions.

1

In section 592(4) of the Taxes Act 1988 (employers’ contributions to exempt approved schemes), at the end there shall be inserted “ but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any contributions under the scheme. ”

2

Subsection (1) above shall have effect in the case of any employer in relation to, as the case may be—

a

any accounting period of that employer ending with a day after 5th April 1993; or

b

any year of assessment the employer’s basis period for which ends with a day after that date.

3

Where—

a

there is after 5th April 1993 an actual payment by an employer of a contribution under an exempt approved scheme,

b

that payment would, apart from this subsection, be allowed to be deducted as an expense, or expense of management, of the employer in relation to any chargeable period in relation to which subsection (1) above has effect, and

c

the total of previously allowed deductions exceeds the relevant maximum,

the amount allowed to be so deducted in respect of the payment mentioned in paragraph (a) above and of any other actual payments of contributions under the scheme which, having been made after 5th April 1993, fall within paragraph (b) above in relation to the same chargeable period shall be reduced by whichever is the smaller of the excess and the amount which reduces the deduction to nil.

4

In relation to any such actual payment by an employer of a contribution under an exempt approved scheme as would be allowed to be deducted as mentioned in subsection (3) above in relation to any chargeable period-

a

the reference in that subsection to the total of previously allowed deductions is a reference to the aggregate of every amount in respect of the making, or any provision for the making, of that or any other contributions under the scheme, which has been allowed to be deducted as an expense, or expense of management, of that person in relation to a previous chargeable period; and

b

the reference to the relevant maximum is a reference to the amount which would have been that aggregate if the restriction on deductions imposed by virtue of subsection (1) above had been applied in relation to every previous chargeable period;

and for the purposes of this subsection an amount the deduction of the whole or any part of which falls to be taken into account as allowed in relation to more than one chargeable period shall be treated as if the amount allowed were a different amount in the case of each of those periods.

5

For the purposes of this section any payment which is treated under subsection (6) of section 592 of the Taxes Act 1988 as spread over a period of years shall be treated as actually paid at the time when it is treated as paid in accordance with that subsection.

6

After subsection (6) of section 592 of the Taxes Act 1988 there shall be inserted the following subsection—

6A
Where any sum is paid to the trustees of the scheme in or towards the discharge of any liability of an employer under section 58B of the M51Social Security Pensions Act 1975 or section 144 of the Pension Schemes Act 1993 (deficiencies in the assets of a scheme) or under Article 68B of the M52Social Security Pensions (Northern Ireland) Order 1975 or section 140 of the Pension Schemes (Northern Ireland) Act 1993 (which contain corresponding provision for Northern Ireland), the payment of that sum—
a
shall be treated for the purposes of this section as an employer’s contribution under the scheme; and
b
notwithstanding (where it is the case) that the employer’s trade, profession, vocation or business is permanently discontinued before the making of the payment, shall be allowed, in accordance with subsection (4) above, to be deducted as such a contribution to the same extent as it would have been allowed but for the discontinuance and as if it had been made on the last day on which the trade, profession, vocation or business was carried on.

7

In this section—

“basis period”, in relation to any person, means a period on the profits or gains of which income tax for any year of assessment falls to be finally computed under Case I or II of Schedule D in respect of the trade, profession or vocation of that person (being the later period in any case where the profits and gains of an earlier period are taken to be the profits and gains of a later period); and
“exempt approved scheme” has the meaning given by section 592(1) of the Taxes Act 1988.

Capital allowances

F78113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F79114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F80115. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F81116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F82117 Transactions between connected persons etc.

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

Miscellaneous

118 Scottish trusts.

1

Where—

a

any of the income of a trust having effect under the law of Scotland is income to which a beneficiary of the trust would have an equitable right in possession if that trust had effect under the law of England and Wales, and

b

the trustees of that trust are resident in the United Kingdom,

the rights of that beneficiary shall be deemed for the purposes of the Income Tax Acts to include such a right to that income notwithstanding that no such right is conferred according to the law of Scotland.

2

This section shall have effect in relation to the income of any trust for the year 1993–94 or any subsequent year of assessment.

119 Controlled foreign companies.

1

In section 750(1) of the Taxes Act 1988 (meaning of lower level of taxation for purposes of provisions relating to controlled foreign companies) for “one-half” there shall be substituted “ three-quarters ”.

2

Subsection (1) above shall apply in relation to accounting periods beginning on or after 16th March 1993.

3

Where a company is by virtue of section 749(1) or (2) of the Taxes Act 1988 regarded as resident in a territory outside the United Kingdom and (apart from this section)—

a

an accounting period of the company would begin before 16th March 1993 and end on or after that date, and

b

the company would not be considered to be subject, by virtue of section 750(1) of that Act, to a lower level of taxation in that accounting period in the territory in which it is regarded as resident,

for the purposes of Chapter IV of Part XVII of that Act that accounting period shall be treated as ending on 15th March 1993.

120 Pay and file: miscellaneous amendments.

Schedule 14 to this Act (which makes various amendments of the M53Taxes Management Act 1970, the Taxes Act 1988 and the M54Finance Act 1989 with a view to, or in connection with, the introduction of “pay and file”) shall have effect.

F83121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

122 Application of Income Tax Acts etc. to public departments.

1

In subsection (2) of section 829 of the Taxes Act 1988 (restriction on application of Income Tax Acts to public departments), at the end there shall be inserted “ unless it is tax which would not have been so borne but for a failure by a public office or department of the Crown to make a deduction required by virtue of subsection (1) above. ”

2

The provisions of Parts IX and X of the Taxes Management Act 1970 (interest and penalties) shall apply in relation to public offices and departments of the Crown for the purposes, so far as they so apply, of the other provisions of that Act and of the provisions of the Income Tax Acts mentioned in section 829(1) of the Taxes Act 1988.

3

This section shall have effect in relation to the year 1993-94 and subsequent years of assessment.

123 Expenditure involving crime.

1

The following section shall be inserted after section 577 of the Taxes Act 1988—

577A Expenditure involving crime.
1
In computing profits or gains chargeable to tax under Schedule A or Schedule D, no deduction shall be made for any expenditure incurred in making a payment the making of which constitutes the commission of a criminal offence.
2
Such expenditure shall not be included in computing any expenses of management in respect of which relief may be given under the Tax Acts.

2

This section shall apply in relation to expenditure incurred on or after 11th June 1993.

F290124 Expenses of Members of Parliament.

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

C16 C17Chapter II Exchange Gains and Losses

Annotations:

Modifications etc. (not altering text)

C16

Pt. II Chapter II (ss. 125-170) modified (1.5.1995) by 1988 c. 1, Sch. 24 para. 19(2) (as inserted (1.5.1995) by 1995 c. 4, s. 133, Sch. 25 paras. 1, 6(5))

Pt. II Chapter II (ss. 125-170) restricted (31.7.1998) by 1988 c. 1, Sch. 28AA para. 8 (as inserted (31.7.1998) by 1998 c. 36, s. 108, Sch. 16 para. 8(1)(a))

Pt. II Chapter II (ss. 125-170): power to amend conferred (3.5.1994) by 1994 c. 9, s. 177(6)(b)

Pt. II Chapter II (ss. 125-170) excluded (3.5.1994) by 1994 c. 9, ss. 226(2), 230

Pt. II Chapter II (ss. 125-170) modified (19.9.1994) by 1994 c. 21, s. 21, Sch. 4 Pt. I para. 23(2) (with s. 40(7)); S.I. 1994/2189, art. 2, Sch.

Pt. II Chapter II (ss. 125-170) modified (23.3.1995) by S.I. 1994/3226, reg. 3(2)

Pt. II Chapter II (ss. 125-170) applied (23.3.1995) by S.I. 1994/3231, reg. 2(1)

Pt. II Chapter II (ss. 125-170) modified (29.4.1996) by 1996 c. 8, s. 105, Sch. 15 Pt. I para. 22(1) (with ss. 80-105)

C17

Pt. II Chapter II to be construed with 1994 c. 31, Sch. 4 Pt. I para. 23 (19.9.1994) by 1994 c. 21, s. 21, Sch. 4 Pt. I para. 23(5); S.I. 1994/2189, art. 2, Sch.

Accrual of gains and losses

F84125. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F85126. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F86127. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trading gains and losses

F87128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-trading gains and losses

F88129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F89130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F90131C12 Non-trading gains and losses: relief.

1

This section applies where—

a

a company is treated as incurring in an accounting period a loss or losses by virtue of section 129 above, and

b

it is not treated as receiving in the accounting period any amount by virtue of that section;

and where this section applies by virtue of this subsection references to the relievable amount for the accounting period are to an amount equal to amount B.

14

A claim under any of subsections (3) to (6) above must be made within the period of two years immediately following the accounting period to which the relievable amount relates or within such further period as the Board may allow.

F91 C14132 Modifications where loss carried forward.

1

This section applies where section 131(12) above treats a company as incurring a loss in an accounting period by virtue of section 129 above.

2

In this section references to amount C are to so much of amount B as the company is treated as incurring in the accounting period otherwise than by virtue of section 131(12).

3

Where section 131 above applies by virtue of section 131(1) and this section applies, then, as regards the accounting period—

a

if amount C is nil section 131(3) to (6) shall not apply;

b

if amount C exceeds nil the references to the relievable amount in section 131(3) to (7), (13) and (14) shall be construed as references to so much of that amount as equals amount C.

4

Where section 131 above applies by virtue of section 131(2) and this section applies, then, as regards the accounting period—

a

if amount C does not exceed amount A section 131(3) to (6) shall not apply;

b

if amount C exceeds amount A the references to the relievable amount in section 131(3) to (7), (13) and (14) shall be construed as references to so much of that amount as equals amount C minus amount A.

F92 C15133 Interaction with ICTA.

1

Section 131(4) above shall apply before section 393A(1) of the Taxes Act 1988 in relation to profits of the accounting period first mentioned in section 131(4) above.

2

Relief shall not be given under section 131(4) above against any ring fence profits of the company; and in this subsection “ring fence profits” has the same meaning as in Chapter V of Part XII of the Taxes Act 1988.

3

Where the company incurs a loss in a trade in the accounting period first mentioned in subsection (7) of section 131 above, that subsection shall apply after section 393A(1) of the Taxes Act 1988 in relation to exchange profits of a particular accounting period.

4

Relief shall not be given by virtue of section 131(7) above so as to interfere with—

a

any relief under section 338 of the Taxes Act 1988 (charges on income) in respect of payments made wholly and exclusively for the purposes of a trade, or

b

5

The reference in subsection (3) above to exchange profits of an accounting period shall be construed in accordance with section 131(10) above.

Alternative calculation

F93134. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Main benefit test

F94135. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F95135A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arm’s length test

F96136. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97136A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F98137. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F99138. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferral of unrealised gains

F100139. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F101140. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F102141. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F103142. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F104143. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Irrecoverable debts

F105144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F106145. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Currency contracts: special cases

F107146. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F108147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Excess gains or losses

F109148. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Local currency to be used

F110149. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exchange rate to be used

F111150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F112151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation: companies

F113152. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation: assets, liabilities and contracts

F114153. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F115154. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F116155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F117156. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F118157. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation: other provisions

F119158. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F120159. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F121160. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F122161. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F123162. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F124163. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F125164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

F126165. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F127166. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F128167. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F129168. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F130168A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F131169. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170 Amendments.

Schedule 18 to this Act (which contains amendments) shall have effect.

C28 C29Chapter III Lloyd’s Underwriters etc.

Annotations:

Modifications etc. (not altering text)

C28

Pt. II Chapter III applied (1.5.1995 with application as mentioned in s. 127(19) of the amending Act) by 1995 c. 4, s. 127(16)(a)(19)

C29

Pt. II Chapter III modified (1.12.1997 with effect with respect to accounting periods of Lloyd's Scottish limited partnerships ending on or after that date) by S.I. 1997/2681, reg. 3(1)(a)

Main provisions

C18171 Taxation of profits and allowance of losses.

3
Regulations under this paragraph may make provision with respect to any year or years of assessment; and the year (or any of the years) may be the year next but one preceding the year in which the regulations are made or any year following that earlier year.

b

comply with the requirements of that Part and are approved by the Board,

the provisions of that Part relating to taxation shall have effect in relation to any special reserve fund of a member set up under the arrangements.

2

The arrangements may from time to time be varied with the consent of the Board.

3

If, after giving notice of their intention to do so to the Council of Lloyd’s, the Board cancel the approval which they have given with respect to the arrangements, paragraph 3 of Schedule 20 to this Act shall not apply, in the case of any member, to any year of assessment after the year of assessment in which the approval is cancelled.

C214

The provisions of Part II of Schedule 20 to this Act shall have effect as respects the winding up of any special reserve fund which—

a

was set up under the arrangements mentioned in section 452(1) of the Taxes Act 1988; and

b

belongs to a member for whom a special reserve fund may be set up under the arrangements mentioned in subsection (1) above.

C22176 Ancillary trust funds.

1

A member shall be treated for the purposes of the Income Tax Acts and the Gains Tax Acts as absolutely entitled as against the trustees to the assets forming part of an ancillary trust fund of his.

2

The cost of acquisition and the consideration for the disposal of assets forming part of an ancillary trust fund—

a

shall be left out of account in computing for the purposes of income tax the profits or losses of the member’s underwriting business; and

b

accordingly, shall not be excluded for the purposes of capital gains tax under section 37 or 39 of the Gains Tax Act.

3

None of the following provisions (which apply where an individual entitled to securities dies), namely—

a

subsections (1) to (4) of section 721 of the Taxes Act 1988 (accrued income scheme);

F142b

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

F142c

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

F142d

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

shall apply where the individual concerned is a member and the security concerned forms part of an ancillary trust fund of his.

4

In a case where subsection (3)(a) above applies, the deceased’s personal representatives shall be treated for the purposes of sections 710 to 728 of the Taxes Act 1988 as the transferor or transferee in relation to transfers of securities as to which the deceased was the transferor or transferee (as the case may be) in the interest period in which he died.

Other special cases

F143177. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

178 Stop-loss and quota share insurance.

1

In computing for the purposes of income tax the profits of a member’s underwriting business, each of the following shall be deductible as an expense, namely—

a

any premium payable by him under a stop-loss insurance, and any repayment of insurance money paid to him under such an insurance;

b

any amount payable by him into the High Level Stop Loss Fund, and any repayment of an amount paid to him out of that Fund; and

F144c

where an amount is payable by him under a quota share contract—

i

so much of that amount as exceeds the amount of transferred losses that are declared on or before the date the contract takes effect (“the declared amount”), or

for the purposes of subsection (1)(c)(i) and (3A) above, as an amount payable under the contract, and

b

for the purposes of section 172, as a payment made at the time the contract takes effect.

F1484

For the purposes of this section—

“cash call” has the same meaning as in Part 1 of Schedule 20 to this Act;
“quota share contract” means any contract between a member and another person which—
1. a
  is made in accordance with the rules or practice of Lloyd’s, and
2. b
  provides for that other person to take over any rights and liabilities of the member under any of the syndicates of which he is a member;
and where the taking over of a member’s rights and liabilities is conditional upon the occurrence of any event, the contract does not take effect until that event occurs; and
“transferred loss”, in relation to such a contract, means a loss for which that other person takes over liability under the contract (disregarding, in the case of a loss that has been declared at the time it is taken over, any part of it in respect of which the member has paid a cash call before that time).

In section 43 of the M55Finance Act 1989 (Schedule D: computation), subsections (6) and (7) (which extend certain time limits for persons permitted by the Council of Lloyd’s to act as underwriting agents at Lloyd’s) shall cease to have effect in relation to periods of account ending on or after 30th June 1993.

Supplemental

182 Regulations.

1

The Board may by regulations provide—

a

for the assessment and collection of tax charged in accordance with section 171 above (so far as not provided for by Schedule 19 to this Act);

b

for making, in the event of any changes in the rules or practice of Lloyd’s, such amendments of this Chapter as appear to the Board to be expedient having regard to those changes;

c

for modifying the application of this Chapter in cases where a syndicate continues after the end of its closing year or a member dies or otherwise ceases to carry on his underwriting business;

F152ca

for modifying the application of this Chapter in relation to cases where assets forming part of a F153premium trust fund are the subject of—

F154i

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

ii

any such arrangements or agreements as are mentioned in section 737E(2) and (8) of the Taxes Act 1988 (sale and repurchase of securities etc.);

d

for giving credit for foreign tax.

F1552

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

F1553

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

F1554

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

5

Regulations made, or deemed to have been made, under any of the following enactments (regulations about Lloyd’s underwriters), namely—

a

section 451(1) or (1A) of the Taxes Act 1988,

b

section 92(5) of the M56Finance Act 1989, or

c

section 209(4) of the Gains Tax Act,

which were in force immediately before 6th April 1992 shall continue in force for the year 1992-93 and subsequent years of assessment notwithstanding the repeal of that enactment by this Act, and shall be deemed to have been made under this section.

183 Consequential amendments.

1

In section 20(2) of the Taxes Act 1988 (Schedule F), for the words “section 450” there shall be substituted the words “ section 171 of the Finance Act 1993 ”.

2

In section 481(5)(f) of that Act (meaning of “relevant deposit”), for the words “section 457) of an underwriting member” there shall be substituted the words “ section 184 of the Finance Act 1993) of an underwriting or former underwriting member ”.

F1563

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

F1574

In section 710(14) of that Act (meaning of “business” and “premiums trust fund”), for the words “section 457” there shall be substituted the words “ section 184 of the Finance Act 1993 ”.

5

In the following provisions (which relate to nominees, trustees etc.), namely—

Section 720(3) of the Taxes Act 1988,
paragraph 18(1) of Schedule 4 to that Act,
paragraph 10(1) of Schedule 11 to the Finance Act 1989, and
paragraph 18(1) of Schedule 10 to the M57Finance Act 1990,

the words from “his special reserve fund” to the end shall be omitted.

6

In the following provisions (which relate to the death of a member), namely—

section 721(5) of the Taxes Act 1988,
paragraph 18(8) of Schedule 4 to that Act,
paragraph 10(6) of Schedule 11 to the Finance Act 1989, and
paragraph 18(6) of Schedule 10 to the M58Finance Act 1990,

the words from “a special reserve fund” to the end shall be omitted.

7

In section 206(2) of the Gains Tax Act (Lloyd’s underwriters), after the words “subsection (1) above” there shall be inserted the words “ and section 174(1) of the Finance Act 1993 ”.

8

In section 209 of that Act (interpretation, regulations about underwriters etc.)—

a

in subsection (1), for the words “sections 450 to 456 of the Taxes Act” there shall be substituted the words “ Chapter III of Part II of the Finance Act 1993 ” and for the words “sections 450 to 456”, in the second place where they occur, there shall be substituted the words “ that Chapter ”; and

b

in subsection (6), the words “or (4)” shall be omitted.

C27184 Interpretation and commencement.

1

In this Chapter, unless the context otherwise requires—

“ancillary trust fund”, in relation to a member, does not include a F158premium trust fund of his or his special reserve fund (if any) but, subject to that, means any trust fund required or authorised by the rules of Lloyd’s, or required by a members’ agent of his F159. . .;
“closing year”—
1. a
  in relation to a year of assessment, means the year of assessment next but one following that year;
2. b
  in relation to an underwriting year, means the underwriting year next but one following that year; and
3. c
  in relation to a syndicate, means the closing year of the underwriting year for which it was formed;
“the Gains Tax Act” means the M59Taxation of Chargeable Gains Act 1992 and
“the Gains Tax Acts” means that Act and any other enactments relating to capital gains tax;
“the High Level Stop Loss Fund” means the fund of that name which, under the rules of Lloyd’s, has been established for the year 1993 and subsequent underwriting years;
“inspector” includes any officer of the Board;
“the Management Act” means the M60Taxes Management Act 1970;
“managing agent”, in relation to a syndicate and a year of assessment, means—
1. a
  the person registered as a managing agent at Lloyd’s who was acting as such an agent for the syndicate at the end of the corresponding underwriting year, or
2. b
  such other person as may be determined in accordance with regulations made by the Board;
“member” means F160an individual who is a member of Lloyd’s and is or has been an underwriting member;
“members’ agent”, in relation to a member of a syndicate and a year of assessment, means—
1. a
  the person registered as a members’ agent at Lloyd’s who was acting as such an agent for the member at the end of the corresponding underwriting year, or
2. b
  if two or more such persons were so acting and one of them was appointed by the member to be responsible for complying with the requirements of Part II of Schedule 19 to this Act in relation to all of the syndicates of which he is a member, that person, or
3. c
  if two or more such persons were so acting and none of them was so appointed, the person who was so acting for the member in his capacity as a member of the syndicate, or
4. d
  such other person as may be determined in accordance with regulations made by the Board;
F161“premium trust fund” means a trust fund into which premiums receivable by members are paid in compliance with a trust deed under section 10.3 of the Lloyd’s Sourcebook made by the Financial Services Authority under the Financial Services and Markets Act 2000 F162;
“prescribed” means prescribed by regulations made by the Board;
“profits” includes gains;
“special reserve fund”, unless the contrary intention appears, means a special reserve fund set up under the arrangements mentioned in section 175(1) above;
“stop-loss insurance” means any insurance taken out by a member against losses in his underwriting business F163, except insurance taken out by entering a quota share contract (within the meaning of section 178 above);
“syndicate” means a syndicate of underwriting members of Lloyd’s formed for an underwriting year;
“underwriting business”, in relation to a member, means his underwriting business as a member of Lloyd’s, whether carried on personally or through an underwriting agent, and does not include any other business carried on by him, and in particular, where he is himself an underwriting agent, does not include his business as such an agent;
“underwriting year” means the calendar year.

2

For the purposes of this Chapter—

a

an underwriting year and a year of assessment shall be deemed to correspond to each other if the underwriting year ends in the year of assessment;

b

the profits or losses of a member’s underwriting business include profits or losses arising to him from assets forming part of a F164premium trust fund or an ancillary trust fund; and

c

any charge made on a member by the F165managing agent of a syndicate of which he is a member, and any expense incurred on his behalf by the F165managing agent of such a syndicate, shall be treated as expenses arising directly from his membership of that syndicate.

3

Subject to any provision to the contrary, the provisions of this Chapter have effect for the year 1992-93 and subsequent years of assessment.

Part III Oil Taxation

185 Abolition of PRT for oil fields with development consents on or after 16th March 1993.

1

In this Part of this Act a “non-taxable field” means an oil field—

a

for no part of which consent for development was granted to a licensee by the Secretary of State before 16th March 1993; and

b

7

In subsections (1) and (2) above “development”, in relation to an oil field, means—

a

the erection or carrying out of permanent works for the purpose of getting oil from the field or for the purpose of conveying oil won from the field to a place on land; or

b

winning oil from the field otherwise than in the course of searching for oil or drilling wells;

and consent for development does not include consent which is limited to the purpose of testing the characteristics of an oil-bearing area and does not relate to the erection or carrying out of permanent works.

8

In subsection (7) above “permanent works” means any structures or other works whatsoever which are intended by the licensee to be permanent and are neither designed to be moved from place to place without major dismantling nor intended by the licensee to be used only for searching for oil.

186 Reduction of rates of PRT and interest repayments for taxable oil fields.

1

With respect to chargeable periods ending after 30th June 1993 the rate of petroleum revenue tax (relevant only to taxable fields) shall be 50 per cent. and, accordingly, with respect to such periods, in section 1(2) of the principal Act for “75” there shall be substituted “ 50 ”.

2

In paragraph 17 of Schedule 2 to the principal Act (limit on interest in the case of relief for losses carried back) at the end of sub-paragraph (2) there shall be added the words “ and, in relation to the appropriate repayment, the chargeable period for which the relevant assessment or amendment is made is referred to as “the repayment period” ”.

3

In sub-paragraph (4) of that paragraph—

a

at the beginning there shall be inserted the words “ Subject to sub-paragraph (6) below ”; and

b

in paragraph (a) for the words “85 per cent.” there shall be substituted “ the relevant percentage of the amount ” and after the word “above” there shall be inserted “ which is treated as reducing the assessable profit of the repayment period ”.

4

At the end of that paragraph there shall be added the following sub-paragraphs—

5
For the purposes of sub-paragraph (4)(a) above—
a
where the repayment period ends on or before 30th June 1993, the relevant percentage, in relation to the amount of the loss or losses which is treated as reducing the assessable profit accruing to the participator for that period is 85 per cent.; and
b
in relation to the amount of the loss or losses which is treated as reducing the assessable profit accruing to the participator for any later repayment period, the relevant percentage is 60 per cent.
6
If, in order to give effect to the relief for losses carried back, a repayment of APRT falls, or will on the making of a claim fall, to be made with respect to a chargeable period which is the repayment period in relation to the appropriate repayment, the reference in sub-paragraph (4)(b) above to the appropriate repayment shall be construed as a reference to the aggregate of that repayment and the repayment of APRT.
7
In sub-paragraph (6) above “APRT” means advance petroleum revenue tax paid under Chapter II of Part VI of the M61Finance Act 1982.

187 Returns and information.

1

In Schedule 2 to the principal Act (management and collection of petroleum revenue tax), other than the Table in paragraph 1 (modifications of the M62Taxes Management Act 1970),—

a

for the words “an oil field”, in each place where they occur, there shall be substituted “ a taxable field ”; and

b

7

Subsections (2) to (6) above (which, in relation to petroleum revenue tax, contain provisions similar to those of section 20 of the M63Taxes Management Act 1970) shall have effect subject to Part I of Schedule 21 to this Act (which contains provisions similar to those of section 20B of that Act); and the provisions of Part II of that Schedule relating to the meaning of “documents” (which are derived from provisions of sections 20 and 20D of that Act) shall have effect.

8

Section 98 of the Taxes Management Act 1970 (penalties, etc. in relation to special returns) shall have effect as if, in the first column of the Table in that section, there were included a reference to subsections (2) to (6) above.

188 Exploration and appraisal expenditure.

1

In section 5A of the principal Act (allowance of exploration and appraisal expenditure), in subsection (1) (conditions for expenditure to be allowable) after paragraph (a) there shall be inserted the following paragraph—

aa
either is incurred before 16th March 1993 or is incurred within the period of two years beginning on that date and is expenditure to which that person or, if that person is a company, that company or a company associated with it in respect of the expenditure, is committed immediately before that date; and

2

After subsection (1) of that section there shall be inserted the following subsections—

1A
For the purposes of subsection (1)(aa) above, in respect of expenditure incurred on or after 16th March 1993, a person is to be regarded as committed to that expenditure immediately before that date if—
a
he has an obligation under an exploration and appraisal contract entered into before that date to incur the expenditure; or
b
the expenditure is incurred wholly and exclusively for the same purpose as that for which the contract referred to in paragraph (a) above was entered into and is so incurred pursuant to an obligation under an exploration and appraisal contract entered into on or after 16th March 1993 and before 16th June 1993.
1B
In considering whether a person has at any time such a contractual obligation as is referred to in paragraph (a) or paragraph (b) of subsection (1A) above in respect of any expenditure,
a
if the contract contains a power (however exercisable) by virtue of which the person concerned, or a company associated with him in respect of the expenditure, is able to bring any contractual obligations to an end, he shall not be regarded as committed to any expenditure which, if the power were to be exercised, would not be incurred; and
b
if the person concerned (or a company associated with him in respect of the expenditure) has an option (however described) which was not exercised before 16th March 1993 but the exercise of which would increase his expenditure under the contract, he shall not be regarded as committed to any expenditure which would be incurred only as a result of the exercise of the option.
1C
For the purposes of subsection (1A) above a contract is an exploration and appraisal contract if it is a contract for the provision of any services or other business facilities or assets for any of the purposes specified in subsection (2) below.

3

In subsection (2) of that section for the words “subsection (1)” there shall be substituted “ subsections (1) to (1C) ”.

with which the participator is associated in respect of expenditure incurred by the other company;

and subsections (7) and (8) of section 5 of the principal Act (companies and associates etc.) apply for the purposes of this section as they apply for the purposes of that section.

5

Where—

a

the claimant is a company, and

b

on 16th March 1993 the claimant was a member of a group of companies, and

c

at least one other company which was a member of the group on that date was then a participator in an oil field, and

d

that other company is also the claimant in relation to an amount of transitional E and A expenditure,

subsection (3) above shall have effect as if references therein to the claimant were references to the aggregate of all those companies which on that date were members of the group and are the claimants in relation to any transitional E and A expenditure.

6

In this section, a group of companies means a company which is not a 51 per cent. subsidiary of any other company, together with each company which is its 51 per cent. subsidiary; and section 838 of the Taxes Act 1988 (subsidiaries) applies for the purposes of this section as it applies for the purposes of the Tax Acts (within the meaning of that Act).

190 Allowance of expenditure on certain assets limited by reference to taxable field use.

1

Where, in the case of expenditure incurred as mentioned in section 1(1) of the 1983 Act (expenditure incurred on non-dedicated mobile assets),—

a

the expenditure would, apart from this subsection, be allowable under section 4 of the principal Act for a claim period of a taxable field, and

b

during that claim period, the asset becomes dedicated to a non-taxable field,

that proportion of the expenditure which is equal to the proportion of the claim period during which the asset is dedicated to a non-taxable field shall not be allowable as mentioned in paragraph (a) above.

2

For the purpose of determining whether an asset becomes at any time dedicated to a non-taxable field, it shall be assumed that, in relation to a non-taxable field, any reference in section 2 of the 1983 Act (dedicated mobile assets) to a claim period is a reference to—

a

the period ending at the end of December following the determination of the field; or

b

the period of twelve months ending at the end of December in any later year.

3

In paragraph 7 of Schedule 1 to the 1983 Act (brought-in assets) in sub-paragraph (1)(c) (which requires that during the initial period the asset should have been used otherwise than in connection with an oil field) for the words “an oil field” there shall be substituted “ a taxable field ”.

4

In paragraph 8 of that Schedule (subsequent use of new asset otherwise than in connection with an oil field) in the heading and in sub-paragraphs (1) to (3) and (6) for the words “an oil field” there shall be substituted “ a taxable field ”.

5

In paragraph 5 of Schedule 2 to the 1983 Act (acquisition otherwise than at arm’s length: limit on tariff and disposal receipts)—

a

in paragraphs (a) and (c) of sub-paragraph (1) for the words “an oil field” there shall be substituted “ a taxable field ”;

F166b

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

c

in sub-paragraph (3)(a) for the words “an oil field” there shall be substituted “ a taxable field ”; and

d

in sub-paragraph (3)(b) for the words “an oil field” there shall be substituted “ a taxable field or, if it is to a participator in a taxable field, the asset is to be used wholly or partly in connection with a non-taxable field ”.

191 Time when expenditure is incurred.

1

Subject to the following provisions of this section, where a claim is made under the principal Act for the allowance of any expenditure and the claim is received by the Board after 16th March 1993, an amount of expenditure is to be taken to be incurred for the purposes of the Oil Taxation Acts on the date on which the obligation to pay that amount becomes unconditional (whether or not there is a later date on or before which the whole or any part of that amount is required to be paid).

C302

Subject to subsection (3) below, where the amount of any expenditure incurred by any person at any time after 16th March 1993 under a contract—

a

for the acquisition from any other person of, or of an interest in, an asset, or

b

for the provision by any other person of services or other business facilities of whatever kind (whether in connection with the use of an asset or not), or

c

for the grant or transfer to that person by any other person of any right, licence or interest (other than an interest in an asset)

is disproportionate to the extent to which that other person has, at or before that time, performed his obligations under the contract then, for the purposes of the Oil Taxation Acts, only so much of the expenditure shall be taken to have been incurred at that time as is proportionate to those obligations which have been so performed.

3

If, in the case of a contract entered into after 16th March 1993 and falling within paragraph (a) or paragraph (b) of subsection (2) above—

a

the expenditure referred to in that subsection is incurred before 1st July 1993, and

b

the other person referred to in paragraph (a) or paragraph (b) (“the contractor”) has performed his obligations by entering into one or more further contracts,

the contractor shall be treated for the purposes of subsection (2) above as having at any time performed his obligations under the contract only to the extent that, at that time, the asset or interest in question has been acquired by, or, as the case may be, the services or other business facilities have been provided to, the person incurring the expenditure.

4

In paragraph 2 of Schedule 4 to the principal Act (limitation of allowable expenditure on transactions between connected persons or otherwise than at arm’s length) for sub-paragraph (1) there shall be substituted the following sub-paragraphs—

1
Where, in a transaction to which this paragraph applies, a person has incurred expenditure in acquiring, bringing into existence or enhancing the value of an asset, he shall at any time be treated for the purposes of—
a
sections 3 and 4 of this Act, and
b
sections 3 and 4 of and Schedule 1 to the M64Oil Taxation Act 1983,
as having incurred that expenditure only to the extent that it does not exceed expenditure (other than loan expenditure) incurred up to that time in a transaction to which this paragraph does not apply (or, if there has been more than one such transaction, the later or latest of them) in acquiring, bringing into existence or enhancing the value of, that asset.
1A
Subsections (1) to (3) of section 191 of the Finance Act 1993 apply to determine for the purposes of this paragraph what expenditure has at any time been incurred under a transaction to which this paragraph does not apply, as they apply in relation to expenditure for the allowance of which a claim is received by the Board after 16th March 1993.
1B
In sub-paragraph (1) above “loan expenditure” means expenditure in respect of interest or any other pecuniary obligation incurred in obtaining a loan or any other form of credit.

5

For sub-paragraph (3) of paragraph 2 of Schedule 4 to the principal Act there shall be substituted the following sub-paragraphs—

3
The preceding provisions of this section shall, with any necessary modification, apply in relation to expenditure incurred by any person in acquiring an interest in an asset or in bringing into existence an asset in which he is to have an interest, or in enhancing the value of an asset in which he has an interest, as those provisions apply in relation to expenditure incurred by a person in acquiring, bringing into existence, or enhancing the value of an asset, as the case may be.
4
The provisions of sub-paragraphs (1) to (2) above shall, with any necessary modification, apply in relation to expenditure incurred by any person in respect of—
a
the use of an asset (including expenditure on renting or hiring), or
b
the provision of services or other business facilities of whatever kind in connection with the use, otherwise than by that person, of an asset,
as they have effect in relation to expenditure incurred in the acquisition of, or of an interest in, an asset.

6

The amendments made by subsections (4) and (5) above have effect where the transaction to which paragraph 2 of Schedule 4 to the principal Act applies takes place on or after 16th March 1993.

192 Chargeable periods in which expenditure may be brought into account.

1

Where a claim which—

a

is made under Schedule 5 or Schedule 6 to the principal Act for the allowance of any expenditure, and

b

is received by the Board after 16th March 1993,

has been allowed, the expenditure shall not be brought into account in determining the assessable profit or allowable loss of any chargeable period which ends earlier than the last day of the claim period in which the expenditure was incurred.

2

Where a claim has been made under Schedule 7 to the principal Act for the allowance of any expenditure incurred after 31st March 1993 and that claim has been allowed, the expenditure shall not be brought into account in determining the assessable profit or allowable loss of any chargeable period which ends before the date on which the expenditure was incurred.

3

The preceding provisions of this section have effect notwithstanding anything in subsection (9) of section 2 of the principal Act (under which expenditure which had been allowed might in certain cases be taken into account in earlier chargeable periods) and, accordingly, at the beginning of that subsection there shall be inserted “ Subject to section 192 of the Finance Act 1993 ”.

193 Tariff receipts etc.

1

In section 9 of the 1983 Act (tariff receipts allowance) in subsection (5) (definition of “user field”) in paragraph (a) after the words “other than the principal field” there shall be inserted “ or a non-taxable field ”, and at the end of that subsection there shall be inserted the following subsection—

5A
No order may be made under subsection (5)(b) above on or after 1st July 1993.

2

Where a participator in a taxable field incurs any expenditure and,—

a

apart from this subsection, the expenditure would be taken into account in determining the assessable profit or allowable loss accruing to that participator from the taxable field in any chargeable period, and

b

in the hands of the recipient, the expenditure would, on the relevant assumptions, constitute tariff receipts or disposal receipts of a participator in a non-taxable field attributable to that field for any period, and

c

at the time the expenditure is incurred, the participator referred to in paragraph (a) above is or is connected with a participator in the non-taxable field referred to in paragraph (b) above,

the expenditure shall be disregarded in determining the assessable profit or allowable loss referred to in paragraph (a) above.

3

For the purposes of subsection (2) above, the relevant assumptions are—

a

that the non-taxable field is a taxable field; and

b

that the asset which gives rise to the expenditure (by virtue of its use, the provision of services or other business facilities in connection with its use or its disposal) is a qualifying asset in relation to the participator in question.

4

In section 12 of the 1983 Act (charge of receipts attributable to United Kingdom use of foreign field asset), in subsection (3) after the words “oil field”, in the first place where they occur, there shall be inserted “ which is a taxable field and ”.

5

After subsection (3) of section 12 of the 1983 Act there shall be inserted the following subsection—

3A
No order may be made under subsection (2)(a) above on or after 1st July 1993.

6

In this section “disposal receipts”, “qualifying asset” and “tariff receipts” have the same meaning as in the 1983 Act; and section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of subsection (2)(c) above.

subsections (4), (5) and (7), and

c

in subsection (6) the words from “Except” to “this Part”,

shall be omitted.

4

In relation to a claim for relief under section 788 of the Taxes Act 1988 which is made by virtue of this section, sections 42 and 43 of the M65Taxes Management Act 1970 shall have effect with the following modifications—

a

for any reference to income tax there shall be substituted a reference to petroleum revenue tax;

b

any reference to income shall be construed as a reference to such consideration as is referred to in subsection (1) above;

c

for any reference to a year of assessment there shall be substituted a reference to a chargeable period within the meaning of the principal Act; and

d

any reference to a chargeable period shall be construed as a reference to a chargeable period within the meaning of the principal Act.

5

Section 816 of the Taxes Act 1988 (disclosure of information) shall apply in relation to petroleum revenue tax as it applies in relation to income tax.

195 Interpretation of Part III and consequential amendments of assessments etc.

1

In this Part—

a

“the principal Act” means the M66Oil Taxation Act 1975 ;

b

“the 1983 Act” means the M67Oil Taxation Act 1983 ;

c

“the Oil Taxation Acts” means Parts I and III of the principal Act, the 1983 Act and any other enactment relating to petroleum revenue tax; and

d

“taxable field” and “non-taxable field” shall be construed in accordance with section 185 above.

2

The Board may make all such amendments of assessments or determinations or of decisions on claims as may be necessary in consequence of the provisions of this Part.

3

This Part, other than section 194, shall be construed as one with Part I of the principal Act.

Part IV Inheritance Tax

196 Rate bands: no indexation in 1993.

The Table substituted by section 72(1) of the M68Finance (No.2) Act 1992 shall apply to chargeable transfers made in the year beginning 6th April 1993, and accordingly section 8(1) of the M69Inheritance Tax Act 1984 (indexation of rate bands)shall not apply to such transfers.

197 Rate bands: indexation for 1994 onwards.

1

In section 8 of the Inheritance Tax Act 1984 (indexation of rate bands)—

a

in subsection (1) for “December in 1984” there shall be substituted “ September in 1993 ” and for “previous December” there shall be substituted “ previous September ”;

b

in subsection (3) for “December” there shall be substituted “ September ”;

c

4
An appeal on any question as to the value of land in the United Kingdom may be to the appropriate tribunal.
4A
If and so far as the question in dispute on any appeal under this section to the Special Commissioners or the High Court is a question as to the value of land in the United Kingdom, the question shall be determined on a reference to the appropriate tribunal.
4B
In this section “the appropriate tribunal” means—
a
where the land is in England or Wales, the Lands Tribunal;
b
where the land is in Scotland, the Lands Tribunal for Scotland;
c
where the land is in Northern Ireland, the Lands Tribunal for Northern Ireland.

2

In section 242 of that Act (recovery of tax) in subsection (3) for the words “subsection (4)” there shall be substituted the words “ subsections (4) to (4B) ”.

3

This section shall apply in relation to any appeal which—

a

is made on or after the day on which this Act is passed, or

b

is made, but has not begun to be heard, before that day.

Part V Stamp Duty

203 Rent to loan: Scotland.

2

In section 1(1) (taxes to which section 1 applies)—

a

after “income tax,” there shall be inserted “ corporation tax (including advance corporation tax) ”;

b

the words “car tax” shall be omitted.

3

Section 1(1A) (reference to income tax to include reference to amounts representing income tax) shall be omitted.

4

In section 1(3)(a) (resolution passed in March or April to have statutory effect for period expiring with 5th August) for “March or April” there shall be substituted “ November or December ” and for “5th August in the same calendar year” there shall be substituted “ 5th May in the next calendar year ”.

5

In section 1(4) (resolution to cease to have statutory effect unless Bill read a second time within twenty-five sitting days) for “twenty-five” there shall be substituted “ thirty ”.

6

In section 5 (resolution giving provisional effect to motions)—

a

in subsection (1), paragraph (c) and the word “or” immediately preceding it shall be omitted;

b

in subsection (2) for “, sections 8(5) and 822 of the 1988 Act” there shall be substituted “ and section 822 of the Income and Corporation Taxes Act 1988 ”.

7

This section shall apply in relation to resolutions passed after the day on which this Act is passed.

206 Corporation tax.

1

In section 8 of the Taxes Act 1988 (general scheme of corporation tax) subsections (4) to (6) (assessments where tax not charged for year etc.) shall be omitted.

F1742

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

F1753

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

207 Stamp duty.

1

In section 50(2) of the M76Finance Act 1973 (period of temporary statutory effect of resolution affecting stamp duties)—

a

in paragraph (a) (period by reference to twenty-fifth day of Commons sitting) for “twenty-fifth” there shall be substituted “ thirtieth ”;

b

in paragraph (d) (period by reference to five months beginning with day resolution takes effect) for “five” there shall be substituted “ six ”.

2

This section shall apply in relation to resolutions passed after the day on which this Act is passed.

Miscellaneous

208 Residence: available accommodation.

1

In section 336 of the Taxes Act 1988 (temporary residents in the United Kingdom) the following subsection shall be inserted after subsection (2)—

3
The question whether—
a
a person falls within subsection (1)(a) above, or
b
for the purposes of subsection (2) above a person is in the United Kingdom for some temporary purpose only and not with the intention of establishing his residence there,
shall be decided without regard to any living accommodation available in the United Kingdom for his use.

2

In section 9 of the M77Taxation of Chargeable Gains Act 1992 (residence, including temporary residence) the following subsection shall be inserted after subsection (3)—

4
The question whether for the purposes of subsection (3) above an individual is in the United Kingdom for some temporary purpose only and not with any view or intent to establish his residence there shall be decided without regard to any living accommodation available in the United Kingdom for his use.

3

In consequence of subsection (1) above, in section 267(4) of the M78Inheritance Tax Act 1984 (residence in United Kingdom determined as for purposes of income tax) the words “but without regard to any dwelling-house available in the United Kingdom for his use” shall be omitted.

4

Subsections (1) and (2) above shall have effect for the year 1993-94 and subsequent years of assessment.

5

Subsection (3) above shall have effect where the year of assessment concerned is 1993-94 or a subsequent year of assessment.

F176209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

210 Trading funds.

Schedule 22 to this Act (which contains provisions about trading funds) shall have effect.

F177211. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

212 Interpretation.

In this Act “the Taxes Act 1988” means the M79Income and Corporation Taxes Act 1988.

213 Repeals.

The enactments specified in Schedule 23 to this Act (which include provisions which are already spent) are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision of that Schedule.

214 Short title.

This Act may be cited as the Finance Act 1993.

SCHEDULES

I10SCHEDULE 1 Table of rates of duty on wine and made-wine

Section 1.

Annotations:

Commencement Information

I10

Schedule 1 deemed to have come into force at 6 p.m. on 16.3.1993: see s. 1(2)(4)

Part I Wine or made-wine of a strength not exceeding 22 per cent.
Description of wine or made-wine
Rates of duty per hectolitre
£
Wine or made-wine of a strength not exceeding 2 per cent.
13.23
Wine or made-wine of a strength exceeding 2 per cent. but not exceeding 3 per cent.
22.04
Wine or made-wine of a strength exceeding 3 per cent. but not exceeding 4 per cent.
30.86
Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5 per cent.
39.69
Wine or made-wine of a strength exceeding 5 per cent. but not exceeding 5.5 per cent.
48.50
Wine or made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent. and not being sparkling
132.26
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent.
218.40
Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.
220.43
Part II Wine or made-wine of a strength exceeding 22 per cent.
Description of wine or made-wine
Rates of duty per litre of alcohol in the wine or made-wine
£
Wine or made-wine of a strength exceeding 22 per cent.
19.81

Description of wine or made-wine	Rates of duty per hectolitre
	£
Wine or made-wine of a strength not exceeding 2 per cent.	13.23
Wine or made-wine of a strength exceeding 2 per cent. but not exceeding 3 per cent.	22.04
Wine or made-wine of a strength exceeding 3 per cent. but not exceeding 4 per cent.	30.86
Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5 per cent.	39.69
Wine or made-wine of a strength exceeding 5 per cent. but not exceeding 5.5 per cent.	48.50
Wine or made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent. and not being sparkling	132.26
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent.	218.40
Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.	220.43

Description of wine or made-wine	Rates of duty per litre of alcohol in the wine or made-wine
	£
Wine or made-wine of a strength exceeding 22 per cent.	19.81

F178SCHEDULE 2 Value added tax: penalties etc.

Section 49.

Annotations:

Amendments (Textual)

F178

Sch. 2 repealed (1.9.1994) by 1994 c. 23, ss. 100(2), 101(1), Sch. 15

Misdeclaration penalty under section 14 of the 1985 Act

1

In subsection (2) of section 14 of the 1985 Act (penalty for misdeclaration or neglect imposed where the tax lost equals or exceeds certain amounts), for paragraphs (a) and (b) there shall be substituted “ equals or exceeds whichever is the lesser of £1,000,000 and 30 per cent. of the relevant amount for that period. ”

2

After subsection (4) of that section there shall be inserted the following subsections—

4A
In this section “the relevant amount”, in relation to a prescribed accounting period, means—
a
for the purposes of a case falling within subsection (1)(a) above, the gross amount of tax for that period; and
b
for the purposes of a case falling within subsection (1)(b) above, the true amount of tax for that period.
4B
In this section “the gross amount of tax”, in relation to a prescribed accounting period, means the aggregate of the following amounts, that is to say-
a
the amount of credit for input tax which (subject to subsection (5A) below) should have been stated on the return for that period, and
b
the amount of output tax which (subject to that subsection) should have been so stated.
4C
In relation to any return which, in accordance with prescribed requirements, includes a single amount as the aggregate for the prescribed accounting period to which the return relates of—
a
the amount representing credit for input tax, and
b
any other amounts representing refunds or repayments of tax to which there is an entitlement,
references in this section to the amount of credit for input tax shall have effect (so far as they would not so have effect by virtue of subsection (5B) below) as references to the amount of that aggregate.

3

In subsection (5A) of that section (account to be taken of corrections), for “subsection (5) above that the statement made by each of those returns is a correct statement” there shall be substituted “ subsections (4B) and (5) above that the statements made by each of those returns (so far as they are not inaccurate in any other respect) are correct statements ”.

P34

This paragraph shall have effect in relation to any prescribed accounting period beginning on or after such day as the Treasury may by order made by statutory instrument appoint, but an order under this sub-paragraph may appoint different days for the purposes of different provisions of this paragraph or for different purposes.

Misdeclaration penalty under section 14A of the 1985 Act

2

1

In subsection (1)(b) of section 14A of the 1985 Act (misdeclaration resulting in understatements or overclaims), for the words from “whichever” to “period” there shall be substituted “ whichever is the lesser of £500,000 and 10 per cent. of the gross amount of tax for that period ”.

2

For subsections (2) and (3) of that section (liability for penalty where there are misdeclarations on three or more occasions) there shall be substituted the following subsections—

2
Subsection (3) below applies in any case where—
a
there is a material inaccuracy in respect of any prescribed accounting period;
b
the Commissioners serve notice on the person concerned (in this section referred to as a “penalty liability notice”) specifying a penalty period for the purposes of this section;
c
that notice is served before the end of five consecutive prescribed accounting periods beginning with the period in respect of which there was the material inaccuracy; and
d
the period specified in the penalty liability notice as the penalty period is the period of eight consecutive prescribed accounting periods beginning with that in which the date of the notice falls.
3
If, where a penalty liability notice has been served on any person, there is a material inaccuracy in respect of any of the prescribed accounting periods falling within the penalty period specified in the notice, that person shall be liable, except in relation to the first of those periods in respect of which there is a material inaccuracy, to a penalty equal to 15 per cent. of the tax for the prescribed accounting period in question which would have been lost if the inaccuracy had not been discovered.

3

In subsection (4) of that section, for “subsections (4) to (5B)” there shall be substituted “ subsections (4), (4B), (5A) and (5B) ”.

4

In subsection (6) of that section (material inaccuracies not to be material in cases to which other sections apply), at the end there shall be inserted “ except, in the case of an inaccuracy by reason of which a person is assessed to a penalty under section 14 above, for the purposes of subsection (2)(a) above. ”

P45

Subject to sub-paragraph (6) below, this paragraph shall have effect in relation to any prescribed accounting period beginning on or after such day as the Treasury may by order made by statutory instrument appoint.

6

No penalty liability notice shall be served on or after the day appointed under sub-paragraph (5) above by reference to any material inaccuracy in respect of a prescribed accounting period beginning before that day, and the penalty period specified in any penalty liability notice served before that day shall be deemed to end with the day before that day.

Mitigation of penalties

3

1

After section 15 of the 1985 Act there shall be inserted the following section—

15A Mitigation of penalties under sections 13, 14, 14A and 15.
1
Where a person is liable to a penalty under any of sections 13, 14, 14A and 15 above, the Commissioners or, on appeal, a value added tax tribunal may reduce the penalty to such amount (including nil) as they think proper.
2
In the case of a penalty reduced by the Commissioners under subsection (1) above, a value added tax tribunal, on an appeal relating to the penalty, may cancel the whole or any part of the reduction made by the Commissioners.
3
None of the matters specified in subsection (4) below shall be matters which the Commissioners or any value added tax tribunal shall be entitled to take into account in exercising their powers under this section.
4
Those matters are—
a
the insufficiency of the funds available to any person for paying any tax due or for paying the amount of the penalty;
b
the fact that there has, in the case in question or in that case taken with any other cases, been no or no significant loss of tax;
c
the fact that the person liable to the penalty or a person acting on his behalf has acted in good faith.

2

Subsection (4) of section 13 of the 1985 Act (mitigation of penalty under section 13) shall cease to have effect; and—

a

in subsection (1) of that section, for “subsections (4) and (7)” there shall be substituted “ subsection (7) ”;

b

in paragraph (b) of subsection (5) of that section, for the words from “have power” to the end of that paragraph there shall be substituted “ have power under section 15A below to reduce a penalty under this section, ”; and

c

in section 40(1A) of the M100Value Added Tax Act 1983 (tribunal not to modify penalties under the 1985 Act), for “section 13(4)” there shall be substituted “ section 15A ”.

3

This paragraph shall have effect in relation to any penalty under section 13, 14, 14A or 15 of the 1985 Act, other than one to which any person was assessed before the day on which this Act is passed.

Interest on tax etc. recovered or recoverable by assessment

4

1

In subsections (1) and (3) of section 18 of the 1985 Act (interest on tax etc. recovered or recoverable by assessment), after the word “shall”, in each subsection, there shall be inserted “ (subject to subsection (3A) below) ”.

2

After subsection (3) of that section there shall be inserted the following subsection—

3A
Where (apart from this subsection)—
a
the period before the assessment in question for which any amount would carry interest under subsection (1) above; or
b
the period for which any amount would carry interest under subsection (3) above,
would exceed three years, the part of that period for which that amount shall carry interest under that subsection shall be confined to the last three years of that period.

P53

This paragraph shall apply in relation to interest on amounts assessed or, as the case may be, paid on or after such day as the Treasury may by order made by statutory instrument appoint.

Default surcharge

5

1

In section 19 of the 1985 Act, in subsection (2) (surcharge liability notice if default for two accounting periods)—

a

in paragraph (a) for “any two prescribed accounting periods” there shall be substituted “ a prescribed accounting period ”,

b

paragraph (b) shall be omitted, and

c

in paragraph (c) for “later period referred to in paragraph (b)” there shall be substituted “ period referred to in paragraph (a) ”.

2

In subsection (3) of that section for “defaults in respect of two prescribed accounting periods and the second of those periods” there shall be substituted “ a default in respect of a prescribed accounting period and that period ”.

3

This paragraph shall apply in relation to any case where a person is in default for the purposes of section 19 of the 1985 Act and is so in default because of a failure of the Commissioners of Customs and Excise to receive a return, or an amount of tax, on or before a day falling on or after 1st October 1993; and in the case of sub-paragraph (2) above it is immaterial when the existing surcharge period began.

6

1

For subsection (4) of section 19 of the 1985 Act (amount of surcharge) there shall be substituted the following subsection—

4
Subject to subsections (6) to (9) below, if a taxable person on whom a surcharge liability notice has been served—
a
is in default in respect of a prescribed accounting period ending within the surcharge period specified in (or extended by) that notice, and
b
has outstanding tax for that prescribed accounting period,
he shall be liable to a surcharge equal to whichever is the greater of the following, namely, the specified percentage of his outstanding tax for that prescribed accounting period and £30.

2

c
in relation to each such period after the second, the specified percentage is 15 per cent.

2

Sub-paragraph (1) above shall apply in relation to any liability to a surcharge arising on or after 1st April 1993.

3

In section 19(5) of the 1985 Act (as amended by sub-paragraph (1) above), for paragraphs (a) to (c) there shall be substituted the following paragraphs—

a
in relation to the first such prescribed accounting period, the specified percentage is 2 per cent.;
b
in relation to the second such period, the specified percentage is 5 per cent.;
c
in relation to the third such period, the specified percentage is 10 per cent.;
d
in relation to each such period after the third, the specified percentage is 15 per cent.

4

Sub-paragraph (3) above shall apply in relation to any liability to a surcharge arising on or after 1st October 1993.

Meaning of “the 1985 Act”

8

In this Schedule “the 1985 Act” means the M101Finance Act 1985.

F284SCHEDULE 3 Car and car fuel benefits: 1994-95 onwards

Section 72.

Annotations:

Amendments (Textual)

F284

Sch. 3 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 8 Pt. 1 (with Sch. 7)

F284 Introductory

F2841

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

F284 Car benefits

F2842

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

F2843

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

F2844

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

F2845

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

F284 Car fuel benefits

F2846

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

F284 General

F2847

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

F285SCHEDULE 4 Vans

Section 73.

Annotations:

Amendments (Textual)

F285

Sch. 4 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 8 Pt. 1 (with Sch. 7)

F2851

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

F2852

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

F2853

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

F2854

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

F2855

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

F2856

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

F2857

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

F2858

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

F286SCHEDULE 5 Removal expenses and benefits

Section 76.

Annotations:

Amendments (Textual)

F286

Sch. 5 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 8 Pt. 1 (with Sch. 7)

F2861

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

F2862

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

SCHEDULE 6 Taxation of distributions: supplemental provisions

Section 79.

The Taxes Act 1988

1

In each of sections 167(2A), F179. . ., F180. . . and 819(2) of the Taxes Act 1988 (definitions of excess liability), and in the definition of “excess liability” in paragraph 19(1) of Schedule 7 to that Act, for “were charged at the basic rate” there shall be substituted “ by virtue of section 1(2)(aa) were charged at the basic rate, or (so far as applicable in accordance with section 207A) the lower rate, ”.

2

1

In subsection (1) of section 233 of that Act (taxation of certain recipients and in respect of non-qualifying distributions)—

a

for the words “basic rate”, in each place where they occur, there shall be substituted “ lower rate ”; and

b

in paragraph (c), the words “as income which is not chargeable at the lower rate and” shall be omitted.

2

After that subsection there shall be inserted the following subsections—

1A
Where in any year of assessment the income of any person who is not a company includes a qualifying distribution in respect of which that person, not being resident in the United Kingdom, is not entitled to a tax credit—
a
the amount or value of the distribution so far as it is comprised in—
i
income to which an assessment such as is mentioned in paragraph (b) of subsection (1) above relates, or
ii
income chargeable to tax in accordance with section 686 at the rate applicable to trusts,
shall be deemed for the purposes of that assessment or, as the case may be, that section to be the sum which if reduced by an amount equal to income tax on that sum at the lower rate would be equal to the amount or value of the distribution actually made; and
b
that person shall be treated for the purposes of section 686 as having paid tax at the lower rate on any amount which under paragraph (a) above is deemed to be the amount or value of the distribution for the purpose of that section;
but no repayment shall be made of any income tax treated by virtue of this subsection as having been paid.
1B
Where in any year of assessment the income of any trustees which is chargeable to income tax in accordance with section 686 includes any non-qualifying distribution (within the meaning of subsection (2) below), the trustees’ liability under any assessment made in respect of income tax at the rate applicable to trusts on the amount or value of the distribution, or on any part of the distribution, shall be reduced by a sum equal to income tax at the lower rate on so much of the distribution as is assessed at the rate applicable to trusts.

3

In subsection (2) of that section, in the definition of “excess liability”—

a

for the words from “not chargeable” to “basic rate” there shall be substituted “ were charged at the lower rate ”; and

b

for “any higher rate” there shall be substituted “ the higher rate or, as the case may be, the rate applicable to trusts ”.

F1813

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

F1824

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

F1835

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

6

In each of sections 549(2), F184. . . and 699(2) of that Act (definitions of excess liability), for “were chargeable at the basic rate” there shall be substituted “ by virtue of section 1(2)(aa) were chargeable at the basic rate, or (so far as applicable in accordance with section 207A) the lower rate, ”.

7

1

In each of subsections (2)(h) and (7)(a) of section 677 of that Act (sums paid to settlor), for the words from “the sum” to “additional rate” there shall be substituted “ tax at the rate applicable to trusts ”.

2

In subsection (6) of that section, for “both tax at the basic rate and tax at the additional rate” there shall be substituted “ tax at the rate applicable to trusts ”.

3

In subsection (7)(b) of that section, for “that sum” there shall be substituted “ the amount of tax at that rate ”.

8

1

In subsection (1) of section 686 of that Act (income of discretionary trusts subject to additional rate tax), for the words from “in addition” onwards there shall be substituted “ be chargeable to income tax at the rate applicable to trusts, instead of at the basic rate or, in accordance with section 207A, at the lower rate. ”

2

After that subsection there shall be inserted the following subsection—

1A
The rate applicable to trusts for any year of assessment shall be the rate equal to the sum of the basic rate and the additional rate in force for that year; and, for the purposes of assessments for the year 1993-94 and in relation to years of assessment for which tax at the basic rate and the additional rate was separately chargeable, references to the charging of income with tax at the rate applicable to trusts shall be taken to include references to the charging of income with tax both at the basic rate and at the additional rate.

3

After subsection (2) of that section there shall be inserted the following subsection—

2A
For the purposes of this section where—
a
any trustees have expenses in any year of assessment (“management expenses”) which are properly chargeable to income or would be so chargeable but for any express provisions of the trust, and
b
there is income arising to them in that year (“the untaxed income”) which does not bear income tax for that year by reason wholly or partly of the trustees not having been resident in the United Kingdom or being deemed under any arrangements under section 788, or any arrangements having effect by virtue of that section, to have been resident in a territory outside the United Kingdom,
there shall be disregarded for the purposes of subsection (2)(d) above such part of the management expenses as bears the same proportion to all those expenses as the untaxed income bears to all the income arising to the trustees in that year.

4

In subsection (6) of that section (payments by personal representatives to trustees), for “basic rate” there shall be substituted “ applicable rate ”.

9

1

In subsection (2) of section 687 of that Act (deemed deduction from payment under discretionary trust), for the words from “a rate” to “in force” there shall be substituted “ the rate applicable to trusts ”.

2

In subsection (3) of that section—

a

in paragraph (a), for “and charged at the additional as well as at the basic rate” there shall be substituted “ which (not being income the tax on which falls within paragraph (aa) or (b) below) is charged at the rate applicable to trusts ”;

b

after that paragraph there shall be inserted the following paragraph—

aa
the amount of tax which, by virtue of section 233(1B), is charged, at a rate equal to the difference between the lower rate and the rate applicable to trusts, on the amount or value of the whole or any part of any non-qualifying distribution included in the income arising to the trustees;

c

in paragraph (b), as it has effect by virtue of section 79(2) of this Act, for “the additional rate” there shall be substituted “ a rate equal to the difference between the lower rate and the rate applicable to trusts ”;

d

in each of paragraphs (e) to (i) (except paragraph (g)), and in paragraph (j) as it so has effect, for the words from “at a rate” to “additional rate” there shall be substituted “ at the rate applicable to trusts ”.

10

In section 694(2A) of that Act (special charge for trustees in certain cases), for “sum of the basic and additional rates” there shall be substituted “ amount of the rate applicable to trusts ”.

11

1

In each of sections 695(4)(a), 696(3) to (5) and 698(2) of that Act (deemed payments out of the residue of a deceased’s estate), for the words “basic rate”, wherever they occur, there shall be substituted “ applicable rate ”.

2

After section 698 of that Act there shall be inserted the following section—

698A Taxation at the lower rate of the income of beneficiaries.
1
Subject to subsection (2) below, in so far as the income of any person is treated under this Part as having borne income tax at the lower rate, section 207A shall apply to that income as it applies to income chargeable under Schedule F.
2
Subsection (1) above shall not apply to income paid indirectly through a trustee and treated as having borne income tax at the lower rate by virtue of section 698(3); but (subject to section 686(1)) section 207A shall apply as if the payment made to the trustee were income of the trustee chargeable under Schedule F.

3

In section 701 of that Act (interpretation of provisions relating to deemed payments), after subsection (3) there shall be inserted the following subsection—

3A
“Applicable rate”, in relation to any amount which a person is deemed by virtue of this Part to receive or to have a right to receive, means the basic rate or the lower rate according as the income of the residue of the estate out of which that amount is or would be paid bears tax at the basic rate or the lower rate; and in determining for the purposes of this Part whether or how much of any payment is or would be deemed to be made out of income that bears tax at one rate rather than another—
a
such apportionments of the amounts bearing tax at different rates shall be made between different persons with interests in the residue of the estate as are just and reasonable in relation to their different interests; and
b
subject to paragraph (a) above, it shall be assumed that payments are to be made out of income bearing tax at the basic rate before they are made out of income bearing tax at the lower rate.

F18512

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

13

In each of sections 720(5) and 764 of that Act (taxation of other income of trustees), for the words from “at a rate” to “additional rate” there shall be substituted “ at the rate applicable to trusts ”.

F18614

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

15

In section 832(1) of that Act (interpretation), after the definition of “qualifying policy” there shall be inserted the following definition—

“the rate applicable to trusts” shall be construed in accordance with section 686(1A);

F18716

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

F18817

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

F18918

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

F19019

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

The Finance Act 1989 (c. 26)

20

In each of sections 68(2)(c) and 71(4)(c) of the Finance Act 1989 F191. . . (which contain references to a rate equal to the sum of the basic rate and the additional rate), for the words from “a rate” to “additional rate” there shall be substituted “ the rate applicable to trusts ”.

The Finance Act 1990 (c. 29)

F19221

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

The Taxation of Chargeable Gains Act 1992 (c. 12)

F19322

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

F19423

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

F19524

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

Commencement

25

1

This Schedule, except the provisions to which sub-paragraphs (2) to (5) below apply, shall have effect for the year 1993-94 and subsequent years of assessment.

F1962

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

F1973

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

F1974

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

F1985

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

SCHEDULE 7 Relief on retirement or re-investment

Section 87.

Part I Retirement relief etc.

Extension of references to “family company”

1

In sections 157 and 163 to 165 of the M80Taxation of Chargeable Gains Act 1992 and in paragraph 12(2) of Schedule 6 and paragraph 7(1) of Schedule 7 to that Act (which contain provisions relating to retirement relief and provisions which apply the definition of “family company” in Schedule 6 for other purposes), for the words “family company”, wherever they occur, there shall be substituted “ personal company ”.

F1992

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

Extension of references to full-time working directors etc.

F2002

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

Part II Roll-over relief on re-investment

3

After Chapter I of Part V of that Act there shall be inserted the following Chapter—

Chapter IA Roll-over relief on Re-investment
164A Relief on re-investment for individuals.
1
Subject to the following provisions of this Chapter, roll-over relief under this section shall be available where—
a
a chargeable gain would (apart from this section) accrue to any individual (“the re-investor”) on any material disposal by him of shares in or other securities of any company (“the initial holding”); and
b
that individual acquires a qualifying investment at any time in the qualifying period.
2
Subject to section 164C, where roll-over relief under this section is available, the re-investor shall, on making a claim as respects the qualifying investment, be treated—
a
as if the consideration for the disposal of the initial holding were reduced by whichever is the smallest of the following, that is to say—
i
the amount of the chargeable gain which apart from this subsection would accrue on the disposal of the initial holding, so far as that amount has not already been held over by way of reductions under this subsection,
ii
the actual amount or value of the consideration for the acquisition of the qualifying investment,
iii
in the case of a qualifying investment acquired otherwise than by a transaction at arm’s length, the market value of that investment at the time of its acquisition, and
iv
the amount specified for the purposes of this subsection in the claim;
and
b
as if the amount or value of the consideration for the acquisition of the qualifying investment were reduced by the amount of the reduction made under paragraph (a) above,
but neither paragraph (a) nor paragraph (b) above shall affect the treatment for the purposes of this Act of the other party to the transaction involving the initial holding or of the other party to the transaction involving the qualifying investment.
3
Subject to subsections (5) and (6) below, the disposal of shares in or other securities of a company is a material disposal for the purposes of this section if the conditions specified in subsection (4) below are satisfied in relation to a period of one year ending with—
a
the date of the disposal; or
b
if the company ceased at any time in the permitted period before the disposal to be a trading company or the holding company of a trading group, that time.
4
The conditions mentioned in subsection (3) above are satisfied in relation to any period if throughout that period-
a
the company has been a trading company or the holding company of a trading group;
b
the company has been an unquoted company;
c
the company has been the re-investor’s personal company; and
d
the re-investor has been a full-time working officer or employee of the company or, if that company is a member of a group or commercial association of companies, of one or more companies which are members of the group or association.
5
Where, throughout a period ending at the same time as the period mentioned in subsection (3) above and beginning at a time (“the time of partial retirement”) when the re-investor ceased to be such a full-time working officer or employee as is mentioned in subsection (4)(d) above—
a
the conditions specified in subsection (4)(a) to (c) above were satisfied in relation to any company,
b
the re-investor was an officer or employee of that company or, as the case may be, of one or more members of the group or association in question, and
c
in that capacity, the re-investor devoted at least 10 hours per week (averaged over the period) to the service of the company or companies in a technical or managerial capacity,
the disposal of shares in or other securities of that company is a material disposal for the purposes of this section if the conditions specified in subsection (4) above were satisfied in relation to the period of one year ending with the time of partial retirement.
6
Where—
a
any company has ceased to be an unquoted company, and
b
in the case of that company, all the conditions specified in subsection (4) above were satisfied in relation to the period of one year ending with the time when the company so ceased,
this section shall have effect in relation to an initial holding acquired by the re-investor at a time when the company in question was an unquoted company as if the company continued to be an unquoted company after that time until the disposal of that holding and as if the period mentioned in subsection (3) above included all such time (if any) as falls after the company’s ceasing to be an unquoted company and before what would, apart from this subsection, have been the beginning of that period.
7
Any question for the purposes of subsection (6) above as to when the shares or other securities comprised in the initial holding were acquired shall be determined by assuming, in relation to any disposals of shares or other securities regarded as forming part of a single asset, that shares or other securities acquired later are disposed of before those acquired earlier.
8
For the purposes of this section a person shall be regarded as acquiring a qualifying investment where he acquires any eligible shares in a qualifying company if—
a
he holds 5 per cent. or more of the eligible shares in that company—
i
at any time after making the acquisition and in the period of 3 years after the disposal of the initial holding, or
ii
at such time after the end of that period as the Board may by notice allow;
b
that company has not ceased to be a qualifying company between the acquisition of those shares and that time; and
c
that company is neither the company in which the initial holding has subsisted nor a company that was a member of the same group of companies as that company at the time of the disposal of the initial holding or of the acquisition of the qualifying investment.
9
For the purposes of this section the acquisition of a qualifying investment shall be taken to be in the qualifying period if, and only if, it takes place—
a
at any time in the period beginning 12 months before and ending 3 years after the disposal of the initial holding, or
b
at such time before the beginning of that period or after it ends as the Board may by notice allow.
10
The provisions of this Act fixing the amount of the consideration deemed to be given for the acquisition or disposal of assets shall be applied before this section is applied; and, without prejudice to the generality of this subsection, section 42(5) shall apply in relation to an adjustment under this section of the consideration for the acquisition of any shares as it applies in relation to an adjustment under any enactment to secure that neither a gain nor a loss accrues on a disposal.
11
The provisions of this section for making any reduction shall apply before any provisions for calculating the amount of, or giving effect to, any relief under section 163 of 164, and references in this section to chargeable gains shall be construed accordingly.
12
Without prejudice to section 52(4), where consideration is given for the acquisition or disposal of any assets some of which are shares or other securities to the acquisition or disposal of which a claim under this section relates and some of which are not, the consideration shall be apportioned in such manner as is just and reasonable.
164B Roll-over relief on re-investment by trustees.
1
Subject to the following provisions of this section, section 164A shall apply, as it applies in such a case as is mentioned in subsection (1) of that section, where there is—
a
a disposal by the trustees of a settlement of any shares in or other securities of a company which are part of the settled property; and
b
such an acquisition by those trustees of eligible shares in a qualifying company as would for the purposes of that section be an acquisition of a qualifying investment at a time in the qualifying period,
but as if the disposal were a material disposal if, and only if, the conditions specified in subsection (2) below are satisfied in relation to the period of one year mentioned in section 164A(3).
2
The conditions mentioned in subsection (1) above are satisfied in relation to any period if—
a
the company has been a trading company or the holding company of a trading group throughout that period;
b
the company has been an unquoted company throughout that period;
c
throughout that period the company has been a personal company of a relevant beneficiary; and
d
that relevant beneficiary has throughout that period been a full-time working officer or employee of the company or, if that company is a member of a group or commercial association of companies, of one or more companies which are members of the group or association.
3
References in this section, in relation to the disposal of any shares or other securities by the trustees of any settlement, to a relevant beneficiary are references to any beneficiary who, under the settlement, has an interest in possession in the whole of the settled property or, as the case may be, in a part of it which consists of or includes the shares or securities, but excluding, for this purpose, an interest for a fixed term.
4
If, in the case of a disposal by any trustees of any shares or other securities, there is, in addition to the beneficiary in relation to whom the requirements of subsection (2)(d) above are satisfied (“the qualifying beneficiary”), at least one other beneficiary who, at the relevant time, has an interest in possession in, the whole of the settled property or, as the case may be, in a part of it which consists of or includes the shares or securities—
a
only the relevant proportion of the gain which would accrue to the trustees on the disposal shall be taken into account for the purposes of section 164A(2)(a)(i); and
b
no reduction under section 164A(2) shall be made in respect of the whole or any part of the balance of the gain.
5
For the purposes of subsection (4) above the relevant proportion is the proportion which the interest specified in paragraph (a) below bears to the interests specified in paragraph (b) below, that is to say—
a
the qualifying beneficiary’s interest at the relevant time in the income of the part of the settled property comprising the shares or other securities in question; and
b
the interests at that time in that income of all the beneficiaries (including the qualifying beneficiary) who at that time have interests in possession in that part.
6
The reference in subsection (5) above to the qualifying beneficiary’s interest is a reference to the interest by virtue of which he is the qualifying beneficiary and not to any other interest he may hold.
7
Section 164A shall not apply by virtue of this section unless immediately after the acquisition mentioned in subsection (1)(b) above the qualifying beneficiary has an interest in possession in the whole of the settled property, or in the part of it in which the acquired shares are comprised, which is the same as or, as the case may be, is equivalent to the interest at the relevant time by virtue of which he is the qualifying beneficiary.
8
In this section “the relevant time”, in relation to a disposal of any shares or other securities, means the time of the disposal or if, by virtue of paragraph (b) of subsection (3) of section 164A, the period mentioned in that subsection is treated in relation to that disposal as ending at any earlier time, that earlier time.
164C Restriction applying to retirement relief and roll-over relief on re-investment.
1
Subject to the following provisions of this section, in the case of any disposal of shares in or other securities of any company in relation to which a claim is made under section 164A—
a
the gains which (apart from sections 163 to 164B) would on the disposal accrue to the individual or, as the case may be, the trustees shall be aggregated,
b
the amount available in respect of the disposal for relief under sections 163 and 164 and for the making of deductions under section 164A(2) above shall be deemed to be confined to the appropriate proportion of the aggregated gains, and
c
so much of the aggregated gains as exceeds the amount so available shall be disregarded for the purposes of sections 163 to 164B and, accordingly, shall constitute chargeable gains.
2
Subject to subsection (4) below, in this section “the appropriate proportion”, in relation to gains accruing on the disposal of shares in or other securities of a company that is not a holding company of a trading group, means the proportion which the amount specified in paragraph (a) below bears to the amount specified in paragraph (b) below, that is to say—
a
that part of the value of the company’s chargeable assets at the relevant time which is attributable to the value of the company’s chargeable business assets; and
b
the whole of the value of the company’s chargeable assets at that time.
3
Subject to subsection (4) below, in this section “the appropriate proportion”, in relation to gains accruing on the disposal of shares in or other securities of a holding company of a trading group, means the proportion which the amount specified in paragraph (a) below bears to the amount specified in paragraph (b) below, that is to say—
a
that part of the value of the trading group’s chargeable assets at the relevant time which is attributable to the value of the trading group’s chargeable business assets; and
b
the whole of the value of the trading group’s chargeable assets at that time.
4
Where a company or trading group has no chargeable assets, “the appropriate proportion”, in relation to the gains accruing on the disposal of shares in or other securities of that company or, as the case may be, of the holding company of that group, means the whole of those gains.
5
Subject to subsection (6)(b) below, every asset of a company is for the purposes of this section a chargeable asset of that company except one, on the disposal of which by the company at the relevant time, no gain accruing to the company would be a chargeable gain.
6
For the purposes of this section—
a
any reference, in relation to a trading group, to the trading group’s chargeable assets or chargeable business assets is a reference to the chargeable assets or, as the case may be, chargeable business assets of every member of the trading group; and
b
a holding by one member of the trading group of the ordinary share capital of another member of the group is not a chargeable asset.
7
Where the whole of the ordinary share capital of a 51 per cent. subsidiary of a holding company is not owned directly or indirectly by that company, then, for the purposes of this section, the value of the chargeable assets and of the chargeable business assets of that subsidiary shall be taken to be reduced according to the formula—
$Ax \frac{B}{C}$
8
In subsection (7) above—
A is the value falling to be reduced of the chargeable assets or chargeable business assets of the subsidiary;
B is the amount of the ordinary share capital of the subsidiary owned, directly or indirectly, by the holding company;
C is the whole of the ordinary share capital of the subsidiary;
and section 838 of the Taxes Act (definition of expressions in relation to subsidiaries) shall apply for construing that subsection and this subsection.
9
In this section “chargeable business asset”, in relation to any company, means a chargeable asset (including goodwill but not including any shares or other securities or any assets held as investments) which is, or is an interest in, an asset used for the purposes of a trade, profession, vocation, office or employment carried on by—
a
the individual concerned,
b
any personal company of that individual,
c
a member of a trading group of which the holding company is a personal company of that individual, or
d
a partnership of which that individual is a member.
10
For the purposes of the application of this section to a case in which trustees dispose of any shares or other securities, the references in subsection (9) above to the individual concerned are references to the qualifying beneficiary.
11
In this section “the relevant time” has the same meaning as in section 164B.
12
This section shall be without prejudice to the provisions of paragraphs 7 to 11 of Schedule 6.
164D Relief carried forward into replacement shares.
1
This section shall apply where a person has acquired any eligible shares in a qualifying company (“the acquired holding”) for a consideration which is treated as reduced, under section 164A or the following provisions of this section, by any amount (“the held-over gain”) .
2
If—
a
the person who acquired the acquired holding disposes of eligible shares in the company in question (“the acquired shares”),
b
that person at any time in the relevant period acquires other eligible shares (“the replacement shares”) in a qualifying company which is not a relevant company;
c
the acquisition of the replacement shares would, in relation to the disposal of the acquired shares, be treated (were the disposal a material disposal) as an acquisition of a qualifying investment for the purposes of section 164A, and
d
roll-over relief is not available under section 164A in relation to the acquisition of the replacement shares,
that person shall, on making a claim as respects the acquisition of the replacement shares, be treated in relation to that acquisition in accordance with subsection (3) below.
3
Where a person falls to be treated in accordance with this subsection in relation to the acquisition of the replacement shares, he shall be treated—
a
as if the consideration for the disposal of the acquired shares were reduced by whichever is the smallest of the following, that is to say—
i
the amount of the held-over gain on the acquisition of the acquired holding, so far as that amount has not already been carried forward under this section from any disposal of eligible shares in the company in question or been charged on a disposal or under section 164F,
ii
the actual amount or value of the consideration for the acquisition of the replacement shares,
iii
in the case of replacement shares acquired otherwise than by a transaction at arm’s length, the market value of the replacement shares at the time of their acquisition, and
iv
the amount specified for the purposes of this subsection in the claim;
and
b
as if the amount or value of the consideration for the acquisition of the replacement shares were reduced by the amount of the reduction made under paragraph (a) above,
but neither paragraph (a) nor paragraph (b) above shall affect the treatment for the purposes of this Act of the other party to the transaction involving the acquired shares or of the other party to the transaction involving the replacement shares.
4
For the purposes of this section the whole or a part of any held-over gain on the acquisition of the acquired holding shall be treated—
a
in accordance with subsection (5) below as charged on any disposal in relation to which the whole or any part of the held-over gain falls to be taken into account in determining the chargeable gain or allowable loss accruing on the disposal; and
b
as charged under section 164F so far as it falls to be disregarded in accordance with subsection (11) of that section.
5
In the case of any such disposal as is mentioned in subsection (4)(a) above, the amount of the held-over gain charged on that disposal—
a
shall, except in the case of a part disposal, be so much of the amount taken into account as so mentioned as is not carried forward under this section from the disposal in question; and
b
in the case of a part disposal, shall be calculated by multiplying the following, that is to say—
i
so much of the amount of the held-over gain as is not carried forward under this section from the disposal in question and has not already been either charged on a previous disposal or carried forward under this section from a previous disposal; and
ii
the fraction used in accordance with section 42(2) for determining, subject to any deductions in pursuance of this Chapter, the amount allowable as a deduction in the computation of the gain accruing on the disposal in question.
6
Where section 58 applies to any disposal of the whole or any part of the acquired holding to any individual—
a
that individual shall not be treated for the purposes of subsection (1) above as a person who has acquired eligible shares for a consideration which is treated as reduced under section 164A or this section; and
b
the amount of the held-over gain which for the purposes of this section shall be treated as charged on the disposal shall be the amount that would have been charged on the disposal if it had been a disposal at market value.
7
References in this section to an amount being carried forward from a disposal are references, in relation to the disposal of any shares, to the reduction by that amount, in accordance with subsection (3)(a) above, of the amount of the consideration for the disposal of those shares.
8
Subsections (10) to (12) of section 164A shall apply in the case of any claim under this section as they apply in the case of a claim under that section.
9
For the purposes of this section a company is a relevant company if it is—
a
the company in which the acquired holding has subsisted or a company which was a member of the same group of companies as that company at the time of the disposal of the acquired holding or of the acquisition of the replacement shares;
b
a company in relation to the disposal of any shares in which there has been a claim under this Chapter such that without that or an equivalent claim there would be no held-over gain in relation to the acquired holding; or
c
a company which, at the time of the disposal or acquisition to which the claim relates, was a member of the same group of companies as a company falling within paragraph (b) above.
10
In this section “the relevant period” means the period (not including any period before the acquisition of the acquired holding) which begins 12 months before and ends 3 years after the disposal of the acquired shares, together with any such further period after the disposal as the Board may by notice allow.
164E Application of Chapter in cases of an exchange of shares.
1
Where—
a
there is a transaction involving the issue of any shares in or debentures of any company in exchange for any shares in or debentures of another company (“the exchanged securities”),
b
but for this section, section 127 would have effect in pursuance of section 135 for requiring the transaction to be treated for the purposes of this Act as one that does not involve a disposal of the exchanged securities,
c
any person would be entitled, if the transaction were treated as involving such a disposal, to make a claim for relief under this Chapter by reference to that disposal and an acquisition of eligible shares in a qualifying company, and
d
that person makes an election under this section for the transaction to be treated as involving the disposal of the exchanged securities and claims that relief,
this Chapter and the other provisions of this Act shall have effect as if section 127 did not apply in the case of that transaction and, accordingly, as if that transaction did involve such a disposal, together with an acquisition of the shares or debentures that are issued in exchange.
2
An election under this section shall be made by notice given to the Board not more than 2 years after the end of, as the case may be—
a
the qualifying period mentioned in section 164A; or
b
the relevant period, within the meaning of section 164D;
and an election made under this section in connection with a claim for relief under section 164B shall be made jointly by the trustees of the settlement and the qualifying beneficiary.
3
Where, in order to give effect (in pursuance of an election under this section) to subsection (1) above, it is necessary to make any adjustment by way of an assessment on any person, the assessment shall not be out of time if it is made within one year of the final determination of the claim for relief in connection with which the election is made.
4
For the purposes of subsection (3) above a claim for relief shall not be deemed to be finally determined until the amount of the relief allowed by virtue of the claim can no longer be varied, whether on appeal or by the order of any court or otherwise.
164F Failure of conditions of relief.
1
This section shall apply in any such case as is mentioned in section 164D(1), and references in this section to the acquired holding and the held-over gain shall be construed accordingly.
2
Subject to the following provisions of this section, if at any time in the relevant period—
a
the shares comprised in the acquired holding cease to be eligible shares,
b
the company in which the acquired holding subsists ceases to be a qualifying company,
c
the person who acquired the acquired holding becomes neither resident nor ordinarily resident in the United Kingdom, or
d
any of the shares comprised in the acquired holding are included in the original shares (within the meaning of sections 127 to 130) in the case of any transaction with respect to which section 116 has effect,
a chargeable gain equal to the appropriate proportion of the held-over gain shall be treated as accruing to that person immediately before that time or, in a case falling within paragraph (d) above, immediately before the disposal assumed for the purposes of section 116(10)(a).
3
For the purposes of this section the appropriate proportion of the held-over gain is so much, if any, of that gain as has not already been either—
a
charged on any disposal or under this section; or
b
carried forward under section 164D from any disposal;
or, in a case to which subsection (2) above applies by virtue of paragraph (d) of that subsection or in accordance with subsection (7) below, such part of that proportion of that gain as is just and reasonable having regard to the extent to which the acquired holding comprises the original shares.
4
Subject to subsection (5) below, subsections (4), (5) and (7) of section 164D shall apply for the purposes of this section as they apply for the purposes of that section.
5
Where the acquired holding or any asset treated as comprised in a single asset with the whole or any part of that holding has been disposed of under section 58 by the individual who acquired that holding to another person (“the spouse”)—
a
the spouse shall not (subject to the following provisions of this subsection) be treated for the purposes of this section as a person who has acquired eligible shares for a consideration which is treated as reduced under section 164A or 164D;
b
the disposal shall not be included in the disposals on which the whole or any part of the held-over gain may be treated as charged for the purposes of this section;
c
disposals by the spouse, as well as disposals by that individual, shall be taken into account for the purposes of section 164D(4) and (5) above, as applied for the purpose of this section;
d
any charge under subsection (2) above (other than one by virtue paragraph (c) of that subsection) shall be apportioned between that individual and the spouse according to the extent to which the appropriate proportion of the held-over gain would be charged on the disposal by each of them of their respective holdings (if any);
e
paragraph (c) of that subsection shall have effect as if the reference in that paragraph to that individual included a reference to the spouse;
f
a charge by virtue of that paragraph shall be imposed only on a person who becomes neither resident nor ordinarily resident in the United Kingdom; and
g
the amount of the charge imposed on any person by virtue of that paragraph shall be that part of the charge on the appropriate proportion of the held-over gain which would be apportioned to that person in a case to which paragraph (d) above applies.
6
Subject to subsection (7) below, where the qualifying company in which the acquired holding subsists ceases to be an unquoted company this section shall have effect as if the relevant period ended immediately before it so ceased.
7
Where there is a transaction by virtue of which any shares in a company are to be regarded under section 127 as the same asset as the acquired holding or the whole or any part of an asset comprising that holding, this section shall not apply by virtue of subsection (2)(a) or (b) above except where—
a
those shares are not, or cease to be, eligible shares in that company;
b
neither that company nor (if different) the company in which the acquired holding subsisted —
i
is or continues to be a qualifying company; or
ii
would be or continue to be a qualifying company if it were an unquoted company;
c
the transaction is one by virtue of which the shares comprised in the acquired holding cease to be eligible shares in pursuance of section 164L; or
d
there is a transaction by virtue of which any shares at any time comprised in the acquired holding would have so ceased in pursuance of that section.
8
This section shall not apply by virtue of subsection (2)(a) or (b) above where the company in which the acquired holding subsists is wound up or dissolved without winding up and—
a
it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax; and
b
the company’s net assets (if any) are distributed to its members or dealt with as bona vacantia before the end of the period of 3 years from the commencement of the winding up or, as the case may be, from the dissolution.
9
This section shall not apply by virtue of subsection (2)(c) above in relation to any person if—
a
the reason for his becoming neither resident nor ordinarily resident in the United Kingdom is that he works in an employment or office all the duties of which are performed outside the United Kingdom, and
b
he again becomes resident or ordinarily resident in the United Kingdom within the period of 3 years from the time when he ceases to be so, without having meanwhile disposed of any eligible shares in the company in question;
and, accordingly, no assessment shall be made by virtue of subsection (2)(c) above before the end of that period in any case where the condition in paragraph (a) above is satisfied and the condition in paragraph (b) above may be satisfied.
10
For the purposes of subsection (9) above a person shall be taken to have disposed of an asset if there has been such a disposal as would, if the person making the disposal had been resident in the United Kingdom, have been a disposal on which (within the meaning of section 164D) the whole or any part of the held-over gain would have been charged.
11
Gains on disposals made after a chargeable gain has under this section been deemed to accrue in respect of the acquired holding to any person shall be computed as if so much of the held-over gain as is equal to the amount of the chargeable gain were to be disregarded.
12
In this section “the relevant period” means (subject to subsection (6) above) the period of 3 years after the acquisition of the acquired holding.
164G Meaning of “qualifying company”.
1
Subject to section 164H, a company is a qualifying company for the purposes of this Chapter if it complies with this section.
2
Subject to the following provisions of this section, a company complies with this section if it is—
a
an unquoted company which exists wholly for the purpose of carrying on one or more qualifying trades or which so exists apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of the company’s activities;
b
an unquoted company whose business consists entirely in the holding of shares in or other securities of, or the making of loans to, one or more qualifying subsidiaries of the company; or
c
an unquoted company whose business consists entirely in—
i
the holding of such shares or securities, or the making of such loans; and
ii
the carrying on of one or more qualifying trades.
3
A company does not comply with this section if—
a
it controls (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary or, without controlling it, has a 51 per cent. subsidiary which is not a qualifying subsidiary;
b
it is under the control of another company (or of another company and a person connected with the other company) or, without being controlled by it, is a 51 per cent. subsidiary of another company; or
c
arrangements are in existence by virtue of which the company could fall within paragraph (a) or (b) above;
and in this subsection “51 per cent. subsidiary” has the meaning given by section 838 of the Taxes Act.
4
In this section “qualifying subsidiary”, in relation to a company (“the holding company”), means any company which is a member of a group of companies of which the holding company is the principal company, and of which each of the members, or each of the members other than the holding company, is a company falling within subsection (5) below.
5
A company falls within this subsection if—
a
it is such a company as is mentioned in subsection (2)(a) above;
b
it exists wholly for the purpose of holding and managing property used by the holding company or any of the holding company’s other subsidiaries for the purposes of—
i
research and development from which it is intended that a qualifying trade to be carried on by the holding company or any of those other subsidiaries will be derived, or
ii
one or more qualifying trades so carried on;
c
it would exist wholly for such a purpose apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of the company’s activities; or
d
it has no profits for the purposes of corporation tax and no part of its business consists in the making of investments.
6
Without prejudice to the generality of subsection (2) above or to section 164F(8), a company ceases to comply with this section if—
a
a resolution is passed, or an order is made, for the winding up of the company;
b
in the case of a winding up otherwise than under the M81Insolvency Act 1986 or the M82Insolvency (Northern Ireland) Order 1989, any other act is done for the like purpose; or
c
the company is dissolved without winding up.
164H Property companies etc. not to be qualifying companies.
1
For the purposes of this Chapter a company is not a qualifying company at any time when the value of the interests in land held by the company is greater than half the value of the company’s chargeable assets within the meaning of section 164C.
2
For the purposes of this section the value of the interests in land held by a company at any time shall be arrived at by first aggregating the market value at that time of each of those interests and then deducting—
a
the amount of any debts of the company which are secured on any of those interests (including any debt secured by a floating charge on property which comprises any of those interests);
b
the amount of any unsecured debts of the company which do not fall due for payment before the end of the period of 12 months beginning with that time; and
c
the amount paid up in respect of those shares of the company (if any) which carry a present or future preferential right to the company’s assets on its winding up.
3
In this section “interest in land” means any estate or interest in land, any right in or over land or affecting the use or disposition of land, and any right to obtain such an estate, interest or right from another which is conditional on that other’s ability to grant the estate, interest or right in question, except that it does not include—
a
the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of a mortgage, an agreement for a mortgage or a charge of any kind over land; or
b
in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.
4
For the purposes of this section, the value of an interest in any building or other land shall be adjusted by deducting the market value of any machinery or plant which is so installed or otherwise fixed in or to the building or other land as, in law, to become part of it.
5
In arriving at the value of any interest in land for the purposes of this section—
a
it shall be assumed that there is no source of mineral deposits in the land of a kind which it would be practicable to exploit by extracting them from underground otherwise than by means of opencast mining or quarrying; and
b
any borehole on the land shall be disregarded if it was made in the course of oil exploration.
6
Where a company is a member of a partnership which holds any interest in land—
a
that interest shall, for the purposes of this section, be treated as an interest in land held by the company; but
b
its value at any time shall, for those purposes, be taken to be such fraction of its value (apart from this subsection) as is equal to the fraction of the assets of the partnership to which the company would be entitled if the partnership were dissolved at that time.
7
Where a company is a member of a group of companies all the members of the group shall be treated as a single company for the purposes of this section; but any debt owed by, or liability of, one member of the group to another shall be disregarded for those purposes.
164I Qualifying trades.
1
For the purposes of this Chapter—
a
a trade is a qualifying trade if it complies with the requirements of this section; and
b
the carrying on of any activities of research and development from which it is intended that a trade complying with those requirements will be derived shall be treated as the carrying on of a qualifying trade.
2
Subject to the following provisions of this section, a trade complies with this section if neither that trade nor a substantial part of it consists in one or more of the following activities, that is to say—
a
dealing in land, in commodities or futures or in shares, securities or other financial instruments;
b
dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution;
c
banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities;
d
leasing (including letting ships on charter or other assets on hire) or receiving royalties or licence fees;
e
providing legal or accountancy services;
f
providing services or facilities for any such trade carried on by another person as—
i
consists, to a substantial extent, in activities within any of paragraphs (a) to (e) above; and
ii
is a trade in which a controlling interest is held by a person who also has a controlling interest in the trade carried on by the company providing the services or facilities;
g
property development;
h
farming;
but this subsection shall have effect in relation to a qualifying trade carried on by a member of a group of companies, as if the reference in paragraph (f) above to another person did not include a reference to the principal company of the group.
3
For the purposes of subsection (2)(b) above—
a
a trade of wholesale distribution is one in which the goods are offered for sale and sold to persons for resale by them, or for processing and resale by them, to members of the general public for their use or consumption;
b
a trade of retail distribution is one in which the goods are offered for sale and sold to members of the general public for their use or consumption; and
c
a trade is not an ordinary trade of wholesale or retail distribution if—
i
it consists, to a substantial extent, in dealing in goods of a kind which are collected or held as an investment, or of that activity and any other activity of a kind falling within subsection (2) above, taken together; and
ii
a substantial proportion of those goods are held by the company for a period which is significantly longer than the period for which a vendor would reasonably be expected to hold them while endeavouring to dispose of them at their market value.
4
In determining for the purposes of this Chapter whether a trade carried on by any person is an ordinary trade of wholesale or retail distribution, regard shall be had to the extent to which it has the following features, that is to say—
a
the goods are bought by that person in quantities larger than those in which he sells them;
b
the goods are bought and sold by that person in different markets;
c
that person employs staff and incurs expenses in the trade in addition to the cost of the goods and, in the case of a trade carried on by a company, to any remuneration paid to any person connected with it;
d
there are purchases or sales from or to persons who are connected with that person;
e
purchases are matched with forward sales or vice versa;
f
the goods are held by that person for longer than is normal for goods of the kind in question;
g
the trade is carried on otherwise than at a place or places commonly used for wholesale or retail trade;
h
that person does not take physical possession of the goods;
and for the purposes of this subsection the features specified in paragraphs (a) to (c) above shall be regarded as indications that the trade is such an ordinary trade and those in paragraphs (d) to (h) above shall be regarded as indications of the contrary.
5
A trade shall not be treated as failing to comply with this section by reason only of its consisting, to a substantial extent, in receiving royalties or licence fees if—
a
the company carrying on the trade is engaged in—
i
the production of films; or
ii
the production of films and the distribution of films produced by it within the period of 3 years before their distribution;
and
b
all royalties and licence fees received by it are in respect of films produced by it within the preceding 3 years or sound recordings in relation to such films or other products arising from such films.
6
A trade shall not be treated as failing to comply with this section by reason only of its consisting, to a substantial extent, in receiving royalties or licence fees if—
a
the company carrying on the trade is engaged in research and development; and
b
all royalties and licence fees received by it are attributable to research and development which it has carried out.
7
A trade shall not be treated as failing to comply with this section by reason only of its consisting in letting ships, other than oil rigs or pleasure craft, on charter if—
a
every ship let on charter by the company carrying on the trade is beneficially owned by the company;
b
every ship beneficially owned by the company is registered in the United Kingdom;
c
the company is solely responsible for arranging the marketing of the services of its ships; and
d
the conditions mentioned in subsection (8) below are satisfied in relation to every letting of a ship on charter by the company;
but where any of the requirements mentioned in paragraphs (a) to (d) above are not satisfied in relation to any lettings, the trade shall not thereby be treated as failing to comply with this section if those lettings and any other activity of a kind falling within subsection (2) above do not, when taken together, amount to a substantial part of the trade.
8
The conditions are that—
a
the letting is for a period not exceeding 12 months and no provision is made at any time (whether in the charterparty or otherwise) for extending it beyond that period otherwise than at the option of the charterer;
b
during the period of the letting there is no provision in force (whether by virtue of being contained in the charterparty or otherwise) for the grant of a new letting to end, otherwise than at the option of the charterer, more than 12 months after that provision is made;
c
the letting is by way of a bargain made at arm’s length between the company and a person who is not connected with it;
d
under the terms of the charter the company is responsible as principal—
i
for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry; and
ii
for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period;
and
e
no arrangements exist by virtue of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) above on behalf of the company;
but this subsection shall have effect, in relation to any letting between a company and another company which is a member of the same group of companies as that company, as if paragraph (c) were omitted.
9
A trade shall not comply with this section unless it is conducted on a commercial basis and with a view to the realisation of profits.
164J Provisions supplementary to section 164I.
1
For the purposes of section 164I, in the case of a trade carried on by a company, a person has a controlling interest in that trade if—
a
he controls the company;
b
the company is a close company and he or an associate of his is a director of the company and either—
i
the beneficial owner of, or
ii
able, directly or through the medium of other companies or by any other indirect means, to control,
more than 30 per cent. of the ordinary share capital of the company; or
c
not less than half of the trade could in accordance with section 344(2) of the Taxes Act be regarded as belonging to him;
and, in any other case, a person has a controlling interest in a trade if he is entitled to not less than half of the assets used for, or of the income arising from, the trade.
2
For the purposes of subsection (1) above, there shall be attributed to any person any rights or powers of any other person who is an associate of his.
3
References in section 164I(2)(f) or subsection (1) above to a trade carried on by a person other than the company in question shall be construed as including references to any business, profession or vocation.
4
In this section “director” shall be construed in accordance with section 417(5) of the Taxes Act.
164K Foreign residents.
1
This Chapter shall not apply in relation to any person in respect of his acquisition of any eligible shares in a qualifying company if at the time when he acquires them he is neither resident nor ordinarily resident in the United Kingdom.
2
This Chapter shall not apply in relation to any person in respect of his acquisition of any eligible shares in a qualifying company if—
a
though resident or ordinarily resident in the United Kingdom at the time when he acquires them, he is regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom; and
b
by virtue of the arrangements, he would not be liable in the United Kingdom to tax on a gain arising on a disposal of those shares immediately after their acquisition.
164L Anti-avoidance provisions.
1
For the purposes of this Chapter an acquisition of shares in a qualifying company shall not be treated as an acquisition of eligible shares if the arrangements for the acquisition of those shares, or any arrangements made before their acquisition in relation to or in connection with the acquisition, include—
a
arrangements with a view to the subsequent re-acquisition, exchange or other disposal of the shares;
b
arrangements for or with a view to the cessation of the company’s trade or the disposal of, or of a substantial amount of, its chargeable business assets; or
c
arrangements for the return of the whole or any part of the value of his investment to the individual acquiring the shares.
2
If, after any eligible shares in a qualifying company have been acquired by any individual, the whole or any part of the value of that individual’s investment is returned to him, those shares shall be treated for the purposes of this Chapter as ceasing to be eligible shares.
3
For the purposes of this section there shall be treated as being a return of the whole or a part of the value of the investment of an individual who is to acquire or has acquired any shares in a company if the company—
a
repays, redeems or repurchases any of its share capital or other securities which belong to that individual or makes any payment to him for giving up his right to any of the company’s share capital or any security on its cancellation or extinguishment;
b
repays any debt owed to that individual, other than a debt which was incurred by the company—
i
on or after the acquisition of the shares; and
ii
otherwise than in consideration of the extinguishment of a debt incurred before the acquisition of the shares;
c
makes to that individual any payment for giving up his right to any debt on its extinguishment;
d
releases or waives any liability of that individual to the company or discharges, or undertakes to discharge, any liability of his to a third person;
e
provides a benefit or facility for that individual;
f
disposes of an asset to that individual for no consideration or for a consideration which is or the value of which is less than the market value of the asset;
g
acquires an asset from that individual for a consideration which is or the value of which is more than the market value of the asset; or
h
makes any payment to that individual other than a qualifying payment.
4
For the purposes of this section there shall also be treated as being a return of the whole or a part of the value of the investment of an individual who is to acquire or has acquired any shares in a company if—
a
there is a loan made by any person to that individual; and
b
the loan is one which would not have been made, or would not have been made on the same terms, if that individual had not acquired those shares or had not been proposing to do so.
5
For the purposes of this section a company shall be treated as having released or waived a liability if the liability is not discharged within 12 months of the time when it ought to have been discharged.
6
References in this section to a debt or liability do not, in relation to a company, include references to any debt or liability which would be discharged by the making by that company of a qualifying payment, and references to a benefit or facility do not include references to any benefit or facility provided in circumstances such that, if a payment had been made of an amount equal to its value, that payment would be a qualifying payment.
7
References in this section to the making by any person of a loan to an individual include references—
a
to the giving by that person of any credit to that individual; and
b
to the assignment or assignation to that person of any debt due from that individual.
8
In this section “qualifying payment” means—
a
the payment by any company of such remuneration for service as an officer or employee of that company as may be reasonable in relation to the duties of that office or employment;
b
any payment or reimbursement by any company of travelling or other expenses wholly, exclusively and necessarily incurred by the individual to whom the payment is made in the performance of duties as an officer or employee of that company;
c
the payment by any company of any interest which represents no more than a reasonable commercial return on money lent to that company;
d
the payment by any company of any dividend or other distribution which does not exceed a normal return on any investment in shares in or other securities of that company;
e
any payment for the supply of goods which does not exceed their market value;
f
the payment by any company, as rent for any property occupied by the company, of an amount not exceeding a reasonable and commercial rent for the property;
g
any reasonable and necessary remuneration which—
i
is paid by any company for services rendered to that company in the course of a trade or profession; and
ii
is taken into account in computing the profits or gains of the trade or profession under Case I or II of Schedule D or would be so taken into account if it fell in a period on the basis of which those profits or gains are assessed under that Schedule;
h
a payment in discharge of an ordinary trade debt.
9
In this section—
a
any reference to a payment or disposal to an individual includes a reference to a payment or disposal made to him indirectly or to his order or for his benefit; and
b
any reference to an individual includes a reference to an associate of his and any reference to a company includes a reference to a person connected with the company.
10
This section shall have effect in relation to the acquisition of shares by the trustees of a settlement as if references to the individual acquiring the shares were references to those trustees or the individual who is the qualifying beneficiary by reference to whom this Chapter has or, as the case may be, would have effect in relation to that acquisition.
11
In this section—
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
“chargeable business assets” has the same meaning as in section 164C; and
“ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business where any credit given does not exceed six months and is not longer than that normally given to customers of the person carrying on the trade or business.
164M Exclusion of double relief.
Where a person acquires any shares in a company those shares shall not be eligible shares or, as the case may be, shall cease to be eligible shares if that person or any person connected with him has made or makes a claim for relief in relation to those shares under Chapter III of Part VII of the Taxes Act (business expansion scheme).
164N Interpretation of Chapter IA.
1
In this Chapter—
“associate” has the meaning given in subsections (3) and (4) of section 417 of the Taxes Act, except that in those subsections, as applied for the purposes of this Chapter, “relative” shall not include a brother or sister;
“eligible shares” means (subject to sections 164L and 164M) any ordinary shares in a company which do not carry—
a
any present or future preferential rights to dividends or to that company’s assets on its winding up; or
b
any present or future preferential right to be redeemed;
“farming” has the same meaning as in the Taxes Act;
“film” means an original master negative of a film, an original master film disc or an original master film tape;
“oil exploration” means searching for oil (within the meaning of Chapter V of Part XII of the Taxes Act);
“oil rig” means any ship which is an offshore installation for the purposes of the M83Mineral Workings (Offshore Installations) Act 1971;
“ordinary share capital” has the meaning given by section 832(1) of the Taxes Act;
“ordinary shares” means shares forming part of a company’s ordinary share capital;
“pleasure craft” means any ship of a kind primarily used for sport or recreation;
“property development” means the development of land, by a company which has, or at any time has had, an interest in the land (within the meaning of section 164H), with the sole or main object of realising a gain from disposing of the land when developed;
“research and development” means any activity which is intended to result in a patentable invention (within the meaning of the M84Patents Act 1977) or in a computer program;
“sound recording” in relation to a film, means its sound track, original master audio disc or original master audio tape; and
“unquoted company” means a company none of the shares in or other securities of which are quoted on any recognised stock exchange or are dealt in on the Unlisted Securities Market.
2
Section 170 shall apply for the interpretation of sections 164G and 164I as it applies for the interpretation of sections 171 to 181.
3
Subject to subsection (2) above, paragraph 1 of Schedule 6 shall have effect for the purposes of this Chapter as it has effect for the purposes of sections 163 and 164 and that Schedule.
4
References in this Chapter to the reduction of an amount include references to its reduction to nil.

SCHEDULE 8 Restriction on set-off of pre-entry losses

Section 88.

Annotations:

Marginal Citations

M85

1992 c. 12.

M86

1978 c. 30.

M87

S.I. 1979/1573 (N.I. 13).

The following is the Schedule to be inserted after Schedule 7 to the M85Taxation of Chargeable Gains Act 1992.

Schedule 7A Restriction on set-off of pre-entry losses
Section 177A.
Application and construction of Schedule
1
1
This Schedule shall have effect, in the case of a company which is or has been a member of a group of companies (“the relevant group”), in relation to any pre-entry losses of that company.
2
In this Schedule “pre-entry loss”, in relation to any company, means—
a
any allowable loss that accrued to that company at a time before it became a member of the relevant group; or
b
the pre-entry proportion of any allowable loss accruing to that company on the disposal of any pre-entry asset;
and for the purposes of this Schedule the pre-entry proportion of any loss shall be calculated in accordance with paragraphs 2 to 5 below.
3
In this Schedule “pre-entry asset”, in relation to any disposal, means (subject to sub-paragraph (4) below) any asset which was held, at the time immediately before it became a member of the relevant group, by any company (whether or not the one which makes the disposal) which is or has at any time been a member of that group.
4
Subject to paragraph 3 below, an asset is not a pre-entry asset if—
a
the company which held the asset at the time it became a member of the relevant group is not the company which makes the disposal; and
b
since that time that asset has been disposed of otherwise than by a disposal to which section 171 applies;
but (without prejudice to sub-paragraph (8) below) where, on a disposal to which section 171 does not apply, any asset would cease to be a pre-entry asset by virtue of this sub-paragraph but the company making the disposal retains any interest in or over the asset in question, that interest shall be a pre-entry asset for the purposes of this Schedule.
5
References in this Schedule, in relation to a pre-entry asset, to the relevant time are references to the time when the company by reference to which that asset is a pre-entry asset became a member of the relevant group; and for the purposes of this Schedule—
a
where a company has become a member of the relevant group on more than one occasion, an asset is a pre-entry asset by reference to that company if it would be a pre-entry asset by reference to that company in respect of any one of those occasions; but
b
references in the following provisions of this Schedule to the time when a company became a member of the relevant group, in relation to assets held on more than one such occasion as is mentioned in paragraph (a) above, are references to the later or latest of those occasions.
6
Subject to so much of sub-paragraph (6) of paragraph 9 below as requires groups of companies to be treated as separate groups for the purposes of that paragraph, if—
a
the principal company of a group of companies (“the first group”) has at any time become a member of another group (“the second group”) so that the two groups are treated as the same by virtue of subsection (10) of section 170, and
b
the second group, together in pursuance of that subsection with the first group, is the relevant group,
then, except where sub-paragraph (7) below applies, the members of the first group shall be treated for the purposes of this Schedule as having become members of the relevant group at that time, and not by virtue of that subsection at the times when they became members of the first group.
7
This sub-paragraph applies where—
a
the persons who immediately before the time when the principal company of the first group became a member of the second group owned the shares comprised in the issued share capital of the principal company of the first group are the same as the persons who, immediately after that time, owned the shares comprised in the issued share capital of the principal company of the relevant group; and
b
the company which is the principal company of the relevant group immediately after that time—
i
was not the principal company of any group immediately before that time; and
ii
immediately after that time had assets consisting entirely, or almost entirely, of shares comprised in the issued share capital of the principal company of the first group.
8
For the purposes of this Schedule, but subject to paragraph 3 below—
a
an asset acquired or held by a company at any time and an asset held at a later time by that company, or by any company which is or has been a member of the same group of companies as that company, shall be treated as the same asset if the value of the second asset is derived in whole or in part from the first asset; and
b
if—
i
any asset is treated (whether by virtue of paragraph (a) above or otherwise) as the same as an asset held by a company at a later time, and
ii
the first asset would have been a pre-entry asset in relation to that company,
the second asset shall also be treated as a pre-entry asset in relation to that company;
and paragraph (a) above shall apply, in particular, where the second asset is a freehold and the first asset is a leasehold the lessee of which acquires the reversion.
9
In determining for the purposes of this Schedule whether any allowable loss accruing to a company under section 116(10)(b) is a loss that accrued before the company became a member of the relevant group, any loss so accruing shall be deemed to have accrued at the time of the relevant transaction within the meaning of section 116(2).
10
In determining for the purposes of this Schedule whether any allowable loss accruing to a company on a disposal under section 212 is a loss that accrued before the company became a member of the relevant group, the provisions of section 213 shall be disregarded.
Pre-entry proportion of losses on pre-entry assets
2
1
Subject to paragraphs 3 to 5 below, the pre-entry proportion of an allowable loss accruing on the disposal of a pre-entry asset shall be whatever would be the allowable loss accruing on that disposal if that loss were the sum of the amounts determined, for every item of relevant allowable expenditure, according to the following formula—
$Ax \frac{B}{C} x \frac{D}{E}$
2
In sub-paragraph (1) above, in relation to any disposal of a pre-entry asset—
A is the total amount of the allowable loss;
B is the sum of the amount of the item of relevant allowable expenditure for which an amount falls to be determined under this paragraph and the indexed rise in that item;
C is the sum of the total amount of all the relevant allowable expenditure and the indexed rises in each of the items comprised in that expenditure;
D is the length of the period beginning with the relevant pre-entry date and ending with the relevant time or, if that date is after that time, nil; and
E is the length of the period beginning with the relevant pre-entry date and ending with the day of the disposal.
3
In sub-paragraph (2) above “the relevant pre-entry date”, in relation to any item of relevant allowable expenditure, means whichever is the later of—
a
the date on which that item of expenditure is, or (on the assumption applying by virtue of sub-paragraphs (4) and (5) below) would be, treated for the purposes of section 54 as having been incurred; and
b
1st April 1982.
4
Where any asset (“the second asset”) is treated by virtue of section 127 as the same as another asset (“the first asset”) previously held by any company, this paragraph and (so far as applicable) paragraph 3 below shall have effect, except in relation to the calculation of any indexed rise—
a
as if any item of relevant allowable expenditure consisting in consideration given for the acquisition of the second asset had been incurred at the same time as the expenditure consisting in the consideration for the acquisition of the first asset; and
b
where there is more than one such time as if that item were incurred at those different times in the same proportions as the consideration for the acquisition of the first asset.
5
Without prejudice to sub-paragraph (4) above, this paragraph shall have effect in relation to any asset which—
a
was held by a company at the time when it became a member of the relevant group, and
b
is treated as having been acquired by that company for such a consideration as secured that on the disposal in pursuance of which it was acquired neither a gain nor a loss accrued,
as if that company and every person who acquired that asset or the equivalent asset at a material time had been the same person and, accordingly, as if the asset had been acquired by that company when it or the equivalent asset was acquired by the first of those persons to have acquired it at a material time and the time at which any expenditure had been incurred were to be determined accordingly.
6
In sub-paragraph (5) above, the reference, in relation to any asset, to a material time is a reference to any time which—
a
is before the occasion on which the company in question is treated as having acquired the asset for such a consideration as is mentioned in that sub-paragraph; and
b
is or is after the last occasion before that occasion on which any person acquired that asset or the equivalent asset otherwise than by virtue of an acquisition which—
i
is treated as an acquisition for such a consideration; or
ii
is the acquisition by virtue of which any asset is treated as the equivalent asset;
and this paragraph shall have effect in relation to any asset to which that sub-paragraph applies without regard to the provisions of section 56(2).
7
In sub-paragraphs (5) and (6) above, the reference in relation to the acquisition of any asset by any company, to the equivalent asset is a reference to any asset which (whether by virtue of paragraph 1(8) above or otherwise) would be treated in relation to that company as the same as the asset in question.
8
The preceding provisions of this paragraph and (so far as applicable) paragraph 3 below shall have effect where—
a
a loss accrues to any company under section 116(10)(b), and
b
the old asset consists in or is treated for the purposes of that paragraph as including pre-entry assets,
as if the disposal on which the loss accrues were that disposal of the old asset which is assumed to have been made for the purposes of the calculation required by section 116(10)(a).
9
In this paragraph—
“indexed rise” shall be construed in accordance with section 54 and, where the formula set out in sub-paragraph (1) above is applied for the purposes of paragraph 3 below, without regard to section 110; and
“relevant allowable expenditure”, in relation to any allowable loss, means the expenditure which falls by virtue of section 38(1)(a) or (b) to be taken into account in the computation of that loss.
Disposals of pooled assets
3
1
This paragraph shall apply (subject to paragraphs 4 and 5 below) where any assets acquired by any company fall to be treated with other assets as indistinguishable parts of the same asset (“a pooled asset”) and the whole or any part of that asset is referable to pre-entry assets.
2
For the purposes of this Schedule, where a pooled asset has at any time contained a pre-entry asset—
a
the pooled asset shall be treated, until all the pre-entry assets included in that asset have (on the assumptions for which this paragraph provides) been disposed of, as incorporating a part which is referable to pre-entry assets; and
b
the size of that part shall be determined in accordance with the following provisions of this paragraph.
3
Where there is a disposal of any part of a pooled asset and the proportion of the asset which is disposed of does not exceed the proportion of that asset which is represented by any part of it which is not, at the time of the disposal, referable to pre-entry assets, that disposal shall be deemed for the purposes of this Schedule to be confined to assets which are not pre-entry assets so that—
a
except where paragraph 4(2) below applies, no part of any loss accruing on that disposal shall be deemed to be a pre-entry loss, and
b
the part of the pooled asset which after the disposal is to be treated as referable to pre-entry assets shall be correspondingly increased.
4
Where there is a disposal of any part of a pooled asset and the proportion of the asset which is disposed of does exceed the proportion of that asset mentioned in sub-paragraph (3) above, that disposal shall be deemed for the purposes of this Schedule to relate to pre-entry assets only so far as required for the purposes of the excess, so that—
a
any loss accruing on that disposal shall be deemed for the purposes of this Schedule to be an allowable loss on the disposal of a pre-entry asset;
b
the pre-entry proportion of that loss shall be deemed (except where paragraph 4(3) below applies) to be the amount (so far as it does not exceed the amount of the loss actually accruing) which would have been the pre-entry proportion under paragraph 2 above of any loss accruing on the disposal of the excess if the excess were a separate asset; and
c
the pooled asset shall be treated after the disposal as referable entirely to pre-entry assets.
5
Where there is a disposal of the whole of a pooled asset or of any part of a pooled asset which, at the time of the disposal, is referable entirely to pre-entry assets, paragraphs (a) and (b) of sub-paragraph (4) above shall apply to the disposal of the asset or the part as they apply in relation to the assumed disposal of the excess mentioned in that sub-paragraph but, in the case of the disposal of the whole of a pooled asset only a part of which is referable to pre-entry assets, as if the reference in paragraph (b) of that sub-paragraph to the excess were a reference to that part.
6
For the purpose of determining, under sub-paragraph (4) or (5) above, what would have been the pre-entry proportion of any loss accruing on the disposal of any assets as a separate asset it shall be assumed that none of the assets treated as comprised in that asset has ever been comprised in a pooled asset with any assets other than those which are taken to constitute that separate asset for the purposes of the determination.
7
The assets which are comprised in any asset which is treated for any of the purposes of this paragraph as a separate asset shall be identified on the following assumptions, that is to say—
a
that assets are disposed of in the order of the dates which for the purposes of paragraph 2 above are the relevant pre-entry dates in relation to the consideration for their acquisition;
b
subject to that, that assets with earlier relevant times are disposed of before those with later relevant times;
c
that disposals made when a company was not a member of the relevant group are made in accordance with the preceding provisions of this paragraph, as they have effect in relation to the group of companies of which the company was a member at the time of the disposal or, as the case may be, of which it had most recently been a member before that time; and
d
subject to paragraphs (a) to (c) above, that a company disposes of assets in the order in which it acquired them.
8
Where in the case of any asset there is more than one date which is the relevant pre-entry date in relation to the consideration for its acquisition, the date taken into account for the purposes of sub-paragraph (7)(a) above shall be the date which is the earlier or earliest of those dates if any date which is the relevant pre-entry date in relation to the acquisition of an option to acquire that asset is disregarded.
9
In applying the formula set out in paragraph 2(1) above in relation to the disposal of an asset which is treated for any of the purposes of this paragraph as comprised in a separate asset—
a
the amount or value of any consideration for the acquisition or disposal of that asset; and
b
the incidental costs of the acquisition or disposal of that asset,
shall be determined (to the exclusion of any apportionment under section 129 or 130) by apportioning any consideration or costs relating to both that asset and other assets acquired or disposed of at the same time according to the proportion that is borne by that asset to all the assets to which the consideration or costs related.
10
Where—
a
any asset (“the latest asset”) falls (whether by virtue of paragraph 1(8) above or otherwise) to be treated as acquired at the same time as another asset (“the original asset”) which was acquired before the latest asset, and
b
the latest asset is either comprised in a pooled asset a part of which is referable to pre-entry assets or is or includes an asset which is to be treated as so comprised,
sub-paragraph (7) above shall apply not only in relation to the latest asset as if it were the original asset but also, in the first place, for identifying the asset which is to be treated as the original asset for the purposes of this paragraph.
11
Sub-paragraphs (3)(b) and (4)(c) above shall have effect in relation to any disposal without prejudice to the effect of any subsequent acquisition of assets falling to be treated as part of a pooled asset on the determination of whether, and to what extent, any part of that pooled asset is to be treated as referable to pre-entry assets.
Rule to prevent pre-entry losses on pooled assets being treated as post-entry losses
4
1
This paragraph shall apply if—
a
there is a disposal of any part of a pooled asset which for the purposes of paragraph 3 above is treated as incorporating a part which is referable to pre-entry assets;
b
the assets disposed of are or include assets (“the post-entry element of the disposal”) which for the purposes of that paragraph are treated as having been incorporated in the part of the pooled asset which is not referable to pre-entry assets;
c
an allowable loss (“the actual loss”) accrues on the disposal; and
d
the amount which in computing the allowable loss is allowed as a deduction of relevant allowable expenditure (“the expenditure actually allowed”) exceeds the relevant allowable expenditure attributable to the post-entry element of the disposal.
2
Subject to sub-paragraph (6) below, where the post-entry element of the disposal comprises all of the assets disposed of—
a
the actual loss shall be treated for the purposes of this Schedule as a loss accruing on the disposal of a pre-entry asset; and
b
the pre-entry proportion of that loss shall be treated as being the amount (so far as it does not exceed the amount of the actual loss) by which the expenditure actually allowed exceeds the relevant allowable expenditure attributable to the post-entry element of the disposal.
3
Subject to sub-paragraph (6) below, where—
a
the actual loss is treated by virtue of paragraph 3 above as a loss accruing on the disposal of a pre-entry asset, and
b
the expenditure actually allowed exceeds the actual cost of the assets to which the disposal is treated as relating,
the pre-entry proportion of the loss shall be treated as being the amount which (so far as it does not exceed the amount of the actual loss) is equal to the sum of that excess and what would, apart from this paragraph and paragraph 5 below, be the pre-entry proportion of the loss accruing on the disposal.
4
For the purposes of sub-paragraph (3) above the actual cost of the assets to which the disposal is treated as relating shall be taken to be the sum of—
a
the relevant allowable expenditure attributable to the post-entry element of the disposal; and
b
the amount which, in computing the pre-entry proportion of the loss in accordance with paragraph 3(4)(b) and (6) above, would be treated for the purposes of C in the formula in paragraph 2(1) above as the total amount allowable as a deduction of relevant allowable expenditure in respect of such of the assets disposed of as are treated as having been incorporated in the part of the pooled asset which is referable to pre-entry assets.
5
Without prejudice to sub-paragraph (6) below, where sub-paragraph (2) or (3) above applies for the purpose of determining the pre-entry proportion of any loss, no election shall be capable of being made under paragraph 5 below for the purpose of enabling a different amount to be taken as the pre-entry proportion of that loss.
6
Where—
a
the pre-entry proportion of the loss accruing to any company on the disposal of any part of a pooled asset falls to be determined under sub-paragraph (2) or (3) above,
b
the amount determined under that sub-paragraph exceeds the amount determined under sub-paragraph (7) below (“the alternative pre-entry loss”), and
c
the company makes an election for the purposes of this sub-paragraph,
the pre-entry proportion of the loss determined under sub-paragraph (2) or (3) above shall be reduced to the amount of the alternative pre-entry loss.
7
For the purposes of sub-paragraph (6) above the alternative pre-entry loss is whatever apart from this paragraph would have been the pre-entry proportion of the loss on the disposal in question, if for the purposes of this Schedule the identification of the assets disposed of were to be made disregarding the part of the pooled asset which was not referable to pre-entry assets, except to the extent (if any) by which the part referable to pre-entry assets fell short of what was disposed of.
8
An election for the purposes of sub-paragraph (6) above with respect to any loss shall be made by the company to which the loss accrued by notice to the inspector given within—
a
the period of two years beginning with the end of the accounting period of that company in which the disposal is made on which the loss accrues; or
b
such longer period as the Board may by notice allow;
and paragraph 5 below may be taken into account under sub-paragraph (7) above in determining the amount of the alternative pre-entry loss as if an election had been made under that paragraph but shall be so taken into account only if the election for the purposes of sub-paragraph (6) above contains an election corresponding to the election that, apart from this paragraph, might have been made under that paragraph.
9
For the purposes of this paragraph the relevant allowable expenditure attributable to the post-entry element of the disposal shall be the amount which, in computing any allowable loss accruing on a disposal of that element as a separate asset, would have been allowed as a deduction of relevant allowable expenditure if none of the assets comprised in that element had ever been comprised in a pooled asset with any assets other than those which are taken to constitute that separate asset for the purposes of this sub-paragraph.
10
For the purpose of identifying the assets which are to be treated for the purposes of sub-paragraph (9) above as comprised in the post-entry element of the disposal, a company shall be taken to dispose of assets in the order in which it acquired them.
11
Paragraph 3(9) above shall apply for the purposes of sub-paragraph (9) above as it applies for the purposes of the application as mentioned in paragraph 3(9) above of the formula so mentioned; and paragraph 3(10) above shall apply for the purposes of this paragraph in relation to sub-paragraph (10) above as it applies for the purposes of paragraph 3 above in relation to sub-paragraph (7) of that paragraph.
12
In this paragraph references to an amount allowed as a deduction of relevant allowable expenditure are references to the amount falling to be so allowed in accordance with section 38(1)(a) and (b) and (so far as applicable) section 42, together with the indexed rises in the items comprised in that expenditure or, as the case may be, in the appropriate portions of those items.
13
In sub-paragraph (12) above “indexed rise” has the same meaning as it has by virtue of paragraph 2(9) above in relation to the application for the purposes of paragraph 3 above of the formula set out in paragraph 2(1) above.
14
Nothing in this paragraph shall affect the operation of the rules contained in paragraph 3 above for determining, for any purposes other than those of sub-paragraph (7) above, how much of any pooled asset at any time consists of a part which is referable to pre-entry assets.
Alternative calculation by reference to market value
5
1
Subject to paragraph 4(5) above and the following provisions of this paragraph, if—
a
an allowable loss accrues on the disposal by any company of any pre-entry asset; and
b
that company makes an election for the purposes of this paragraph in relation to that loss,
the pre-entry proportion of that loss (instead of being the amount determined under the preceding provisions of this Schedule) shall be whichever is the smaller of the amounts mentioned in sub-paragraph (2) below.
2
Those amounts are—
a
the amount of any loss which would have accrued if that asset had been disposed of at the relevant time at its market value at that time; and
b
the amount of the loss accruing on the disposal mentioned in sub-paragraph (1)(a) above.
3
Where no loss would have accrued on the disposal assumed for the purposes of sub-paragraph (2)(a) above, the loss accruing on the disposal mentioned in sub-paragraph (1)(a) above shall be deemed not to have a pre-entry proportion.
4
Sub-paragraph (5) below shall apply where—
a
an election is made for the purposes of this paragraph in relation to any loss accruing on the disposal (“the real disposal”) of the whole or any part of a pooled asset; and
b
the case is one in which (but for the election) paragraph 3 above would apply for determining the pre-entry proportion of a loss accruing on the real disposal.
5
In a case falling within sub-paragraph (4) above, this paragraph shall have effect as if the amount specified in sub-paragraph (2)(a) above were to be calculated—
a
on the basis that the disposal which is assumed to have taken place was a disposal of all the assets falling within sub-paragraph (6) below; and
b
by apportioning any loss that would have accrued on that disposal between—
i
such of the assets falling within paragraph (6) below as are assets to which the real disposal is treated as relating, and
ii
the remainder of the assets so falling,
according to the proportions of any pooled asset whose disposal is assumed which would have been, respectively, represented by assets mentioned in sub-paragraph (i) above and by assets mentioned in sub-paragraph (ii) above,
and where assets falling within sub-paragraph (6) below have different relevant times there shall be assumed to have been a different disposal at each of those times.
6
Assets fall within this sub-paragraph if—
a
immediately before the time which is the relevant time in relation to those assets, they were comprised in a pooled asset which consisted of or included assets which fall to be treated for the purposes of paragraph 3 above as—
i
comprised in the part of the pooled asset referable to pre-entry assets; and
ii
disposed of on the real disposal;
b
they were also comprised in such a pooled asset immediately after that time; and
c
the pooled asset in which they were so comprised immediately after that time was held by a member of the relevant group.
7
Where—
a
an election is made under paragraph 4(6) above requiring the determination by reference to this paragraph of the alternative pre-entry loss accruing on the disposal of any assets comprised in a pooled asset, and
b
in pursuance of that election any amount of the loss that would have accrued on an assumed disposal is apportioned in accordance with sub-paragraph (5) above to assets (“the relevant assets”) which—
i
are treated for the purposes of that determination as assets to which the disposal related, but
ii
otherwise continue after the disposal to be treated as incorporated in the part of that pooled asset which is referable to pre-entry assets,
then, on any further application of this paragraph for the purpose of determining the pre-entry proportion of the loss accruing on a subsequent disposal of assets comprised in that pooled asset, that amount (without being apportioned elsewhere) shall be deducted from so much of the loss accruing on the same assumed disposal as, apart from the deduction, would be apportioned to the relevant assets on that further application of this paragraph.
8
An election under this paragraph with respect to any loss shall be made by the company in question by notice to the inspector given within—
a
the period of two years beginning with the end of the accounting period of that company in which the disposal is made on which the loss accrues; or
b
such longer period as the Board may by notice allow.
Restrictions on the deduction of pre-entry losses
6
1
In the calculation of the amount to be included in respect of chargeable gains in any company’s total profits for any accounting period—
a
if in that period there is any chargeable gain from which the whole or any part of any pre-entry loss accruing in that period is deductible in accordance with paragraph 7 below, the loss or, as the case may be, that part of it shall be deducted from that gain;
b
if, after all such deductions as may be made under paragraph (a) above have been made, there is in that period any chargeable gain from which the whole or any part of any pre-entry loss carried forward from a previous accounting period is deductible in accordance with paragraph 7 below, the loss or, as the case may be, that part of it shall be deducted from that gain;
c
the total chargeable gains (if any) remaining after the making of all such deductions as may be made under paragraph (a) or (b) above shall be subject to deductions in accordance with section 8(1) in respect of any allowable losses that are not pre-entry losses; and
d
any pre-entry loss which has not been the subject of a deduction under paragraph (a) or (b) above (as well as any other losses falling to be carried forward under section 8(1)) shall be carried forward to the following accounting period of that company.
2
Subject to sub-paragraph (1) above, any question as to which or what part of any pre-entry loss has been deducted from any particular chargeable gain shall be decided—
a
where it falls to be decided in respect of the setting of losses against gains in any accounting period ending before 16th March 1993 as if—
i
pre-entry losses accruing in any such period had been set against chargeable gains before any other allowable losses accruing in that period were set against those gains;
ii
pre-entry losses carried forward to any such period had been set against chargeable gains before any other allowable losses carried forward to that period were set against those gains; and
iii
subject to sub-paragraphs (i) and (ii) above, the pre-entry losses carried forward to any accounting period ending on or after 16th March 1993 were identified with such losses as may be determined in accordance with such elections as may be made by the company to which they accrued;
and
b
in any other case, in accordance with such elections as may be made by the company to which the loss accrued;
and any question as to which or what part of any pre-entry loss has been carried forward from one accounting period to another shall be decided accordingly.
3
An election by any company under this paragraph shall be made by notice to the inspector given—
a
in the case of an election under sub-paragraph (2)(a)(iii) above, before the end of the period of two years beginning with the end of the accounting period of that company which was current on 16th March 1993; and
b
in the case of an election under sub-paragraph (2)(b) above, before the end of the period of two years beginning with the end of the accounting period of that company in which the gain in question accrued.
4
For the purposes of this Schedule where any matter falls to be determined under this paragraph by reference to an election but no election is made, it shall be assumed, so far as consistent with any elections that have been made—
a
that losses are set against gains in the order in which the losses accrued; and
b
that the gains against which they are set are also determined according to the order in which they accrued with losses being set against earlier gains before they are set against later ones.
Gains from which pre-entry losses are to be deductible
7
1
A pre-entry loss that accrued to a company before it became a member of the relevant group shall be deductible from a chargeable gain accruing to that company if the gain is one accruing—
a
on a disposal made by that company before the date on which it became a member of the relevant group (“the entry date”);
b
on the disposal of an asset which was held by that company immediately before the entry date; or
c
on the disposal of any asset which—
i
was acquired by that company on or after the entry date from a person who was not a member of the relevant group at the time of the acquisition; and
ii
since its acquisition from that person has not been used or held for any purposes other than those of a trade which was being carried on by that company at the time immediately before the entry date and which continued to be carried on by that company until the disposal.
2
The pre-entry proportion of an allowable loss accruing to any company on the disposal of a pre-entry asset shall be deductible from a chargeable gain accruing to that company if—
a
the gain is one accruing on a disposal made, before the date on which it became a member of the relevant group, by that company and that company is the one (“the initial company”) by reference to which the asset on the disposal of which the loss accrues is a pre-entry asset;
b
the pre-entry asset and the asset on the disposal of which the gain accrues were each held by the same company at a time immediately before it became a member of the relevant group; or
c
the gain is one accruing on the disposal of an asset which—
i
was acquired by the initial company (whether before or after it became a member of the relevant group) from a person who, at the time of the acquisition, was not a member of that group; and
ii
since its acquisition from that person has not been used or held for any purposes other than those of a trade which was being carried on, immediately before it became a member of the relevant group, by the initial company and which continued to be carried on by the initial company until the disposal.
3
Where two or more companies become members of the relevant group at the same time and those companies were all members of the same group of companies immediately before they became members of the relevant group, then, without prejudice to paragraph 9 below—
a
an asset shall be treated for the purposes of sub-paragraph (1)(b) above as held, immediately before it became a member of the relevant group, by the company to which the pre-entry loss in question accrued if that company is one of those companies and the asset was in fact so held by another of those companies;
b
two or more assets shall be treated for the purposes of sub-paragraph (2)(b) above as assets held by the same company immediately before it became a member of the relevant group wherever they would be so treated if all those companies were treated as a single company; and
c
the acquisition of an asset shall be treated for the purposes of sub-paragraphs (1)(c) and (2)(c) above as an acquisition by the company to which the pre-entry loss in question accrued if that company is one of those companies and the assset was in fact acquired (whether before or after they became members of the relevant group) by another of those companies.
4
Paragraph 1(4) above shall apply for determining for the purposes of this paragraph whether an asset on the disposal of which a chargeable gain accrues was held at the time when a company became a member of the relevant group as it applies for determining whether that asset is a pre-entry asset in relation to that group by reference to that company.
5
Subject to sub-paragraph (6) below, where a gain accrues on the disposal of the whole or any part of—
a
any asset treated as a single asset but comprising assets only some of which were held at the time mentioned in paragraph (b) of sub-paragraph (1) or (2) above, or
b
an asset which is treated as held at that time by virtue of a provision requiring an asset which was not held at that time to be treated as the same as an asset which was so held,
a pre-entry loss shall be deductible by virtue of paragraph (b) of sub-paragraph (1) or (2) above from the amount of that gain to the extent only of such proportion of that gain as is attributable to assets held at that time or, as the case may be, represents the gain that would have accrued on the asset so held.
6
Where—
a
a chargeable gain accrues by virtue of subsection (10) of section 116 on the disposal of a qualifying corporate bond,
b
that bond was not held as required by paragraph (b) of sub-paragraph (1) or (2) above at the time mentioned in that paragraph, and
c
the whole or any part of the asset which is the old asset for the purposes of that section was so held,
the question whether that gain is one accruing on the disposal of an asset the whole or any part of which was held by a particular company at that time shall be determined for the purposes of this paragraph as if the bond were deemed to have been so held to the same extent as the old asset.
Change of a company’s nature
8
1
If—
a
within any period of three years, a company becomes a member of a group of companies and there is (either earlier or later in that period, or at the same time) a major change in the nature or conduct of a trade carried on by that company, or
b
at any time after the scale of the activities in a trade carried on by a company has become small or negligible, and before any considerable revival of the trade, that company becomes a member of a group of companies,
the trade carried on before that change, or which has become small or negligible, shall be disregarded for the purposes of paragraph 7(1)(c) and (2)(c) above in relation to any time before the company became a member of the group in question.
2
In sub-paragraph (1) above the reference to a major change in the nature or conduct of a trade includes a reference to—
a
a major change in the type of property dealt in, or services or facilities provided, in the trade; or
b
a major change in customers, markets or outlets of the trade;
and this paragraph shall apply even if the change is the result of a gradual process which began outside the period of three years mentioned in sub-paragraph (1)(a) above.
3
Where the operation of this paragraph depends on circumstances or events at a time after the company becomes a member of any group of companies (but not more than three years after), an assessment to give effect to this paragraph shall not be out of time if made within six years from that time or the latest such time.
Identification of “the relevant group” and application of Schedule to every connected group
9
1
This paragraph shall apply where there is more than one group of companies which would be the relevant group in relation to any company.
2
Where any loss has accrued on the disposal by any company of any asset, this Schedule shall not apply by reference to any group of companies in relation to any loss accruing on that disposal unless—
a
that group is a group in relation to which that loss is a pre-entry loss by virtue of paragraph 1(2)(a) above or, if there is more than one such group, the one of which that company most recently became a member;
b
that group, in a case where there is no group falling within paragraph (a) above, is either—
i
the group of which that company is a member at the time of the disposal, or
ii
if it is not a member of a group of companies at that time, the group of which that company was last a member before that time;
c
that group, in a case where there is a group falling within paragraph (a) above, is a group of which that company was a member at any time in the accounting period of that company in which it became a member of the group falling within that paragraph;
d
that group is a group the principal company of which is or has been, or has been under the control of—
i
the company by which the disposal is made, or
ii
another company which is or has been a member of a group by reference to which this Schedule applies in relation to the loss in question by virtue of paragraph (a), (b) or (c) above;
or
e
that group is a group of which either—
i
the principal company of a group by reference to which this Schedule so applies, or
ii
a company which has had that principal company under its control,
is or has been a member;
and sub-paragraphs (3) to (5) below shall apply in the case of any loss accruing on the disposal of any asset where, by virtue of this sub-paragraph, there are two or more groups (“connected groups”) by reference to which this Schedule applies.
3
This Schedule shall apply separately in relation to each of the connected groups (so far as they are not groups in relation to which the loss is a pre-entry loss by virtue of paragraph 1(2)(a) above) for the purpose of—
a
determining whether the loss on the disposal of any asset is a loss on the disposal of a pre-entry asset; and
b
calculating the pre-entry proportion of that loss.
4
Subject to sub-paragraph (5) below, paragraph 6 above shall have effect—
a
as if the pre-entry proportion of any loss accruing on the disposal of an asset which is a pre-entry asset in the case of more than one of the connected groups were the largest pre-entry proportion of that loss calculated in accordance with sub-paragraph (3) above; and
b
so that, where the loss accruing on the disposal of any asset is a pre-entry loss by virtue of paragraph 1(2)(a) above in the case of any of the connected groups, that loss shall be the pre-entry loss for the purposes of paragraph 6 above, and not any amount which is the pre-entry proportion of that loss in relation to any of the other groups.
5
Where, on the separate application of this Schedule in the case of each of the groups by reference to which this Schedule applies, there is, in the case of the disposal of any asset, a pre-entry loss by reference to each of two or more of the connected groups, no amount in respect of the loss accruing on the disposal shall be deductible under paragraph 7 above from any chargeable gain if any of the connected groups is a group in the case of which, on separate applications of that paragraph in relation to each group, the amount deductible from that gain in respect of that loss is nil.
6
Notwithstanding that the principal company of one group (“the first group”) has become a member of another (“the second group”), those two groups shall not by virtue of section 170(10) be treated for the purposes of this paragraph as the same group if the principal company of the first group was under the control, immediately before it became a member of the second group, of a company which at that time was already a member of the second group.
7
Where, in the case of the disposal of any asset—
a
two or more groups which but for sub-paragraph (6) above would be treated as the same group are treated as separate groups by virtue of that sub-paragraph; and
b
one of those groups is a group of which either—
i
the principal company of a group by reference to which this Schedule applies by virtue of sub-paragraph (2)(a), (b) or (c) above in relation to any loss accruing on the disposal, or
ii
a company which has had that principal company under its control,
is or has been a member,
this paragraph shall have effect as if that principal company had been a member of each of the groups mentioned in paragraph (a) above.
Appropriations to stock in trade
10
Where, but for an election under subsection (3) of section 161, there would be deemed to have been a disposal at any time by any company of any asset—
a
the amount by which the market value of the asset may be treated as increased in pursuance of that election shall not include the amount of any pre-entry loss that would have accrued on that disposal; and
b
this Schedule shall have effect as if the pre-entry loss of the last mentioned amount had accrued to that company at that time.
Continuity provisions
11
1
This paragraph applies where provision has been made by or under any enactment (“the transfer legislation”) for the transfer of property, rights and liabilities to any person from—
a
a body established by or under any enactment for the purpose, in the exercise of statutory functions, of carrying on any undertaking or industrial or other activity in the public sector or of exercising any other statutory functions;
b
a subsidiary of such a body; or
c
a company wholly owned by the Crown.
2
A loss shall not be a pre-entry loss for the purposes of this Schedule in relation to any company to whom a transfer has been made by or under the transfer legislation if that loss—
a
accrued to the person from whom the transfer has been made; and
b
falls to be treated, in accordance with any enactment made in relation to transfers by or under that legislation, as a loss accruing to that company.
3
For the purposes of this Schedule where a company became a member of the relevant group by virtue of the transfer by or under the transfer legislation of any shares in or other securities of that company or any other company—
a
a loss that accrued to that company before it so became a member of that group shall not be a pre-entry loss in relation to that group; and
b
no asset held by that company when it so became a member of that group shall by virtue of that fact be a pre-entry asset.
4
For the purposes of this paragraph a company shall be regarded as wholly owned by the Crown if it is—
a
a company limited by shares in which there are no issued shares held otherwise than by, or by a nominee of, the Treasury, a Minister of the Crown, a Northern Ireland department or another company wholly owned by the Crown; or
b
a company limited by guarantee of which no person other than the Treasury, a Minister of the Crown or a Northern Ireland department, or a nominee of the Treasury, a Minister of the Crown or a Northern Ireland department, is a member.
5
In this paragraph—
“enactment” includes any provision of any Northern Ireland legislation, within the meaning of section 24 of the M86Interpretation Act 1978; and
“statutory functions” means functions under any enactment, under any subordinate legislation, within the meaning of the Interpretation Act 1978, or under any statutory rules, within the meaning of the M87Statutory Rules (Northern Ireland) Order 1979.
Companies changing groups on certain transfers of shares etc.
12
For the purposes of this Schedule, and without prejudice to paragraph 11 above, where—
a
a company which is a member of a group of companies becomes at any time a member of another group of companies as the result of a disposal of shares in or other securities of that company or any other company; and
b
that disposal is one on which, by virtue of any enactment specified in section 35(3)(d), neither a gain nor a loss would accrue,
this Schedule shall have effect in relation to the losses that accrued to that company before that time and the assets held by that company at that time as if any time when it was a member of the first group were included in the period during which it is treated as having been a member of the second group.

SCHEDULE 9 OVERSEAS LIFE INSURANCE COMPANIES: AMENDMENT OF TAXES ACT 1988 ETC

Section 97.

Insertion of Schedule 19AC into the Taxes Act 1988

1

The following Schedule shall be inserted after Schedule 19AB to the Taxes Act 1988—

SCHEDULE 19AC Modification of Act in relation to overseas life insurance companies
Section 444B.
1
In its application to an overseas life insurance company this Act shall have effect with the following modifications.
2
1
In section 6(4), the words “and section 444D”shall be treated as inserted after the words “Part XI”.
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
3
1
In subsection (2) of section 11, the following paragraphs shall be treated as inserted after paragraph (a)—
“
where section 11B applies for an accounting period, any trading or other income arising in that period from assets which by virtue of that section are attributed to the branch or agency at the time the income arises (but so that this paragraph shall not include distributions received from companies resident in the United Kingdom); and
ab
where section 11C applies for an accounting period, any trading or other income falling within section 11C(2) in that period (but so that this paragraph shall not include distributions received from companies resident in the United Kingdom); and”.
2
The following shall be treated as inserted after paragraph (b) of that subsection “and
c
chargeable gains accruing to the company on the disposal of assets of the company’s long term business fund situated outside the United Kingdom and used or held for the purposes of the branch or agency immediately before the disposal; and
d
where section 11B applies for an accounting period, chargeable gains accruing to the company in that period on the disposal of assets which by virtue of that section are attributed to the branch or agency immediately before the disposal; and
e
where section 11C applies for an accounting period, chargeable gains accruing to the company in that period by virtue of section 11C(3).”
3
The following subsection shall be treated as inserted after that subsection—
“
For the purposes of subsection (2)(c) above—
a
section 275 of the 1992 Act (location of assets) shall apply as it applies for the purposes of that Act;
b
“long term business fundhas the meaning given by section 431(2).”
4
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
4
1
The following sections shall be treated as inserted after section 11—
11A “Overseas life insurance companies: interpretation of sections 11B and 11C.
1
For the purposes of this section and sections 11B and 11C—
a
an asset is at any time a section 11(2)(b) asset if, were it to be disposed of at that time, any chargeable gains accruing to the company on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 11(2)(b);
b
an asset is at any time a section 11(2)(c) asset if, were it to be disposed of at that time, any chargeable gains accruing to the company on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 11(2)(c);
c
relevant contracts and policies are contracts and policies the effecting of which constitutes the carrying on of life assurance business;
and in this section and those sections any expression to which a meaning is given by section 431(2) has that meaning.
2
For the purposes only of subsection (1)(a) and (b) above any enactment which—
a
limits any chargeable gain on the disposal of an asset;
b
treats any gain on the disposal of an asset as not being a chargeable gain; or
c
treats any disposal of an asset as not giving rise to a chargeable gain,
shall be disregarded.
3
For the purposes of sections 11B and 11C—
a
the notional value at any time is the value at that time of the assets which the branch or agency would reasonably be expected to hold at that time in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency;
b
the section 11B value at any time is the value at that time of such of the section 11(2)(b) and section 11(2)(c) assets as are assets held at that time in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency;
c
the section 11C value at any time is the value at that time of—
i
such of the section 11(2)(b) and section 11(2)(c) assets as are assets held at that time in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency; and
ii
the assets which by virtue of section 11B are attributed to the branch or agency at that time;
d
a relevant fund is a fund of assets of the company (wherever those assets may be situated) any part of which is held in consequence of any relevant contracts, and any relevant policies, which at any time in the accounting period concerned are carried out at the branch or agency.
4
In applying subsection (3)(a) above as regards a particular time, it shall be assumed that—
a
at that time the branch or agency is a company resident in the United Kingdom, undertaking the activities it then actually undertakes;
b
the terms of any dealings between the branch or agency and another part of the company are not (or not necessarily) their actual terms but are such as would be the terms if the branch or agency and the other part of the company were independent persons dealing at arm’s length.
11B Overseas life insurance companies: attribution of assets.
1
This section applies for an accounting period where the mean of the notional value at the beginning and end of the accounting period exceeds the mean of the section 11B value at those times.
2
Where this section applies for an accounting period, assets shall be attributed to the branch or agency in that period in accordance with the following provisions of this section.
3
There shall be attributed to the branch or agency in the accounting period such of the qualifying assets of the company as (having regard to the excess mentioned in subsection (1) above) it is just and reasonable to attribute to the branch or agency.
4
For the purposes of subsection (3) above—
a
where an asset is a qualifying asset for the whole of the accounting period it may, subject to paragraphs (c) and (d) below, be attributed to the branch or the agency for the whole or any part or parts of that period;
b
where an asset is a qualifying asset for any portion of the accounting period it may, subject to paragraphs (c) and (d) below, be attributed to the branch or agency for the whole or any part or parts of that portion;
c
an asset shall not be attributed to the branch or agency for any period of time during which it is a section 11(2)(b) or section 11(2)(c) asset;
d
an asset shall not be attributed to the branch or agency at any particular time unless it is held in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency.
5
An asset of the company is a qualifying asset at any time if it is an asset of one or more of the following descriptions, that is to say—
a
an asset which, in relation to any relevant contracts and any relevant policies which at that time are carried out at the branch or agency, is a linked asset within the meaning given by section 431(2);
b
an asset which at that time is maintained in the United Kingdom as a result of a requirement imposed under section 39 of the M88Insurance Companies Act 1982, other than an asset not treated as so maintained by virtue of a direction under subsection (2) of that section;
c
an asset which at that time is treated for the purposes of any such requirement as is mentioned in paragraph (b) above as maintained in the United Kingdom by virtue of a direction under subsection (2) of that section;
d
an asset which at that time is held in respect of the business carried on by the branch or agency as a result of a condition of an order under section 68 of the Insurance Companies Act 1982;
e
an asset which at that time is held in a fund which the company is required to maintain under the prudential legislation of a territory outside the United Kingdom in respect of the business carried on by the branch or agency;
f
an asset which is identified in tax returns submitted to a taxing authority of a territory outside the United Kingdom as an asset which at that time is wholly referable to the business carried on by the branch or agency.
11C Overseas life insurance companies: additional income and gains.
1
This section applies for an accounting period where the mean of the notional value at the beginning and end of the accounting period exceeds the mean of the section 11C value at those times.
2
Where this section applies for an accounting period, the income which falls within this subsection in that period shall be the specified amount of each item of relevant income arising in that period from any assets of the relevant fund.
3
Where this section applies for an accounting period, the chargeable gains accruing to the company in that period by virtue of this subsection shall be the specified amount of each relevant gain accruing to the company in that period on the disposal of any assets of the relevant fund.
4
For the purposes of this section—
a
relevant income is income other than income which falls within section 11(2)(a) or (aa);
b
a relevant gain is a gain (other than a chargeable gain which falls within section 11(2)(b), (c) or (d)) which would be a chargeable gain if the company were resident in the United Kingdom.
5
For the purposes of this section the specified amount of an item of relevant income arising in the accounting period from any assets of the relevant fund shall be determined by the formula—
$SI = Ix \frac{(NV - CV)}{RF}$
6
For the purposes of this section the specified amount of a relevant gain accruing to the company in the accounting period on the disposal of any assets of the relevant fund shall be determined by the formula—
$SG = Gx \frac{(NV - CV)}{RF}$
7
In subsections (5) and (6) above—
SI is the specified amount of an item of relevant income arising in the accounting period from any assets of the relevant fund;
I is an item of relevant income arising in that period from any assets of the relevant fund;
NV is the mean of the notional value at the beginning and end of that period;
CV is the mean of the section 11C value at the beginning and end of that period;
RF (subject to subsection (8) below) is the mean of the value of the relevant fund at the beginning and end of that period;
SG is the specified amount of a relevant gain accruing to the company in that period on the disposal of any assets of the relevant fund;
G is a relevant gain accruing to the company in that period on the disposal of any assets of the relevant fund.
8
Where the assets of the relevant fund at the beginning or end of the accounting period include—
a
section 11(2)(b) or section 11(2)(c) assets; or
b
assets which by virtue of section 11B are attributed to the branch or agency,
the value at that time of the relevant fund for the purposes of the definition of RF in subsection (7) above shall be reduced by the value at that time of those assets.
9
Where in the accounting period the company has more than one relevant fund—
a
in the definition of RF in subsection (7) above, the reference to the value of the relevant fund shall be treated as a reference to the value of the relevant funds; and
b
any other reference in this section to the relevant fund shall be treated as a reference to the relevant funds.”
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
5
1
In section 76, the following subsections shall be treated as inserted after subsection (6)—
“
In its application to an overseas life insurance company this section shall have effect as if—
a
the reference in subsection (1)(ca) to any reinsurance commission were to any such reinsurance commission concerned as is attributable to the branch or agency in the United Kingdom through which the company carries on life assurance business;
b
the references in subsection (1) to income and gains were to such income and gains concerned as are so attributable.
6B
In their application to an overseas life insurance company section 75(5) and subsections (2) and (3)(b) above shall have effect as if for “242” there were substituted “444D”.”
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
6
1
In subsection (2) of section 431, the following definition shall be treated as substituted for the definition of “investment reserve”—
“ “investment reserve”, in relation to an overseas life insurance company, means the excess of the value of the relevant assets over the relevant liabilities, and for the purposes of this definition—
a
relevant assets are such assets of the company’s long term business fund as are—
i
section 11(2)(b) assets;
ii
section 11(2)(c) assets; or
iii
assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business; and
b
relevant liabilities are such liabilities of the long term business as are attributable to the branch or agency;
and in a case where section 11C applies, the value of the relevant assets shall be increased by the amount by which the notional value exceeds the section 11C value; and any expression used in this definition to which a meaning is given by section 11A has that meaning;.”
2
In that subsection, the following definition shall be treated as substituted for the definition of “liabilities”—
“ “liabilities”, where the company concerned is an overseas life insurance company, does not include excluded liabilities and (subject to that) means—
a
liabilities as estimated for the purposes of the company’s periodical return, or
b
in the case of liabilities not estimated for the purposes of such a periodical return, liabilities as estimated for the purposes of any return equivalent to a periodical return and required to be made by the company under the law of the territory in which the company is resident, or
c
in the case of liabilities not estimated for the purposes of such a periodical return or equivalent return, liabilities as found from the company’s records;
and excluded liabilities are any liabilities that have fallen due or been reinsured and any not arising under or in connection with policies or contracts effected as part of the company’s insurance business;”.
3
In that subsection, the following words shall be treated as inserted after paragraph (b) of the definition of “overseas life assurance business”—
“but none of the life assurance business of an overseas life insurance company shall be treated as overseas life assurance business;”.
4
In that subsection, at the end of the definition of “overseas life assurance fund” the following words shall be treated as inserted , “but that Schedule shall not apply in the case of an overseas life insurance company”.
5
In that subsection, the following definition shall be treated as substituted for the definition of “value” —
“ “value”, in relation to assets and where the company concerned is an overseas life insurance company, means—
a
their value as taken into account for the purposes of the company’s periodical return, or
b
where their value is not taken into account for the purposes of such a periodical return, their value as taken into account for the purposes of any return equivalent to a periodical return and required to be made by the company under the law of the territory in which the company is resident, or
c
where their value is not taken into account for the purposes of such a periodical return or equivalent return, their value as found from the company’s records;
and the reference in paragraph (c) above to the value of assets as found from the company’s records is a reference to the market value as so found or, where applicable, the current value (within the meaning of the Directive of the Council of the European Communities dated 19th December 1991 No.91/674/EEC (directive on the annual accounts and consolidated accounts of insurance undertakings)) as so found;”.
6
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
7
1
In section 432A, the following subsection shall be treated as inserted after subsection (2)—
“
In the case of an overseas life insurance company—
a
any income which falls within section 11(2)(aa) or (ab); and
b
any chargeable gains or allowable losses which fall within section 11(2)(d) or (e),
shall be referable to life assurance business.”
2
The following subsection shall be treated as inserted after subsection (9) of that section—
“
In its application to an overseas life insurance company this section shall have effect as if—
a
the references in subsections (3), (6) and (8) to assets were to such of the assets concerned as are—
i
section 11(2)(b) assets;
ii
section 11(2)(c) assets; or
iii
assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;
b
the references in subsections (6) and (8) to liabilities were to such of the liabilities concerned as are attributable to the branch or agency;
and any expression used in this subsection to which a meaning is given by section 11A has that meaning.”
3
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
8
1
In subsection (1) of section 432B, the words “or treated as brought into account by virtue of paragraph 1 of Schedule 8A to the Finance Act 1989” shall be treated as inserted after the word “1982”.
2
The following words shall be treated as inserted at the end of subsection (2) of that section“; but this subsection shall not apply for a period of account in relation to which paragraph 1(6), (7) or (8) of Schedule 8A to the Finance Act 1989 applies.”
3
The following subsection shall be treated as inserted after subsection (3) of that section—
“
In their application to an overseas life insurance company—
a
subsection (3) above shall have effect as if after “with which an account is concerned” there were inserted “or in respect of which items are treated as brought into account by virtue of paragraph 1 of Schedule 8A to the Finance Act 1989”; and
b
that subsection and sections 432C to 432E shall have effect as if the reference to relevant business were to relevant business of the branch or agency in the United Kingdom through which the company carries on life assurance business.”
4
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
9
1
In section 434, the following subsection shall be treated as inserted after subsection (1)—
“
Nothing in paragraph (a), (aa) or (ab) of section 11(2) shall prevent UK distribution income of an overseas life insurance company from being taken into account as part of the profits in computing trading income in accordance with the provisions applicable to Case I of Schedule D.”
2
In subsection (2) of that section, the words “UK distribution income of an overseas life insurance company” shall be treated as substituted for the words “franked investment income of a company so resident”.
3
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
10
1
In section 438, the following subsection shall be treated as inserted after subsection (3)—
“
Subject to subsection (6) below, nothing in paragraph (a), (aa) or (ab) of section 11(2) shall prevent UK distribution income of an overseas life insurance company from being taken into account as part of the profits in computing under section 436 income from pension business.”
2
In subsections (6) and (6A) of that section, the words “UK distribution income” shall be treated as substituted for the words “franked investment income” in each place where they occur.
3
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
11
1
In subsection (2) of section 440A, in paragraphs (a) and (b) the words “UK securities” shall be treated as substituted for the word “securities” in the first place where it occurs in each paragraph.
2
Paragraph (c) of that subsection shall be treated as omitted.
3
In paragraphs (d) and (e) of that subsection, the words “UK securities”shall be treated as substituted for the word “securities”
4
The following paragraphs shall be treated as inserted at the end of that subsection—
“
the section 11C securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs; and
g
the non-UK securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.”
5
The following subsection shall be treated as inserted after subsection (6) of that section—
“
For the purposes of this section—
a
UK securities are such securities as are—
i
section 11(2)(b) assets;
ii
section 11(2)(c) assets; or
iii
assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;
b
section 11C securities are securities—
i
(in a case where section 11C (other than subsection (9)) applies) which are assets of the relevant fund, other than UK securities; or
ii
(in a case where that section including that subsection applies) which are assets of the relevant funds, other than UK securities;
c
non-UK securities are securities which are not UK securities or section 11C securities;
and any expression used in this subsection to which a meaning is given by section 11A has that meaning.”
6
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
12
1
In paragraph A of section 704, in sub-paragraph (e) the words “UK distribution income under section 444D”shall be treated as substituted for the words “a surplus of franked investment income under section 242 or 243”.
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
13
1
In subsection (2) of section 794, the following shall be treated as inserted after paragraph (c) “and
d
for tax paid under the law of any territory in respect of the UK branch income or UK branch gains of an overseas life insurance company for the chargeable period in question but only where the following conditions are fulfilled, namely—
i
that the territory under whose law the tax was paid is not one in which the company is liable to tax by reason of domicile, residence or place of management; and
ii
that the amount of relief claimed does not exceed (or is by the claim expressly limited to) that which would have been available if the branch or agency concerned had been an insurance company resident in the United Kingdom and the income or gains in question had been income or gains of that company. ”
2
The following subsections shall be treated as inserted after that subsection—
“
For the purposes of subsection (2)(d) above—
a
“UK branch income”, in relation to an overseas life insurance company, means such of its income falling within section 11(2)(a), (aa) or (ab) as arises from assets of its long term business fund;
b
“UK branch gains”, in relation to an overseas life insurance company, means such of its chargeable gains falling within section 11(2)(b), (c), (d) or (e) as accrue on the disposal of assets of its long term business fund;
c
“long term business fund” has the meaning given by section 431(2).
4
In relation to any item of income falling within section 11(2)(ab), or any chargeable gain falling within section 11(2)(e), the reference in subsection (2)(d) above to tax paid shall be construed as a reference to that part of the tax paid which bears to the whole of the tax paid the same proportion as that item of income, or that chargeable gain, bears to the relevant income, or relevant gain, by reference to which that item of income, or that chargeable gain, is, by virtue of section 11C, calculated; and, in relation to any such item of income or any such chargeable gain, the reference in section 790(4) to tax paid shall be construed accordingly.”
3
This paragraph shall apply in relation to chargeable periods beginning after 31st December 1992.
14
1
In subsection (1) of section 811, the words “subsections (1A) and (2)”shall be treated as substituted for the words “subsection (2)”.
2
The following subsection shall be treated as inserted after that subsection—
“
In relation to any item of income falling within section 11(2)(ab), the reference in subsection (1) above to any sum which has been paid in respect of tax on that income shall be construed as a reference to the part of that sum which bears to the whole of that sum the same proportion as that item of income bears to the relevant income by reference to which that item of income is, by virtue of section 11C, calculated.”
3
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
15
1
In paragraph 1(8) of Schedule 19AB, the words “UK distribution income” shall be treated as substituted for the words “franked investment income” in each place where they occur.
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.

Deemed disposal and reacquisition

2

1

Where immediately before the relevant day the company referred to in section 11(2) of the Taxes Act 1988 is an overseas life insurance company, then, subject to sub-paragraph (4) below, it shall be deemed for the purposes of corporation tax on chargeable gains—

a

to have disposed immediately before the relevant day of every asset to which sub-paragraph (2) below applies, and

b

immediately to have reacquired every such asset,

at its market value at the time of the deemed disposal.

2

This sub-paragraph applies to any asset which—

a

was held by the company immediately before the relevant day, and

b

at the beginning of that day is a chargeable asset in relation to the company.

3

For the purposes of sub-paragraph (2) above an asset is at the beginning of the relevant day a chargeable asset in relation to the company if, were it to be disposed of at that time, any chargeable gains accruing to the company on the disposal would form part of its chargeable profits by virtue of paragraph (c), (d) or (e) of section 11(2) of the Taxes Act 1988 (as that paragraph has effect by virtue of Schedule 19AC to that Act).

4

Sub-paragraph (1) above shall not have effect in applying paragraph 2(2) of Schedule 28 to that Act in the case of a disposal by the company.

5

For the purposes of this paragraph the relevant day is the first day of the company’s first accounting period to begin after 31st December 1992.

SCHEDULE 10 Overseas life insurance companies: amendment of Finance Act 1989

Section 101.

Annotations:

Marginal Citations

M89

1989 c.26.

The following Schedule shall be inserted after Schedule 8 to the M89Finance Act 1989—

SCHEDULE 8A Modification of sections 83 and 89 in relation to overseas life insurance companies
Section 89A.
1
1
In its application to an overseas life insurance company (as defined in section 431(2) of the Taxes Act 1988) section 83 of this Act shall have effect with the following modifications; and in those modifications any reference to the Taxes Act 1988 is a reference to that Act as it has effect in relation to such a company by virtue of Schedule 19AC to that Act.
2
The reference in subsection (1)(a) to investment income shall be construed as a reference to such of the income concerned as is attributable to the branch or agency in the United Kingdom through which the company carries on life assurance business.
3
The reference in subsection (1)(b) to assets shall be construed as a reference to such of the assets concerned—
a
as are—
i
section 11(2)(b) assets;
ii
section 11(2)(c) assets; or
iii
assets which by virtue of section 11B of the Taxes Act 1988 are attributed to the branch or agency; or
b
as are assets—
i
(in a case where section 11C of that Act (other than subsection (9)) applies) of the relevant fund, or
ii
(in a case where that section including that subsection applies) of the relevant funds,
other than assets which fall within paragraph (a) above.
4
In determining for the purposes of subsection (1) whether there has been any increase or reduction in the value (whether realised or not) of assets—
a
no regard shall be had to any period of time during which an asset held by the company does not fall within paragraph (a) or (b) of sub-paragraph (3) above; and
b
in the case of an asset which falls within paragraph (b) of that sub-paragraph, only the specified portion of any increase or reduction in the value of the asset shall be taken into account.
5
For the purposes of this paragraph—
a
the specified portion of any increase or reduction in the value of an asset is found by applying to that increase or reduction the same fraction as would, by virtue of section 11C of the Taxes Act 1988, be applied to any relevant gain accruing to the company on the disposal of the asset; and
b
any expression to which a meaning is given by section 11A of that Act has that meaning.
6
Where for a period of account any investment income referred to in subsection (1) is not brought into account within the meaning given by subsection (2) it shall be treated as brought into account for the period if it arises in the period.
7
Where for a period of account any increase in value referred to in subsection (1) is not brought into account within the meaning given by subsection (2) it shall be treated as brought into account for the period if it is shown in the company’s records as available to fund one or both of the following for the period, namely, bonuses to policy holders and dividends to shareholders.
8
Where for a period of account any reduction in value referred to in subsection (1) is not brought into account within the meaning given by subsection (2) it shall be treated as brought into account for the period if it is shown in the company’s records as reducing sums available to fund one or both of the following for the period, namely, bonuses to policy holders and dividends to shareholders.
9
This paragraph shall apply in relation to periods of account beginning after 31st December 1992.
2
1
In its application to an overseas life insurance company section 89 of this Act shall have effect with the following modifications; and in those modifications any reference to the Taxes Act 1988 is a reference to that Act as it has effect in relation to such a company by virtue of Schedule 19AC to that Act.
2
Any reference to franked investment income shall be treated as a reference to UK distribution income (as defined by section 444D(4) of the Taxes Act 1988).
3
Any reference in subsection (5)(a) to income shall be construed as a reference to such of the income concerned as is attributable to the branch or agency in the United Kingdom through which the company carries on life assurance business.
4
The reference in subsection (5)(b) to assets shall be construed as a reference to such of the assets concerned—
a
as are—
i
section 11(2)(b) assets;
ii
section 11(2)(c) assets; or
iii
assets which by virtue of section 11B of the Taxes Act 1988 are attributed to the branch or agency; or
b
as are assets—
i
(in a case where section 11C of that Act (other than subsection (9)) applies) of the relevant fund, or
ii
(in a case where that section including that subsection applies) of the relevant funds,
other than assets which fall within paragraph (a) above.
5
In subsection (5)(c) the reference to expenses shall be construed as a reference to such of the expenses concerned as are attributable to the branch or agency.
6
In subsection (5)(d) the reference to interest shall be construed as a reference to such of the interest concerned as is so attributable.
7
In determining for the purposes of subsection (5) whether there has been any increase or reduction in the value (whether realised or not) of assets—
a
no regard shall be had to any period of time during which an asset does not fall within paragraph (a) or (b) of sub-paragraph (4) above; and
b
in the case of an asset which falls within paragraph (b) of that sub-paragraph, only the specified portion of any increase or reduction in the value of the asset shall be taken into account;
and sub-paragraph (5) of paragraph 1 above shall apply for the purposes of this paragraph as it applies for the purposes of that paragraph.
8
Where for a period of account any item consisting of income, expenses or interest referred to in subsection (5) is not brought into account within the meaning given by subsection (6) it shall be treated as brought into account for the period if it arises in the period.
9
Where for a period of account any increase in value referred to in subsection (5) is not brought into account within the meaning given by subsection (6) it shall be treated as brought into account for the period if it is shown in the company’s records as available to fund one or both of the following for the period, namely, bonuses to policy holders and dividends to shareholders.
10
Where for a period of account any reduction in value referred to in subsection (5) is not brought into account within the meaning given by subsection (6) it shall be treated as brought into account for the period if it is shown in the company’s records as reducing sums available to fund one or both of the following for the period, namely, bonuses to policy holders and dividends to shareholders.
11
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.

SCHEDULE 11OVERSEAS LIFE INSURANCE COMPANIES: AMENDMENT OF TAXATION OF CHARGEABLE GAINS ACT 1992

Section 102.

Annotations:

Marginal Citations

M90

1992 c. 12.

The following Schedule shall be inserted after Schedule 7A to the M90Taxation of Chargeable Gains Act 1992—

SCHEDULE 7B Modification of Act in relation to overseas life insurance companies
Section 214B.
1
In its application to an overseas life insurance company (as defined in section 431(2) of the Taxes Act) this Act shall have effect with the following modifications; and in those modifications any reference to the Taxes Act is a reference to that Act as it has effect in relation to such a company by virtue of Schedule 19AC to that Act.
2
1
In section 13(5)(d), the words “section 11(2)(b), (c), (d) or (e) of the Taxes Act” shall be treated as substituted for the words “section 10(3)”.
2
This paragraph shall apply in relation to chargeable gains accruing to companies in accounting periods beginning after 31st December 1992.
3
1
In section 16(3), the words “under section 11(2)(b), (c), (d) or (e) of the Taxes Act” shall be treated as substituted for the words “under section 10”.
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
4
1
In section 25, the following subsection shall be treated as substituted for subsection (7)—
7
“For the purposes of this section an asset is at any time a chargeable asset in relation to an overseas life insurance company if, were it to be disposed of at that time, any chargeable gains accruing to the company on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 11(2)(b), (c), (d) or (e) of the Taxes Act.”
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
5
1
In section 140A(2), the words “section 11(2)(b), (c) or (d) of the Taxes Act” shall be treated as substituted for the words “section 10(3)”.
2
This paragraph shall apply in relation to transfers taking place in accounting periods of company B beginning after 31st December 1992.
6
1
In section 159(4)(b), the words “section 11(2)(b), (c) or (d) of the Taxes Act” shall be treated as substituted for the words “section 10(3)”.
2
This paragraph shall apply in relation to disposals or acquisitions made in accounting periods beginning after 31st December 1992.
7
1
In section 172(4), the words “section 11(2)(b), (c), (d) or (e) of the Taxes Act” shall be treated as substituted for the words “section 10(3)”.
2
This paragraph shall apply in relation to disposals made or assumed to have been made in accounting periods beginning after 31st December 1992.
8
1
In subsections (2)(a) and (3) of section 185, the words “or (4A)” shall be treated as inserted after the words “subsection (4)”.
2
The following subsections shall be treated as inserted after subsection (4) of that section—
4A
“Subject to subsection (4B) below, if at any time after the relevant time the company is an overseas life insurance company—
a
any assets of its long term business fund which, immediately after the relevant time—
i
are situated outside the United Kingdom and are used or held for the purposes of the branch or agency in the United Kingdom through which the company carries on life assurance business; or
ii
are attributed to the branch or agency by virtue of section 11B of the Taxes Act,
shall be excepted from subsection (2) above; and
b
any new assets of its long term business fund which, after that time—
i
are so situated and are so used or held; or
ii
are so attributed,
shall be excepted from subsection (3) above.
4B
Subsection (4A) above shall not apply if the relevant time falls before the relevant day; and for the purposes of this subsection the relevant day is the first day of the company’s first accounting period to begin after 31st December 1992.”
3
In subsection (5) of that section, the following paragraph shall be treated as inserted after paragraph (b)—
“
“life assurance business” and “long term business fund” have the meanings given by section 431(2) of the Taxes Act;”
.
9
1
In section 191(1)(b), the words “section 11(2)(b), (c), (d) or (e) of the Taxes Act” shall be treated as substituted for the words “section 10(3)”.
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
10
1
In section 212, the following subsection shall be treated as inserted after subsection (5)—
“
In its application to an overseas life insurance company this section shall have effect as if the references in subsections (1) and (2) to assets were to such of the assets concerned as are—
a
section 11(2)(b) assets;
b
section 11(2)(c) assets; or
c
assets which by virtue of section 11B of the Taxes Act are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;
and any expression used in this subsection to which a meaning is given by section 11A of the Taxes Act has that meaning.”
2
This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.
11
1
In section 213(4), the words “in the United Kingdom through a branch or agency” shall be treated as inserted after the words “long term business”.
2
This paragraph shall apply in relation to events occurring in accounting periods beginning after 31st December 1992.
12
1
In section 214, the following subsection shall be treated as inserted after subsection (11)—
“
In its application to an overseas life insurance company this section shall have effect as if—
a
the references in subsections (1), (2) and (6) to (10) to assets were to such of the assets concerned as are—
i
section 11(2)(b) assets; or
ii
section 11(2)(c) assets;
b
the references in subsections (1), (7) and (8) to liabilities were to such of the liabilities concerned as are attributable to the branch or agency in the United Kingdom through which the company carries on life assurance business;
and any expression used in this subsection to which a meaning is given by section 11A of the Taxes Act has that meaning.”
2
This paragraph shall apply where the accounting period mentioned in section 214(6)(d) begins after 31st December 1992.
13
1
In subsection (4) of section 214A, in item G the words “in the United Kingdom through a branch or agency” shall be treated as inserted after the words “cessation of the carrying on”.
2
In subsection (6) of that section, the words “ in the United Kingdom through a branch or agency ” shall be treated as inserted after the words “long term business”.
3
In subsection (11) of that section, the following words shall be treated as inserted at the end “ ; and, as it applies for the purposes of this section, the words “(with the modifications set out in subsection (12) of that section)” shall be treated as inserted after the words “section 214”. ”
14
1
In section 228(6)(b), the words “section 11(2)(b), (c) or (d) of the Taxes Act” shall be treated as substituted for the words “section 10(3)”.
2
This paragraph shall apply in relation to acquisitions made in chargeable periods beginning after 31st December 1992.

F201SCHEDULE 12

Section 114.

Annotations:

Amendments (Textual)

F201

Sch. 12 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, s., 580, Sch. 4

1

The M102Capital Allowances Act 1990 shall be amended as follows.

2

1

In subsection (1) of section 124 (expenditure qualifying for allowances)—

a

for “this Part, including” there shall be substituted “ writing-down allowances or ”; and

b

in paragraph (b), for “this Part” there shall be substituted “ writing-down allowances or, as the case may be, section 122 ”.

2

In subsection (2) of that section, for “this Part” there shall be substituted “ writing-down allowances ”.

3

After section 124 there shall be inserted the following sections—

124A Initial allowances: contracts entered into between October 1992 and November 1993.
1
Subject to the following provisions of this Part, if a person having a major interest in any agricultural land incurs any expenditure to which this section applies, there shall be made to him, for the chargeable period which is that related to the incurring of the expenditure, an allowance (“an initial allowance”) equal to 20 per cent. of the amount of that expenditure.
2
This section applies to any expenditure falling within section 123 which is incurred under a contract which—
a
is entered into either—
i
in the period beginning with 1st November 1992 and ending with 31st October 1993; or
ii
for the purpose of securing that obligations under a contract entered into in that period are complied with;
but
b
is not entered into for the purpose of securing that obligations under a contract entered into before the beginning of that period are complied with.
3
No expenditure on the construction of any building, fence or other works shall be taken into account for the purposes of any initial allowance under this Part unless it is incurred for the purposes of husbandry on the agricultural land in question; and no initial allowance shall be made under this Part in respect of expenditure on the construction of any building, fence or other works unless the building, fence or other works is or is to be first used for the purposes of husbandry on or before 31st December 1994.
4
Where expenditure is incurred on a farmhouse or any asset (other than a farmhouse) which is to serve partly the purposes of husbandry and partly other purposes, the same apportionment of that expenditure shall be made for the purposes of any initial allowance under this Part as is required by section 124(1)(a) or (b) to be made for the purposes of writing-down allowances.
5
In a case where—
a
any expenditure to which this section applies is incurred on the construction of any building, fence or other works; and
b
either—
i
when the building, fence or other works comes to be used it is not used for the purposes of husbandry; or
ii
it has not come to be so used by the end of 31st December 1994,
the expenditure shall be left out of account for the purposes of initial allowances under this Part and, accordingly, any initial allowance made in respect of the expenditure under this section shall be withdrawn and all such assessments and adjustments of assessments shall be made as may be necessary to give effect to that withdrawal.
6
Subject to subsection (7) below, a person making a claim by virtue of this section as it applies for income tax purposes may require the initial allowance to be reduced to a specified amount; and a company may by notice given to the inspector not later than two years after the end of the chargeable period for which the allowance falls to be made disclaim the initial allowance or require it to be reduced to a specified amount.
7
Subsection (6) above shall have effect as respects allowances falling to be made for accounting periods ending after the day appointed for the purposes of section 10 of the principal Act (pay and file) with the omission of the words “as it applies for income tax purposes” and the words from “and a company” onwards.
124B Restriction on writing-down allowance where initial allowance made.
Where an initial allowance under this Part is made for any chargeable period in respect of any expenditure on the construction of a building, fence or other works, a writing-down allowance in respect of that expenditure shall be made under this Part for the same chargeable period only if the building, fence or other works has come to be used for the purposes of husbandry before the end of that period.

4

1

In subsection (1) of section 126 (transfers of relevant interest), for “a writing-down allowance” there shall be substituted “ an allowance under this Part ”.

2

For subsection (2) of that section there shall be substituted the following subsection—

2
If, in a case falling within subsection (1) above, the date of the acquisition occurs during a chargeable period of the former owner or its basis period, the former owner shall be entitled—
a
to the whole of any initial allowance for the chargeable period related to the acquisition; but
b
only to an appropriate proportion of any writing-down allowance for the chargeable period so related;
and, similarly, if the date of the acquisition occurs during a chargeable period of the new owner or its basis period, the new owner shall be entitled only to an appropriate proportion of any writing-down allowance for the chargeable period (of his) related to the acquisition.

3

In subsection (6) of that section (balancing increase of last writing-down allowance in respect of allowance lost on transfers), after “total allowances” there shall be inserted “ (including any initial allowance) ”.

5

1

After subsection (3) of section 127 (buildings etc. bought unused) there shall be inserted the following subsections—

3A
The expenditure referred to in subsection (1) above includes neither—
a
expenditure which falls to be disregarded for the purposes of writing-down allowances by virtue of section 124(1); nor
b
expenditure some or all of which is expenditure to which section 124A applies.
3B
Accordingly, any expenditure which is treated as incurred under subsection (2)(c) above shall be treated (without prejudice to section 124(2)) as incurred for the purposes mentioned in section 124(1).

2

In subsection (4) of that section, for “and (3)” there shall be substituted “ (3) and (3B) ”.

6

After section 127 there shall be inserted the following section—

127A Purchases of buildings and structures: cases involving initial allowances.
1
This section shall apply (subject to subsection (2) below) where—
a
there is expenditure on the construction of any building, fence or other works (“the actual expenditure”) which—
i
is expenditure falling within section 123; and
ii
is not expenditure which would fall to be disregarded for the purposes of writing-down allowances by virtue of section 124(1);
b
some or all of the actual expenditure is expenditure to which section 124A applies or would be such expenditure if it were capital expenditure; and
c
before the building, fence or other works comes to be used, the relevant interest is sold.
2
In relation to any case in which the relevant interest is sold in pursuance of a contract entered into in the period beginning with 1st November 1992 and ending with 31st October 1993 by a person who—
a
carries on a trade which consists, in whole or in part, in the construction of buildings or structures with a view to their sale; and
b
has been entitled to that interest since before 1st November 1992,
section 124A(2) above shall have effect for the purposes of subsection (1)(b) above and subsection (6) below as if for the words from “contract which” onwards there were substituted “contract entered into either before 1st November 1993 or for the purpose of securing that obligations under a contract entered into before that date are complied with.”
3
Where this section applies—
a
the actual expenditure shall be left out of account for the purposes of this Part and, accordingly—
i
any initial allowance or writing-down allowance made in respect of the actual expenditure shall be withdrawn; and
ii
all such assessments and adjustments of assessments shall be made as may be necessary to give effect to that withdrawal;
b
section 126 shall not apply;
c
the person who buys the relevant interest shall be treated for the purposes of this Part as having incurred, on the date when the purchase price becomes payable, expenditure falling within section 123 on the construction of the building, fence or other works (“the deemed expenditure”); and
d
the deemed expenditure shall be treated (without prejudice to section 124(2) and 124A(5)) as incurred for the purposes of husbandry on the agricultural land in question.
4
The deemed expenditure—
a
shall be whichever is the lesser of the net price paid by the person concerned for the purchase of the relevant interest and the actual expenditure; and
b
shall be regarded as comprising a section 124A element and a residual element.
5
The section 124A element of the deemed expenditure shall be calculated in accordance with the formula—
$A x \frac{B}{C}$
6
In subsection (5) above—
A is the deemed expenditure;
B is so much of the actual expenditure as is expenditure to which section 124A applies or expenditure that would be such expenditure if it were capital expenditure; and
C is the actual expenditure.
7
The residual element of the deemed expenditure shall be so much (if any) of the deemed expenditure as does not comprise the section 124A element.
8
Notwithstanding the provisions of subsection (3)(c) above—
a
the section 124A element of the deemed expenditure shall be treated for the purpose only of determining entitlement to allowances as expenditure to which that section applies; and
b
the residual element of the deemed expenditure shall be treated for that purpose as expenditure which is not expenditure to which that section applies.
9
Where the relevant interest is sold more than once before the building, fence or other works is used, subsections (2) and (3)(c) and (d) above shall have effect only in relation to the last of those sales.

7

1

In subsection (1) of section 128 (balancing allowances and charges), for “a writing-down allowance” there shall be substituted “ an allowance under this Part ”.

2

In subsection (2) of that section, for “this Part less the aggregate of any writing-down allowances” there shall be substituted “ any allowances under this Part less the aggregate of any such allowances ”.

3

In subsection (3) of that section, after “purposes of” there shall be inserted “ allowances under ”.

4

In subsection (6) of that section, for “writing-down allowances” there shall be substituted “ allowances under this Part ”.

8

In section 129(1) (balancing events), for “a writing-down allowance” there shall be substituted “ an allowance under this Part ”.

9

In section 131(2) (application of Chapter I of Part V to forestry buildings etc.), in the words after paragraph (b), before “subject” there shall be inserted “ with the omission of sections 124A, 127(3A)(b) and 127A and ”.

10

In section 146(3) (allowances under Parts V and VI not to exceed expenditure), after “made under” there shall be inserted “ Part V or ”.

F202SCHEDULE 13 First-year allowances for machinery and plant

Section 115.

Annotations:

Amendments (Textual)

F202

Sch. 13 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, s. 580, Sch. 4

1

The M103Capital Allowances Act 1990 shall be amended as follows.

2

In section 23(6) (interpretation of information provisions relating to first-year allowances), at the end there shall be inserted “ and references in this section to a first-year allowance shall not include references to a first-year allowance in respect of expenditure to which section 22 applies by virtue only of subsection (3B) of that section. ”

3

In section 30(2)(c) (special provision for ships), for “section” there shall be substituted “ sections 46(8)(e) and ”.

4

In section 38(m) (assets attracting first-year allowances not to be treated as short-life assets), after “section 22” there shall be inserted “ (2), (3) or (3A) ”.

5

1

In subsection (2)(a) of section 39 (definition of a qualifying purpose), for “subsections (2) and (3)” there shall be substituted “ subsections (2) to (3B) ”.

2

In subsection (8)(b) of that section (anti-avoidance provision in respect of chartering), after “new expenditure,” there shall be inserted “ a first-year allowance by virtue of section 22(3B) or ”.

6

After subsection (8) of section 42 (modifications in relation to “old expenditure” of provisions relating to overseas leasing) there shall be inserted the following subsection—

9
For the purposes of the application of this section to any expenditure to which section 22 applies by virtue only of subsection (3B) of that section, this section shall have effect—
a
as if subsection (4) above included a reference to a first-year allowance made in respect of that expenditure; and
b
for the purposes of paragraph (a) above, as if the reference in that subsection to an event occurring such that there is no right to that allowance included a reference to an event occurring such that, if subsection (3) included a reference to first-year allowances, there would be no such right.

7

1

In subsection (1) of section 43 (cases where section applies), for “This section” there shall be substituted “ Subsections (2) and (3) below ”.

2

After subsection (3) of that section there shall be inserted the following subsection—

4
Section 22(6A)(a) shall not prevent a first-year allowance being made in respect of expenditure incurred by any person on the provision of machinery or plant for leasing where it appears that—
a
the machinery or plant will be leased as mentioned in subsection (1) above; and
b
the circumstances are such that subsection (2) above will require the whole or any part of the expenditure to be treated as not falling within section 42(1);
and any first-year allowance made by virtue of this subsection in respect of that expenditure shall be made on the same assumptions and subject to the same apportionments (if any) as it appears would, by virtue of subsection (3) above, be applicable in the case of a writing-down allowance.

8

In section 44 (further provisions in relation to joint lessees in cases involving new expenditure), after subsection (4) there shall be inserted the following subsection—

5
For the purposes of the application of this section to any expenditure to which section 22 applies by virtue of subsection (3B) of that section, this section shall have effect as if—
a
references to section 43(2) included references to section 43(4);
b
references to a normal writing-down allowance included references to a first-year allowance; and
c
the reference in subsection (2) above to the separate item of machinery or plant referred to in section 43(3)(a) were, in relation to a first-year allowance, a reference to the machinery or plant in respect of which, in accordance with section 43(4), that allowance is or is treated as made.

9

In section 46 (recovery of allowances made in respect of plant and machinery subsequently let to a foreign resident), after subsection (7) there shall be inserted the following subsection—

8
For the purposes of the application of this section to any expenditure to which section 22 applies by virtue of subsection (3B) of that section, this section shall have effect as if—
a
in subsection (1) above, after “qualified for a” there were inserted “first-year allowance or any”;
b
in subsection (2) above—
i
in paragraph (a), at the beginning there were inserted “the aggregate of any first-year allowance and”; and
ii
in paragraph (b), after the word “no” there were inserted “first-year allowance or”;
c
in subsection (5) above—
i
after “and a” there were inserted “first-year allowance or”; and
ii
in paragraph (a), for the words from “it referred” to the end of the paragraph there were substituted “that allowance were such a first-year allowance or, as the case may be, normal writing-down allowance as is referred to in paragraph (a) of that subsection and the references to the expenditure in respect of which an allowance is made were construed accordingly;”
d
in subsection (6) above—
i
in paragraph (a), after “for a” there were inserted “first-year allowance or”; and
ii
in the words after paragraph (b), for “a normal writing-down allowance has been made” there were substituted “the allowance that has been made is a first-year allowance or normal writing-down allowance”;
and
e
in subsection (7) above—
i
in paragraph (a), after “section” there were inserted “30(2)(c) or”; and
ii
for “section 31” there were substituted “section 30 or 31”.

10

In section 48 (information provisions in relation to joint lessees in cases involving new expenditure), after subsection (6) there shall be inserted the following subsection—

7
For the purposes of the application of this section to any expenditure to which section 22 applies by virtue of subsection (3B) of that section, this section shall have effect as if the references in subsections (1) and (2) above to a normal writing-down allowance included references to a first-year allowance; but nothing in this subsection shall prevent subsection (1) above from continuing to apply where the use for permitted leasing is after the expenditure has qualified for one allowance and before it qualifies for another.

11

1

In subsection (3) of section 50, in paragraph (i) of the definition of “old expenditure” (old expenditure to include expenditure falling within section 22) after “22” there shall be inserted “ other than expenditure to which that section applies by virtue only of subsection (3B) of that section ”.

2

After subsection (4) of that section there shall be inserted the following subsection—

4A
In the case of expenditure to which section 22 applies by virtue only of subsection (3B) of that section, any reference in this Chapter to the expenditure having qualified for a first-year allowance is a reference to such an allowance having fallen to be made in respect of the whole or any part of that expenditure.

12

1

In section 81 (assets used for purposes not attracting capital allowances and assets received by way of gift), after subsection (1) there shall be inserted the following subsection—

1A
Subject to section 63, in a case falling within subsection (1)(a) or (b) above, the assumptions applied by that subsection in relation to sections 24 to 26—
a
shall apply in relation to section 22 as they apply in relation to those sections but only for the purposes of first-year allowances by virtue of section 22(3B); and
b
where those assumptions require any person to be treated as having incurred expenditure in a chargeable period related to any event, shall apply for those purposes as if they required that person to be treated as having incurred that expenditure on the date of that event.

2

After subsection (2) of that section there shall be inserted the following subsection—

2A
Where a person is treated as having incurred capital expenditure on the provision of machinery or plant by virtue of subsection (1)(a) above, he shall be treated for the purposes of section 75(1), as it has effect in relation to first-year allowances by virtue of section 22(3B), as having done so by way of purchase from a person connected with him.

3

Sub-paragraph (2) above shall have effect in cases where machinery or plant is brought into use on or after 14th April 1993.

13

1

In subsection (1)(a) of section 147 (exclusion of double allowances), after “those Parts” there shall be inserted “ or section 22 ”.

2

In subsection (2) of that section, after “any person” there shall be inserted “ an allowance is made under section 22 in respect of any capital expenditure or ”.

SCHEDULE 14 Pay and file: miscellaneous amendments

Section 120.

Failure to give notice of liability for corporation tax

F2031

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

Further claims etc. where assessment made

F2042

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

Interest on overdue corporation tax: transitional cases

3

1

Section 86 of that Act of 1970 (interest on overdue tax) shall be amended as follows.

2

In subsection (3)(b), for “subject to subsection (3A)” there shall be substituted “ subject to subsections (3A) and (4A) ”.

3

In subsection (3A), at the beginning there shall be inserted “ Subject to subsection (4A) below, ”.

4

After subsection (4) there shall be inserted the following subsections—

4A
For the purposes of this section where—
a
a notice served under section 11 above at any time after the appointed day for the purposes of section 82 of the M91Finance (No. 2) Act 1987 (amendment of section 11 for the purposes of pay and file) is to be taken as requiring a company to make a return for any accounting period ending on or before the day appointed for the purposes of section 10 of the principal Act; and
b
the tax charged by any assessment to corporation tax for that accounting period does not become due and payable until after the date nine months from the end of that accounting period,
the reckonable date, in relation to tax charged for that accounting period by that assessment, is the date mentioned in paragraph (b) above (instead of the date which would otherwise be determined under subsection (3) or (3A) above).
4B
The Board may at their discretion mitigate (whether before or after judgment) any interest due under this section in a case where the reckonable date is determined under subsection (4A) above and may stay or compound any proceedings for the recovery thereof.

Interest on overdue corporation tax: pay and file cases

4 F2051

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

2

For subsection (6) of that section there shall be substituted the following subsections—

6
In any case where—
a
on a claim under section 393A(1) of the principal Act, the whole or any part of a loss incurred in an accounting period (“the later period”) has been set off for the purposes of corporation tax against profits of a preceding accounting period (“the earlier period”);
b
the earlier period does not fall wholly within the period of twelve months immediately preceding the later period; and
c
if the claim had not been made, there would be an amount or, as the case may be, an additional amount of corporation tax for the earlier period which would carry interest in accordance with this section,
then, for the purposes of the determination at any time of whether any interest is payable under this section or of the amount of interest so payable, the amount mentioned in paragraph (c) above shall be taken to be an amount of unpaid corporation tax for the earlier period except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable as mentioned in subsection (1) above.
7
Where, in a case falling within subsection (6)(a) and (b) above—
a
there is in the earlier period, as a result of the claim under section 393A(1) of the principal Act, an amount of surplus advance corporation tax, as defined in subsection (3) of section 239 of that Act; and
b
pursuant to a claim under the said subsection (3), the whole or any part of that amount is to be treated for the purposes of the said section 239 as discharging liability for an amount of corporation tax for an accounting period before the earlier period,
the claim under the said subsection (3) shall be disregarded for the purposes of subsection (6) above but subsection (4) above shall have effect in relation to that claim as if the reference in the words after paragraph (c) to the later period within the meaning of subsection (4) above were a reference to the period which, in relation to the claim under the said section 393A(1), would be the later period for the purposes of subsection (6) above.

Effect on interest of reliefs

5

In section 91(1B) of that Act of 1970 (subsection (1A) subject to section 87A(4)), after “section 87A(4)” there shall be inserted “ (6) and (7) ”.

Failure to make return for corporation tax

F2066

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

Things to be done by companies

7

In section 108(1) of that Act of 1970 (which includes provision requiring companies to act for the purposes of the Taxes Acts through their proper officers), after “proper officer of the company” there shall be inserted “ or, except where a liquidator has been appointed for the company, through such other person as may for the time being have the express, implied or apparent authority of the company to act on its behalf for the purpose ”.

Relief under section 393 of the Taxes Act 1988

8

1

In relation to any case in which by virtue of section 99 of the M92Finance Act 1990 losses may be set off under subsection (1) of section 393 or of section 396 of the Taxes Act 1988 without the making of a claim, the Taxes Act 1988 shall have effect with the following amendments.

2

In section 343(3) (company reconstructions without change of ownership), the word “claim”, in the second place where it occurs, shall be omitted.

3

In section 395 (leasing contracts and company reconstructions)—

a

in subsection (1)(b), for the words “to claim relief under section 393(1) or 393A(1)” there shall be substituted “ under section 393(1) or in pursuance of a claim under section 393A(1) to relief ”; and

b

in the words after paragraph (c) of subsection (1) and in subsection (4), the words “to claim relief” shall be omitted.

4

In section 398 (transactions in deposits), for the words from “he may” onwards there shall be substituted “ the amount of his loss may be set off in pursuance of a claim under section 392 or, as the case may be, against which the amount of his loss may be set off under section 396 ”.

5

In section 400(2)(a) (write-off of government investments), the words “or, if a claim had been made under that subsection, would be” shall be omitted.

9

In section 65(6) of the M93Finance (No. 2) Act 1992 (I minus E basis for life assurance business not to be affected by certain claims), after paragraph (b) there shall be inserted the words— “ but, in relation to any case in which by virtue of section 99 of the Finance Act 1990 losses may be set off under subsection (1) of section 393 of the Taxes Act 1988 without the making of a claim, this section shall have effect as if references to the making of a claim under that subsection were references to the setting off of any loss under that subsection. ”

Interest on tax overpaid

10 F2071

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

2

In subsection (7A) of that section, for “any increase in the amount of that repayment” there shall be substituted “ so much of the amount of that repayment as falls to be made ”.

F2073

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

4

In subsection (7B) of that section, for “any increase in the amount of that payment” there shall be substituted “ so much of the amount of that payment as falls to be made ”.

F2075

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

F2076

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

Surrender of refunds

11

In section 102 of the M94Finance Act 1989 (surrender of company tax refund etc. within group), after subsection (4) there shall be inserted the following subsection—

4A
Where subsection (4) above has effect in relation to any amount and there is, by virtue of any of subsections (7) to (7C) of section 826 of the Taxes Act 1988, a period for which the whole or any part of that amount would not, had the refund been made to the surrendering company, have carried interest under that section, that period shall be treated as excluded—
a
from any period for which any refund made by virtue of subsection (4) above to the recipient company in respect of some or all of that amount or, as the case may be, that part of it is to carry interest under that section; and
b
from any period for which a sum representing some or all of that amount or part would (apart from this subsection) be treated by virtue of subsection (4) above as not carrying interest under section 87A of the M95Taxes Management Act 1970;
and in determining for the purposes of this subsection which part of any amount is applied in discharging a liability of the recipient company to pay any corporation tax and which part is represented by a refund to the recipient company, it shall be assumed that the part in relation to which there is a period which would not have carried interest under section 826 of the Taxes Act 1988 is applied in preference to any other part of that amount in or towards discharging the liability.

F208SCHEDULE 15 Exchange gains and losses: alternative calculation

Section 134.

Annotations:

Amendments (Textual)

F208

Sch. 15 repealed (24.7.2002 with effect as mentioned in s. 79(3) of the amending Act) by 2002 c. 23, ss. 79(1)(b), 141, Sch. 40 Pt. 3(10) Note 2 (with Sch. 23 paras. 25, 26)

Introduction

b

at any time on a day in the period the asset or contract was held, or the liability was owed, by the company in exempt circumstances, and

c

such other conditions as may be prescribed are fulfilled,

the amount of the gain or loss shall be found in accordance with the alternative method of calculation.

2

Regulations may also provide that as regards any such day as is mentioned in sub-paragraph (1) above the accrued amount shall be ascertained in accordance with prescribed rules.

3

Regulations may be so framed that the accrued amount as regards a day depends on the extent to which an asset or contract is held, or a liability is owed, in exempt circumstances.

4

For the purposes of this paragraph an asset or contract is held, or a liability is owed, in exempt circumstances at a given time if it is then held or owed—

a

for the purposes of F266long-term insurance business;

b

for the purposes of mutual insurance business;

c

for the purposes of the occupation of commercial woodlands;

d

by a housing association approved at that time for the purposes of section 488 of the Taxes Act 1988;

e

by a self-build society approved at that time for the purposes of section 489 of that Act.

5

In this paragraph—

F267“long-term insurance business” means business which consists of the effecting or carrying out of contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

“commercial woodlands” means woodlands in the United Kingdom which are managed on a commercial basis and with a view to the realisation of profits.

Unremittable income

3

1

Regulations may provide that where—

a

as regards an asset falling within section 153(1)(a) or (b) of this Act an initial exchange gain or initial exchange loss accrues to a company for an accrual period under section 125 or 127 of this Act or would so accrue apart from regulations under this Schedule,

b

at any time on a day in the period income represented by the asset was unremittable, and

c

such other conditions as may be prescribed are fulfilled,

the amount of the gain or loss shall be found in accordance with the alternative method of calculation.

2

Regulations may also provide that as regards any such day as is mentioned in sub-paragraph (1) above the accrued amount shall be ascertained in accordance with prescribed rules.

3

Regulations may be so framed that the accrued amount as regards a day depends on the extent to which the income represented by an asset is unremittable.

4

For the purposes of this paragraph income is unremittable if—

F268a

a claim under subsection (2) of section 584 of the Taxes Act 1988 (relief for unremittable income) has been made in relation to the income,

b

paragraphs (a) and (b) of that subsection apply to it, and

c

those paragraphs have not ceased to apply to it.

Matched liabilities

4

1

Regulations may provide that where—

a

as regards a liability an initial exchange gain or initial exchange loss accrues to a company for an accrual period under section 125 or 127 of this Act or would so accrue apart from regulations under this Schedule,

b

the liability falls within section 153(2)(a) of this Act,

c

the liability is eligible to be matched on any day in the accrual period with an asset held by the company, and such other conditions as may be prescribed are fulfilled, and

d

11

For the purposes of sub-paragraph (10) above each of the following is a relevant person—

a

the company mentioned in sub-paragraph (1) above;

b

any person who has at any time acquired a matched asset (or part of a matched asset) since the company acquired it;

and a matched asset is an asset which has at any time been to any extent matched with a liability in pursuance of an election.

12

Regulations may make provision—

a

as to the occasion on which a chargeable gain or allowable loss mentioned in sub-paragraph (10) above is to be treated as accruing, as to the amount to be treated as the amount of the gain or loss, and as to other matters relating to the gain or loss;

b

as to the timing and extent of any adjustment mentioned in sub-paragraph (10)(c) above and as to other matters relating to the adjustment.

F273 Currency contracts: matching

Annotations:

Amendments (Textual)

F273

Sch. 15 para. 4A and preceding cross-heading inserted (3.5.1994) by 1994 c. 9, s. 116(2)

F2744A

1

Regulations may provide that where—

a

as regards a contract an initial exchange gain or initial exchange loss accrues to a company for an accrual period under section 126(5) of this Act or would so accrue apart from regulations under this Schedule,

b

the relevant duty is eligible to be matched on any day in the accrual period with an asset held by the company, and such other conditions as may be prescribed are fulfilled, and

c

an election is made in accordance with the regulations to match the duty with the asset on any such day and the election has effect by virtue of the regulations,

the amount of the gain or loss shall be found in accordance with the alternative method of calculation.

2

Regulations may also provide that as regards any day in respect of which an election has effect the accrued amount shall be ascertained in accordance with prescribed rules.

3

The reference in sub-paragraph (1) above to the relevant duty is to the duty to which, under the contract, the company becomes subject as regards the second currency (within the meaning given by section 126 of this Act).

4

Where regulations are made under this paragraph, sub-paragraphs (3) to (12) of paragraph 4 above shall apply as they apply where regulations are made under that paragraph; but in the application of those sub-paragraphs by virtue of this sub-paragraph—

a

the references to a liability in sub-paragraphs (3), (4), (9) and (11) shall be construed as references to a duty,

b

the references to liabilities in sub-paragraphs (3) and (4) shall be construed as references to duties, and

c

the reference in sub-paragraph (11)(a) to sub-paragraph (1) of paragraph 4 shall be construed as a reference to sub-paragraph (1) above.

Combination of circumstances

5

1

This paragraph applies where regulations under more than one of paragraphs 2 to 4 above apply—

a

as regards the same asset or liability, and

b

for the same accrual period.

2

Regulations may provide that, as regards any day falling within the period and identified in accordance with prescribed rules, the accrued amount shall be ascertained in accordance with rules prescribed under this paragraph (rather than provisions made under any of those paragraphs).

F2695A

1

This paragraph applies where regulations under both paragraph 2 and paragraph 4A above apply—

a

as regards the same contract, and

b

for the same accrual period.

2 Arm’s length test

6

Where regulations make provision under any of F270the relevant paragraphs, they may provide that for the purposes of section 136(11) of this Act amounts X and Y shall be found without regard to matters which are prescribed and would otherwise have had to be taken into account under the regulations F271; and the relevant paragraphs are paragraphs 2, 3, 4 and 5 above..

Local currency

7

Where regulations make provision under any of paragraphs 2 to F2725A above, section 149 of this Act shall have effect as if the references to sections 125 to 127 included references to this Schedule and the provisions of the regulations.

General

8

Regulations may be so framed that the accrued amount as regards a day is nil (so that, depending on the circumstances, an initial exchange gain or initial exchange loss may be extinguished).

9

Regulations may make different provision about exchange gains (on the one hand) and exchange losses (on the other).

F209SCHEDULE 16 Exchange gains and losses: transitionals

Section 165.

Annotations:

Amendments (Textual)

F209

Sch. 16 repealed (24.7.2002 with effect as mentioned in s. 79(3) of the amending Act) by 2002 c. 23, ss. 79(1)(b), 141, Sch. 40 Pt. 3(10) Note 2 (with Sch. 23 paras. 25, 26)

Introduction

1

For the purposes of this Schedule an existing asset, liability or contract is an asset, liability or contract to which this Chapter applies by virtue of section 165(2) or (3) of this Act or by virtue of regulations under section 165(4) of this Act.

General provision

2

4

The regulations may provide that where—

a

apart from provision under this sub-paragraph, an allowable loss would be treated as accruing by virtue of provision made under sub-paragraph (3)(b) above, and

b

the company concerned makes an election in accordance with prescribed rules,

such other factors as the Treasury think fit;

and for this purpose exchange differences are gains and losses attributable to fluctuations in currency exchange rates.

4

The regulations may include provision designed to prevent provision under them being avoided by the replacement (or partial replacement) of assets or liabilities by other assets or liabilities.

Allowable losses

5

1

Regulations may provide that where—

a

an allowable loss of a prescribed description has accrued to a qualifying company for the purposes of the M106Taxation of Chargeable Gains Act 1992,

b

the loss has accrued before the company’s commencement day,

c

all or part of the loss has not been allowed as a deduction under that Act, and

d

prescribed conditions (whether relating to the making of a claim or otherwise) are fulfilled,

such other factors as the Treasury think fit;

and for this purpose exchange differences are gains and losses attributable to fluctuations in currency exchange rates.

F210SCHEDULE 17 Exchange gains and losses: chargeable gains

Section 169.

Annotations:

Amendments (Textual)

F210

Sch. 17 repealed (24.7.2002 with effect as mentioned in s. 79(3) of the amending Act) by 2002 c. 23 ss. 79(1)(b), 141, Sch. 40 Pt. 3(10) Note 2 (with Sch. 23 paras. 25, 26)

Introduction

1

In this Schedule “the 1992 Act” means the M108Taxation of Chargeable Gains Act 1992.

Currency

2

1

In a case where—

a

there is for the purposes of the 1992 Act a disposal of currency other than sterling by a qualifying company, and

b

immediately before the disposal the company did not hold the currency in exempt circumstances (within the meaning given by paragraph 3 below),

for the purposes of that Act no chargeable gain or allowable loss shall accrue on the disposal.

2

This paragraph applies to disposals on or after the company’s commencement day.

C413

1

For the purposes of paragraph 2 above a company holds currency in exempt circumstances at a given time if—

a

the purposes for which it then holds the currency are or include any of the purposes mentioned in sub-paragraph (2) below,

b

it is a housing association approved at that time for the purposes of section 488 of the Taxes Act 1988, or

c

it is a self-build society approved at that time for the purposes of section 489 of that Act.

2

The purposes referred to in sub-paragraph (1)(a) above are—

a

the purposes of F275long-term insurance business;

b

the purposes of mutual insurance business;

c

the purposes of the occupation of commercial woodlands.

3

In this paragraph—

F276“long-term insurance business” means business which consists of the effecting or carrying out of contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;
“commercial woodlands” means woodlands in the United Kingdom which are managed on a commercial basis and with a view to the realisation of profits.

Debts other than securities

F2774. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Debts on securities: disposals

F2785. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Debts on securities: relief

F2796. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reconstructions, groups etc.

7

1

This paragraph applies where there is for the purposes of the 1992 Act a disposal or acquisition of an asset which is—

a

currency,

b

a debt which is not a debt on a security and the right to settlement under which is a qualifying asset,

c

a security (as defined in section 132 of the 1992 Act) where the right to settlement under the debt on the security is a qualifying asset, or

d

an obligation which by virtue of section 143 of the 1992 Act (futures and options) is regarded as an asset to the disposal of which that Act applies and which is a duty under a currency contract.

2

In a case where—

a

the condition mentioned in sub-paragraph (3) below is fulfilled, and

b

section 139 F280or 171 of the 1992 Act (reconstructions, groups etc.) would, apart from this paragraph, apply as regards the disposal or acquisition,

the section concerned shall not apply as regards the disposal and the corresponding acquisition or (as the case may be) shall not apply as regards the acquisition and the corresponding disposal.

3

The condition is that stated in paragraph (a) or (b) below (as the case may be)—

a

the disposal is by a qualifying company and immediately before the disposal the asset is held wholly for qualifying purposes;

b

the acquisition is by a qualifying company and immediately after the acquisition the asset is held wholly for qualifying purposes.

4

For the purposes of this paragraph qualifying purposes are purposes which constitute one or both of the following—

a

purposes of F281long-term insurance business;

b

purposes of mutual insurance business;

F282and “long-term insurance business” means business which consists of the effecting or carrying out of contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

5

This paragraph applies where the disposal or acquisition (as the case may be) is made on or after the commencement day of the company mentioned in sub-paragraph (3)(a) or (b) above (as the case may be).

Indexation allowance

F2838. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 18 Exchange gains and losses: amendments

Section 170.

Taxes Management Act 1970 (c. 9)

1

In section 87A of the Taxes Management Act 1970 (interest on overdue tax for accounting periods ending after appointed day) the following subsection shall be inserted after subsection (4)—

4A
In a case where—
a
there is for an accounting period of a company (“the later period”) a relievable amount within the meaning of section 131 of the Finance Act 1993 (non-trading exchange gains and losses),
b
as a result of a claim under subsection (5) or (6) of that section the whole or part of the relievable amount for the later period is set off against the exchange profits (as defined in subsection (10) of that section) of an earlier accounting period (“the earlier period”), and
c
disregarding the effect of subsection (5) or (6) (as the case may be) of that section, an amount of corporation tax for the earlier period would carry interest in accordance with this section,
then, in determining the amount of interest payable under this section on corporation tax unpaid for the earlier period, no account shall be taken of any reduction in the amount of that tax resulting from the claim under subsection (5) or (6) of that section except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable, as mentioned in subsection (1) above.

Income and Corporation Taxes Act 1988 (c. 1)

F2112

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

F2123

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

4

In section 407 of the Taxes Act 1988 (relationship between group relief and other relief) in subsection (2) at the end of paragraph (b) there shall be inserted “ and ”, and after that paragraph there shall be inserted—

c
relief under section 131(7) of the Finance Act 1993 in respect of the whole or part of a relievable amount for an accounting period after the accounting period the profits of which are being computed;
and the reference in paragraph (c) above to a relievable amount shall be construed in accordance with section 131 of the Finance Act 1993.

5

In section 826 of the Taxes Act 1988 (interest on tax overpaid) the following subsection shall be inserted after subsection (7B)—

7C
In a case where—
a
there is for an accounting period of a company (“the later period”) a relievable amount within the meaning of section 131 of the Finance Act 1993 (non-trading exchange gains and losses),
b
as a result of a claim under subsection (5) or (6) of that section the whole or part of the relievable amount for the later period is set off against the exchange profits (as defined in subsection (10) of that section) of an earlier accounting period (“the earlier period”), and
c
a repayment falls to be made of corporation tax for the earlier period,
then, in determining the amount of interest (if any) payable under this section on the repayment of corporation tax for the earlier period, no account shall be taken of any increase in the amount of the repayment resulting from the claim under subsection (5) or (6) (as the case may be) of that section except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable, as mentioned in subsection (2) above.

6

In Schedule 27 to the Taxes Act 1988 (distributing funds) in paragraph 5 (United Kingdom equivalent profits) the following sub-paragraph shall be inserted after sub-paragraph (2)—

2A
In applying sub-paragraph (1) above the effect of sections 125 to 133 of the Finance Act 1993 (exchange gains and losses) shall be ignored.

Finance Act 1989 (c. 26)

F2137

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

C33SCHEDULE 19 Lloyd’s underwriters: assessment and collection of tax

Section 173.

Annotations:

Modifications etc. (not altering text)

C33

Sch. 19 extended (with modifications) (3.5.1994) by 1994 c. 9, s. 221(1) (subject to s. 221(2))

Part I Determination of a syndicate’s profit or loss

Preliminary

1

In this Part of this Schedule “profit or loss”, in relation to a syndicate, means the aggregate amount of such of the profits or losses of all the members of the syndicate (taken together) as arise—

a

directly from their membership of the syndicate, or

b

from assets forming part of F214premium trust funds,

any reference in sub-paragraph (2) or (3) above to the delivery of the return is a reference to its delivery together with the accompanying documents referred to in sub-paragraph (1) above; and

b

the reference in sub-paragraph (5) above to the return being incorrect includes a reference to any of those documents being incorrect.

Determinations by inspector

3

1

If the inspector is satisfied that a return under paragraph 2(1) above affords correct and complete information concerning the syndicate’s profit or loss for a year of assessment, he shall determine that profit or loss accordingly.

2

If for a year of assessment the inspector is dissatisfied with a return under paragraph 2(1) above, or there is no such return, the inspector shall determine the syndicate’s profit or loss for that year to the best of his judgment.

3

If the inspector discovers that a determination under sub-paragraph (1) or (2) above—

a

understates the syndicate’s profits for the year of assessment; or

b

overstates the syndicate’s losses for that year,

he may, by a determination under this sub-paragraph, vary the first-mentioned determination accordingly.

4

Notice of a determination under this paragraph shall be served on the syndicate’s managing agent and shall state the time within which any appeal against the determination may be made under paragraph 4 below.

5

After notice of a determination under this paragraph has been served on the syndicate’s managing agent, the determination shall not be altered except in accordance with the express provisions of the Taxes Acts.

Appeals

4

1

A syndicate’s managing agent may appeal against a determination under paragraph 3 above by a notice of appeal in writing given to the inspector within thirty days after the date of the notice of determination.

2

An appeal under this paragraph shall be to the General Commissioners, except that the agent may elect (in accordance with section 46(1) of the Management Act) to bring the appeal before the Special Commissioners instead of the General Commissioners.

3

Subsections F217(5) and (6) of section 31A and subsections (2) to (7) of section 31D of the Management Act shall apply for the purposes of an election under sub-paragraph (2) above as they apply for the purposes of an election under subsection F217(1) of section 31D of that Act.

Modification of determinations pending appeal

5

3

Sub-paragraph (2)(b) above shall not apply in the case of a variation under paragraph 3(3) above which is made later than six years after the end of the closing year.

Assessment of individual members: time limits

8

For the purposes of sections 36 and 40 of the Management Act (extension of time in cases of fraudulent or negligent conduct) anything done or omitted to be done by a syndicate’s managing agent shall be deemed to have been done or omitted to be done by each member of the syndicate.

F219 C32Part II Payments on account of tax

Annotations:

Amendments (Textual)

F219

Sch. 19 Pt. II repealed (3.5.1994 with effect for the year 1994-95 and subsequent years of assessment) by 1994 c. 9, ss. 228, 258, Sch. 21 para. 10, Sch. 26 Pt. V(25) Note 6

Modifications etc. (not altering text)

C32

Sch. 19 Pt. II modified (9.3.1995 with effect for the years of assessment 1992-93 and 1993-94 only) by S.I. 1995/352, reg. 3(1)(3)

Preliminary

4

The provisions of section 824 of the Taxes Act 1988 (repayment supplements: individuals and others) shall not apply to any repayment of tax made under this paragraph.

F2234A

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

5

In this paragraph “investment income”, in relation a syndicate, means the aggregate amount of the profits arising to all the members of the syndicate (taken together) from assets forming part of premiums trust funds.

C40SCHEDULE 20 Lloyd’s underwriters: special reserve funds

Section 175.

Annotations:

Modifications etc. (not altering text)

C40

Sch. 20 excluded (1.12.1997 with effect with respect to accounting periods of Lloyd's Scottish limited partnerships ending on or after that date) by S.I. 1997/2681, reg. 7(1)

Part I Requirements for and tax consequences of new-style funds

Preliminary

C341

1

In this Part of this Schedule—

“the arrangements” means the arrangements mentioned in section 175(1) of this Act;
“cash call” means a request for funds which, in pursuance of a contract made in accordance with the rules and practices of Lloyd’s, is made to a member by the agent of a syndicate of which he is a member;
“overall premium limit”, in relation to a member and an underwriting year, means the maximum amount which, under the rules of Lloyd’s, the member may accept by way of premiums in that year;
F224“payment”, unless the contrary intention appears, means a payment in money;
“stop-loss payment” means a payment of insurance money under a stop-loss insurance or a payment out of the High Level Stop Loss Fund;
“syndicate profit”, in relation to a member and an underwriting year, means the amount by which the aggregate of his profits exceeds the aggregate of his losses for the year, and “syndicate loss” shall be construed accordingly.

2

For the purposes of the definitions of “syndicate profit” and “syndicate loss” in sub-paragraph (1) above—

a

any reference to profits or losses of a member is a reference to profits or losses which, in the accounts of the syndicates of which he is a member, are shown as arising to him, F225. . .

b

any payments under paragraph 3(1), 4(1), (2), (3) or (6), 5(1), (4) or (7) or 6(2) below shall be disregarded.

F226c

where the accounts of a syndicate remain open beyond the end of the underwriting year which is the closing year for that syndicate, profits or losses shown in the accounts of the syndicate as arising to a member in any subsequent underwriting year shall be profits or losses of the member for the last underwriting year but one preceding that subsequent underwriting year.

General requirements

2

1

The arrangements must provide—

a

for the setting up, in relation to any member, of a special reserve fund vested in one or more trustees who have control over it, and

b

for the appointment of an authorised fund manager (who may be the trustees or one of the trustees) to invest the capital of the fund and to vary the investments;

the aggregate amount of the payments under sub-paragraph (1) above as reduced by the aggregate amount of any payments under sub-paragraph (2) above,

exceeds in the aggregate the amount of the member’s syndicate loss.

6

Where the whole or any part of a stop-loss payment made to a member is repaid, there shall be made to the member or his personal representatives or assigns, out of his special reserve fund, payments the amount of which is equal in the aggregate to the amount (if any) to which sub-paragraph (7) below applies or the amount of his special reserve fund, whichever is the less.

7

This sub-paragraph applies to any amount which—

a

has been paid into the member’s special reserve fund under sub-paragraph (2) or (3) above, but

b

would not have been so paid but for the stop-loss payment or (as the case may be) the part repaid.

8

Any payments required by sub-paragraph (1), (2), (3) or (6) above shall be made before the end of such period as may be prescribed.

Payments out of fund to cover syndicate losses

C375

1

The arrangements must be such as to secure that, if the member has sustained a syndicate loss for an underwriting year, there shall be made into a F230premium trust fund of his, out of his special reserve fund, payments the amount of which is equal in the aggregate to the net amount of the loss or the amount of his special reserve fund, whichever is the less.

2

Sub-paragraphs (3) and (4) below apply where a stop-loss payment is made to the member in respect of his syndicate loss for any year.

3

If any payments are subsequently made for the year under sub-paragraph (1) above, the aggregate amount of those payments shall be determined as if the net amount of the syndicate loss were reduced by the amount of the stop-loss payment.

4

If any payments have previously been made for the year under sub-paragraph (1) above, so much of the stop-loss payment as does not exceed the requisite amount shall be paid into his special reserve fund.

5

In sub-paragraph (4) above “the requisite amount” means so much of the amount (if any) given by sub-paragraph (6) below as does not exceed the amount mentioned in paragraph (b) of that sub-paragraph.

6

The amount given by this sub-paragraph is the amount by which—

a

the amount of the stop-loss payment, and

b

the aggregate amount of the payments made under sub-paragraph (1) above,

shall determine in the prescribed manner the value of the fund as at the end of the year 1994 and each subsequent underwriting year; and

b

shall report the value so determined to the member;

and the report shall also state such other matters as may be prescribed.

2

If the value F231(determined under sub-paragraph (1) above) of the fund as at the end of any underwriting year exceeds 50 per cent. of—

F232a

the higher of—

i

the member’s overall premium limit for that year, and

ii

his overall premium limit for the immediately preceding year; or

b

where he did not accept premiums in F233either of those years, his overall premium limit for the last underwriting year in which he did so,

there shall be made to the member or his personal representatives or assigns, out of his special reserve fund, payments the amount of which is equal in the aggregate to the excess.

3

The payments required by sub-paragraph (2) above shall be made before the end of such period as may be prescribed.

Payments out of fund on cessation

7

1

The arrangements must provide that, on the member ceasing to carry on his underwriting business, whether by reason of death or otherwise, the amount of his special reserve fund, so far as not required for giving effect to the requirements of paragraph 4 or 5 above, shall be paid over to the member or his personal representatives or assigns.

2

For the purposes of sub-paragraph (1) above, a payment of an amount shall be in money or F234in assets forming part of the fund or both, as the member or his personal representatives or assigns may direct.

Entitlement of member for tax purposes

F2358

1

Subject to sub-paragraph (2) F236and paragraph 11(2)-(4)below, a member shall be treated for the purposes of the Income Tax Acts and the Gains Tax Acts as absolutely entitled as against the trustees to the assets forming part of his special reserve fund.

2

Where an asset is disposed of by a member to the trustees of his special reserve fund, nothing in sub-paragraph (1) above shall affect the operation of the Gains Tax Acts in relation to that disposal.

Tax exemption for profits arising from assets of fund

9

1

Profits or losses arising from assets forming part of a special reserve fund shall be excluded for the purposes of income tax under the Income Tax Acts, and for the purposes of capital gains tax under the Gains Tax Acts.

2

Where for any underwriting year income tax has been deducted from any profits arising from assets forming part of a special reserve fund, the fund manager may, at any time after the end of that year, claim repayment of that tax.

F2373

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

Tax consequences of payments into and out of fund

F238 C3910

e

as increased by the aggregate amount of any payments made—

i

by the trustees to the member or his personal representatives or assigns,

ii

out of his special reserve fund under paragraph 7(1) above (except where they are also made under paragraph 6(2) above), or otherwise than out of his special reserve fund, and

iii

before the end of that year,

and for this purpose the amount of any payment which is made by way of the transfer of an asset shall be taken to be the market value of the asset at the date of the transfer and “market value” shall be construed in accordance with section 272 of the Taxation of Chargeable Gains Act 1992 F254.

4

Where an asset is transferred to the member or his personal representatives or assigns under paragraph 7(1) above F255or otherwise than out of his special reserve fund, the transfer shall be treated, for the purposes of the Gains Tax Acts F256—

a
in a case where the asset was held by the trustees at the end of the penultimate underwriting year, as an acquisition of the asset by the member or his personal representatives or assigns at the end of that year for a consideration equal to its market value at that time;
b
in a case where the asset was acquired by the trustees after the end of the penultimate underwriting year, as an acquisition of the asset by the member or his personal representatives or assigns, at the date on which, and for the consideration for which, the asset was acquired by the trustees; and
c
in a case where the asset was both acquired by the trustees and transferred by them to the member or his personal representatives or assigns before the end of the penultimate underwriting year, as an acquisition of the asset by the member or his personal representatives or assigns at the date of the transfer and for a consideration equal to its market value at that time.

F2575

In this paragraph, subject to the provisions of any regulations made by the Board—

“the penultimate underwriting year” means the underwriting year F258corresponding to the year of assessment immediately preceding the member’s final year of assessment;

F259“the relevant underwriting year” means—

a
where a member dies before the occurrence of any of the events specified in sub–paragraph (6) below, the underwriting year immediately preceding that corresponding to the relevant year of assessment; and
b
in any other case, the underwriting year corresponding to the year of assessment immediately preceding the member’s final year of assessment.

“the relevant year of assessment” means—
1. a
  F260where a member dies before the occurrence of any of the events specified in sub-paragraph (6) below, the year of assessment at the end of which he is treated, by virtue of section 179A(2) of this Act F261, as having died;
2. b
  in any other case, his final year of assessment.

F2626

For the purposes of the definitions of “the relevant underwriting year” and “the relevant year of assessment” in sub–paragraph (5) above the events specified before the occurrence of which a member dies are the following—

a

the member’s deposit at Lloyd’s is paid over to him or his assigns, or to a person other than the member or his assigns;

b

the member or another person is released from any arrangement entered into by the member or that person in order to satisfy the requirement on the part of the member to provide a deposit at Lloyd’s;

c

the last open year of account of any syndicate of which he was a member is closed.

7

For the purposes of sub–paragraph (6)(c) above, the last open year of account of any syndicate of which a person was a member shall be regarded as having closed either—

a

when the member is treated under the rules or practice of Lloyd’s as having been discharged of all his liabilities in relation to that syndicate, whether by the syndicate closing its accounts or by the member or his personal representatives or assigns entering into a quota share contract, or

b

in a case where the member entered, or his personal representatives or assigns have entered, into a quota share contract before the end of the closing year of the syndicate, at the end of the underwriting year in which the contract was made.

Part II Winding up of old-style funds

Preliminary

12

1

In this Part of this Schedule—

“new-style fund” means a special reserve fund set up under the arrangements mentioned in section 175(1) of this Act;
“old-style fund” means a special reserve fund set up under the arrangements mentioned in section 452(1) of the Taxes Act 1988;
“the relevant period”, in relation to an old-style fund, means the period of three months beginning with the closing date.

2

For the purposes of sub-paragraph (1) above, the closing date for an old-style fund shall be the earliest date on which each of the following has occurred as respects the year 1991-92 and earlier years of assessments, namely—

a

the time for making any payments into the fund under section 452(5) of the Taxes Act 1988 has expired, or the member has given notice to the inspector that he will not be making any (or any further) such payments; and

b

any payments required by section 453(1) of that Act to be made out of the fund have been so made.

Winding up of old-style funds

13

1

A member may, at any time before the end of the relevant period, direct that so much of the capital of any old-style fund of his as represents sums paid into it under section 452(5) of the Taxes Act 1988 shall be transferred, at the end of that period, into his new-style fund; F263. . .

2

Where an amount of capital is transferred into a member’s new-style fund under sub-paragraph (1) above, there shall be paid into that fund by the Board an amount equal to the amount of tax which, if the amount transferred were a net amount corresponding to a gross amount from which income tax had been duly deducted at the basic rate for the year 1992-93, would have been so deducted.

3

If a member does not give a direction under sub-paragraph (1) above in relation to any old-style fund of his, so much of the capital of that fund as represents sums paid into it under section 452(5) of the Taxes Act 1988 shall be paid over, at the end of the relevant period, to the member or his personal representatives or assigns.

4

In either event, the remaining capital of any old-style fund of a member shall be paid over, at the end of the relevant period, to the member or his personal representatives or assigns.

5

For the purposes of sub-paragraphs (1) and (3) above, any payments made out of an old-style fund under section 453(1) of the Taxes Act 1988 shall be treated as having been met, so far as possible, out of payments made into the fund under section 452(5) of that Act.

F2646

A transfer or payment under this paragraph of an amount of capital shall be in money or in assets forming part of the fund or both, as the member may direct.

Tax consequences of winding up

14

1

Where an asset is transferred into a member’s new-style fund under paragraph 13(1) above, the transfer shall be treated, for the purposes of the Gains Tax Acts, to be a disposal of the asset by the member for a consideration equal to its market value.

2

Sub-paragraph (3) below applies where an amount is paid over to the member or his personal representatives or assigns under paragraph 13(3) above.

3

In computing for the purposes of income tax the profits of the member’s underwriting business for the year 1992-93, it shall be assumed—

a

that the amount paid were a net amount corresponding to a gross amount from which income tax had been duly deducted at the basic rate for that year; and

b

that the corresponding gross amount were a trading receipt for that year.

SCHEDULE 21 Oil taxation: supplementary provisions about information

Section 187.

Part I Restrictions on powers under section 187

1

References in this Part of this Schedule to subsection (2), subsection (3) or subsection (5) are references to those subsections of section 187 of this Act.

2

Before a notice is given to a person by the Board under subsection (2), subsection (3) or subsection (5), the person must have been given a reasonable opportunity to deliver (or, in the case of subsection (3), to deliver or make available) the documents in question or to furnish the particulars in question; and the Board must not apply for consent under subsection (5) until the person has been given that opportunity.

3

1

Subject to sub-paragraph (2) below, where a notice is given to any person under subsection (3), the Board shall give a copy of the notice to the taxpayer to whom it relates.

2

If, on an application by the Board, a Special Commissioner so directs, a copy of a notice under subsection (3) need not be given to the taxpayer to whom it relates; but such a direction shall not be given unless the Commissioner is satisfied that the Board has reasonable grounds for suspecting the taxpayer of fraud.

4

1

A notice under subsection (2) does not oblige a person to deliver documents or furnish particulars relating to the conduct of any pending appeal by him.

2

A notice under subsection (3) or subsection (5) does not oblige a person to deliver or make available documents relating to the conduct of a pending appeal by the taxpayer.

3

In this paragraph, “appeal” means appeal relating to tax.

5

To comply with a notice under subsection (2), and as an alternative to delivering documents to comply with a notice under subsection (3) or subsection (5), copies of documents may be delivered instead of the originals; but—

a

the copies must be photographic or otherwise by way of facsimile; and

b

if so required by the Board in the case of any documents specified in the requirement, the originals must be made available for inspection by a named officer of the Board (failure to comply with this requirement counting as failure to comply with the notice).

6

1

A notice under subsection (3) does not oblige a person to deliver or make available any document the whole of which originates more than six years before the date of the notice.

2

Sub-paragraph (1) above does not apply where the notice is so expressed as to exclude the restrictions of that sub-paragraph; and it can only be so expressed where the Board has applied to a Special Commissioner for, and obtained, his approval.

3

For the purpose of sub-paragraph (2) above, the Commissioner shall give approval only if satisfied, on the Board’s application, that there is reasonable ground for believing that tax has, or may have been, lost to the Crown owing to the fraud of the taxpayer.

7

A notice under subsection (3) or subsection (5) does not oblige a barrister, advocate or a solicitor to deliver or make available, without his client’s consent, any document with respect to which a claim to professional privilege could be maintained.

8

1

Subject to paragraphs 9 and 10 below, a notice under subsection (3) or subsection (5)—

a

does not oblige a person who has been appointed as an auditor for the purposes of any enactment to deliver or make available documents which are his property and were created by him or on his behalf for or in connection with the performance of his functions under that enactment; and

b

does not oblige a tax adviser to deliver or make available documents which are his property and consist of relevant communications.

2

In sub-paragraph (1) above “relevant communications” means communications between the tax adviser and—

a

a person in relation to whose tax affairs he has been appointed, or

b

any other tax adviser of such a person,

the purpose of which is the giving or obtaining of advice about any of those tax affairs; and in this paragraph “tax adviser” means a person appointed to give advice about the tax affairs of another person (whether appointed directly by that other person or by another tax adviser of his).

9

1

Subject to paragraph 11 below, paragraph 8 above shall not have effect in relation to any document which contains information explaining any information, return, accounts or other document which the person to whom the notice is given has, as tax accountant, assisted any client of his in preparing for, or delivering to, the Board.

2

For the purposes of this paragraph, a person stands in relation to another as a tax accountant at any time when he assists the other in the preparation or delivery of any information, return, accounts or other document which he knows will be, or is or are likely to be, used for any purpose of tax; and his clients are those to whom he stands or has stood in that relationship.

10

Subject to paragraph 11 below, in the case of a notice under subsection (5), paragraph 8 above shall not have effect in relation to any document which contains information giving the identity or address of any taxpayer to whom the notice relates or of any person who has acted on behalf of any such person.

11

Paragraph 8 above is not disapplied by paragraph 9 or paragraph 10 above in the case of any document if—

a

the information within paragraph 9 or paragraph 10 is contained in some other document; and

b

either—

i

that other document, or a copy of it, has been delivered to the Board, or

ii

that other document has been inspected by an officer of the Board.

12

Where paragraph 8 above is disapplied by paragraph 9 or paragraph 10 above in the case of a document, the person to whom the notice is given either shall deliver the document to the Board or make it available for inspection by an officer of the Board or shall—

a

deliver to the Board a copy (which is photographic or otherwise by way of facsimile) of any parts of the document which contain the information within paragraph 9 or paragraph 10; and

b

if so required by the Board, make available for inspection by a named officer of the Board such parts of the document as contain that information;

and failure to comply with any requirement under sub-paragraph (b) above shall constitute a failure to comply with the notice.

Part II Meaning of “documents”

2AA Initial reserves.
1
An order providing for any assets and liabilities to be appropriated as assets and liabilities of a trading fund may make—
a
provision for any part of the amount by which the values of the assets exceed the amounts of the liabilities to be treated as reserves in the accounts of the trading fund, and
b
provision about the maintenance of such reserves.
2
For the purposes of subsection (1) above “reserves” means reserves whether general, capital or otherwise; and an order may provide for different kinds of reserves.
3
Nothing in subsection (1) above shall prejudice the operation of section 4(2) of this Act in relation to a trading fund; and nothing in section 4(2) of this Act shall prejudice the operation of subsection (1) above in relation to a trading fund.
4
This section applies in relation to an order made after the day on which the Finance Act 1993 was passed.

2

In section 2(3) (originating debt where fund established) in paragraph (b) after “capital” there shall be inserted “ or any amount treated by virtue of the order as reserves or (where the order provides for both public dividend capital and reserves) the aggregate of those amounts ”.

3

In section 2(4) (addition to originating debt where additional assets and liabilities appropriated to fund) in paragraph (b) after “capital” there shall be inserted “ for any amount treated by virtue of the order as reserves or (where the order provides for both public dividend capital and reserves) the aggregate of those amounts ”.

Public dividend capital etc.

3

In section 2A (public dividend capital) the following subsection shall be inserted after subsection (2) (limited power of Minister to issue public dividend capital to fund)—

2A
If the responsible Minister considers it appropriate to do so, he may with Treasury concurrence issue out of money provided by Parliament an amount to the fund as public dividend capital; and this subsection shall have effect instead of subsection (2) above after the day on which the Finance Act 1993 was passed.

Maximum borrowing etc.

4

1

The following section shall be inserted after section 2B—

2C Maximum borrowing etc.
1
Where an order made after the day on which the Finance Act 1993 was passed establishes a trading fund, the order shall provide that the aggregate of the following shall not exceed the maximum specified in the order—
a
the total outstanding at any given time in respect of amounts issued to the fund under section 2B of this Act (other than as originating debt), and
b
the total at that time constituting public dividend capital issued to the fund under section 2A(2A) of this Act;
and that maximum (or that maximum as varied by a subsequent order) shall be observed accordingly.
2
Where an order made on or before the day on which the Finance Act 1993 was passed establishes a trading fund, and the order specifies the maximum amount that may be issued to the fund under section 2B of this Act, the order shall be taken to provide that the aggregate of the following shall not exceed that maximum—
a
the total outstanding at any given time in respect of amounts issued to the fund under section 2B of this Act (other than as originating debt), and
b
the total at that time constituting public dividend capital issued to the fund under section 2A(2A) of this Act;
and that maximum (or that maximum as varied by a subsequent order) shall be observed accordingly.
3
The sum of the maxima in force in respect of all trading funds at any time shall not exceed £2,000 million.
4
The Treasury may by order made by statutory instrument increase or further increase the limit in subsection (3) above by any amount, not exceeding £1,000 million, specified in the order but not so as to make the limit exceed £4,000 million.
5
No order under subsection (4) above shall be made unless a draft of a statutory instrument containing it has been laid before the House of Commons and approved by a resolution of that House.

2

In section 2B (borrowing by funds) subsections (6) to (9) (which are superseded by the new section 2C) shall be omitted.

SCHEDULE 23 Repeals

Section 213.

I11Part I Excise duties

Annotations:

Commencement Information

I11

Sch. 23 Pt. I partly in force; Sch. 23 Pt. I partly in force at Royal Assent, Sch. 23 Pt. I(7) in force at 1.2.1994 see S.I. 1993/2842, art. 3(3), otherwise in force in accordance with ss. 4, 11(5), 12(8).

(1) Beer duty

Chapter	Short title	Extent of repeal
1979 c. 4.	The Alcoholic Liquor Duties Act 1979.	In section 42, in subsection (2) paragraph (a) and in paragraph (b) the words “or removal to the Isle of Man”, and in subsections (3) and (4) the word “remove,” in each place where it occurs. Section 43. Section 45(1)(b). Section 51.
1979 c. 58.	The Isle of Man Act 1979.	In Schedule 1, paragraph 30.
1991 c. 31.	The Finance Act 1991.	In Schedule 2, paragraph 10.

Chapter

Short title

Extent of repeal

1979 c. 4.

The Alcoholic Liquor Duties Act 1979.

In section 42, in subsection (2) paragraph (a) and in paragraph (b) the words “or removal to the Isle of Man”, and in subsections (3) and (4) the word “remove,” in each place where it occurs.

Section 43.

Section 45(1)(b).

Section 51.

1979 c. 58.

The Isle of Man Act 1979.

In Schedule 1, paragraph 30.

1991 c. 31.

The Finance Act 1991.

In Schedule 2, paragraph 10.

These repeals have effect in accordance with section 4 of this Act

(2) Blending of alcoholic liquors

Chapter	Short title	Extent of repeal
1979 c. 4.	The Alcoholic Liquor Duties Act 1979.	In section 55, paragraph (e) of subsection (5) and the word “and” immediately preceding that paragraph, and subsection (5A).

These repeals have effect in accordance with section 5 of this Act.

(3) Mixing of wine and spirits

Chapter	Short title	Extent of repeal
1979 c. 4.	The Alcoholic Liquor Duties Act 1979.	Section 58(2).

This repeal has effect in accordance with section 6 of this Act.

(4) Hydrocarbon oil duty: fuel substitutes

Chapter	Short title	Extent of repeal
1979 c. 5.	The Hydrocarbon Oil Duties Act 1979.	Section 4. Section 7. Section 16. Section 19(6). In section 20AA(1)(a), the words “petrol substitute, spirits used for making power methylated spirits”. Section 21(1)(b). In section 27(1), the definitions of “petrol substitute” and “power methylated spirits”. Part II of Schedule 3.
1979 c. 8.	The Excise Duties (Surcharges or Rebates) Act 1979.	In section 1(1)(a), the words “(other than power methylated spirits)”.
1986 c. 41.	The Finance Act 1986.	In paragraph 4 of Schedule 5, “13”.

Chapter

Short title

Extent of repeal

1979 c. 5.

The Hydrocarbon Oil Duties Act 1979.

Section 4.

Section 7.

Section 16.

Section 19(6).

In section 20AA(1)(a), the words “petrol substitute, spirits used for making power methylated spirits”.

Section 21(1)(b).

In section 27(1), the definitions of “petrol substitute” and “power methylated spirits”.

Part II of Schedule 3.

1979 c. 8.

The Excise Duties (Surcharges or Rebates) Act 1979.

In section 1(1)(a), the words “(other than power methylated spirits)”.

1986 c. 41.

The Finance Act 1986.

In paragraph 4 of Schedule 5, “13”.

The power in section 11(5) of this Act applies to these repeals as it applies to that section.

(5) Hydrocarbon oil duty: fuel measurement

Chapter	Short title	Extent of repeal
1979 c. 5.	The Hydrocarbon Oil Duties Act 1979.	Section 2(5). In section 15(1), the words “shown to the satisfaction of the Commissioners to have been”.

Chapter

Short title

Extent of repeal

1979 c. 5.

The Hydrocarbon Oil Duties Act 1979.

Section 2(5).

In section 15(1), the words “shown to the satisfaction of the Commissioners to have been”.

The power in section 12(8) of this Act applies to these repeals as it applies to that section.

(6) Vehicles excise duty

Chapter	Short title	Extent of repeal
1985 c. 54.	The Finance Act 1985.	In Schedule 2, paragraph 6.
1988 c. 39.	The Finance Act 1988.	Section 4(2).
1989 c. 26.	The Finance Act 1989.	Section 6(6).
1990 c. 29.	The Finance Act 1990.	Section 5(7).
1991 c. 31.	The Finance Act 1991.	Section 4(4).
1992 c. 20.	The Finance Act 1992.	Section 4(3) and (4).

These repeals have effect in relation to licences taken out after 16th March 1993.

(7) Repeals connected with lottery duty

Chapter	Short title	Extent of repeal
1979 c. 2.	The Customs and Excise Management Act 1979.	In section 1(1), in the definition of “the revenue trade provisions of the customs and excise Acts”, the word “and” at the end of paragraph (b) and, in the definition of “revenue trader”, the word “or” at the end of paragraph (a)(i).
1981 c. 63.	The Betting and Gaming Duties Act 1981.	Section 6(4).
1986 c. 41.	The Finance Act 1986.	In Schedule 4, paragraph 2(2).

These repeals come into force in accordance with section 41 of this Act.

Part II Value added tax

(1) Fuel and power

Chapter	Short title	Extent of repeal
1983 c. 55.	The Value Added Tax Act 1983.	In Schedule 5, Group 7.

This repeal comes into force in accordance with section 42 of this Act.

(2) Fuel scales

Chapter	Short title	Extent of repeal
1986 c. 41.	The Finance Act 1986.	In Schedule 6— (a) in paragraph 2(1) and (2), the words “Subject to paragraph 3 below,”, in each place where they occur; and (b) paragraph 3 and the Table B set out after that paragraph.

These repeals have effect in relation to any case where the prescribed accounting period begins after 5th April 1993.

(3) Acquisitions

Chapter	Short title	Extent of repeal
1983 c. 55.	The Value Added Tax Act 1983.	In section 5(9), in the words after paragraph (b), the words from “a supply of goods” to “below or there is”. Section 32B. In section 48(1), in the definition of “taxable person”, the words “(subject to section 32B(3) above)”.
1992 c. 48.	The Finance (No. 2) Act 1992.	In paragraph 6(2) of Schedule 3, paragraph (b) and the word “and” immediately preceding it.

Chapter

Short title

Extent of repeal

1983 c. 55.

The Value Added Tax Act 1983.

In section 5(9), in the words after paragraph (b), the words from “a supply of goods” to “below or there is”.

Section 32B.

In section 48(1), in the definition of “taxable person”, the words “(subject to section 32B(3) above)”.

1992 c. 48.

The Finance (No. 2) Act 1992.

In paragraph 6(2) of Schedule 3, paragraph (b) and the word “and” immediately preceding it.

These repeals come into force in accordance with section 44(4) of this Act.

(4) Penalties

Chapter	Short title	Extent of repeal
1985 c. 54.	The Finance Act 1985.	Section 13(4). Section 19(2)(b).

Chapter

Short title

Extent of repeal

1985 c. 54.

The Finance Act 1985.

Section 13(4).

Section 19(2)(b).

The repeal of section 13(4) of the Finance Act 1985 has effect in accordance with paragraph 3(3) of Schedule 2 to this Act and the repeal of section 19(2)(b) of that Act has effect in accordance with paragraph 5(3) of that Schedule.

(5) Repeals connected with abolition of car tax

Chapter	Short title	Extent of repeal
1983 c. 55.	The Value Added Tax Act 1983.	In Schedule 4, in paragraph 3A(1) the words “or with car tax” and the word “tax” in the second place where it occurs. In Schedule 4A, in paragraph 2(1) the words “or with car tax” and the word “tax” in the second place where it occurs. In Schedule 7, in paragraph 2(3B) the words “or of a chargeable vehicle within the meaning of the Car Tax Act 1983” and the words “or of such a vehicle”.

Chapter

Short title

Extent of repeal

1983 c. 55.

The Value Added Tax Act 1983.

In Schedule 4, in paragraph 3A(1) the words “or with car tax” and the word “tax” in the second place where it occurs.

In Schedule 4A, in paragraph 2(1) the words “or with car tax” and the word “tax” in the second place where it occurs.

In Schedule 7, in paragraph 2(3B) the words “or of a chargeable vehicle within the meaning of the Car Tax Act 1983” and the words “or of such a vehicle”.

Part III Income tax, corporation tax and capital gains tax

(1) Temporary relief for interest payments

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 354(5) and (6). Section 356D(9). Section 357(4). Section 371. In paragraph 10(1) and (2) of Schedule 7, the words “354(5) and (6)”, in each place.

Chapter

Short title

Extent of repeal

1988 c. 1.

The Income and Corporation Taxes Act 1988.

Section 354(5) and (6).

Section 356D(9).

Section 357(4).

Section 371.

In paragraph 10(1) and (2) of Schedule 7, the words “354(5) and (6)”, in each place.

These repeals come into force in accordance with section 57 of this Act.

(2) Charities

Chapter	Short title	Extent of repeal
1990 c. 29.	The Finance Act 1990.	Section 24.
1992 c. 48.	The Finance (No. 2) Act 1992.	Section 26.

1

The repeal of section 24 of the Finance Act 1990 has effect for the year 1993-94 and subsequent years of assessment.

(3) Car benefits

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 157(4) and (5).

These repeals have effect for the year 1994-95 and subsequent years of assessment.

(4) Car fuel

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 158(5), the words “or 3”.

This repeal has effect for the year 1993-94.

(5) Heavier commercial vehicles (consequential repeal)

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 159A(8)(a), the word “but” at the end of sub-paragraph (i).

This repeal has effect for the year 1993-94 and subsequent years of assessment.

(6) Taxation of distributions

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 233(1)(c), the words “as income which is not chargeable at the lower rate and”.
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 5(2)(a), the words “(liability to income tax at the additional rate)”.
1992 c. 48.	The Finance (No. 2) Act 1992.	In section 19, in subsection (3), the words “233(2)” and, in subsection (4), the words “233(1)(c)”.

These repeals have effect for the year 1993-94 and subsequent years of assessment.

(7) Retirement relief etc.

Chapter	Short title	Extent of repeal
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In paragraph 1 of Schedule 6, in sub-paragraph (2), the definitions of “family company”, “family” and “relative”, and sub-paragraphs (3) and (4).

These repeals come into force in accordance with section 87(2) of this Act.

(8) Insurance companies

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 432A(10).
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 212— (a) in subsection (2), the words from “and in relation to” onwards; (b) subsections (3), (4), (6) and (8). Section 213(9). Section 214(3) to (5).

Chapter

Short title

Extent of repeal

1988 c. 1.

The Income and Corporation Taxes Act 1988.

Section 432A(10).

1992 c. 12.

The Taxation of Chargeable Gains Act 1992.

In section 212—

(a) in subsection (2), the words from “and in relation to” onwards;

(b) subsections (3), (4), (6) and (8).

Section 213(9).

Section 214(3) to (5).

The repeal of section 212(8) of the Taxation of Chargeable Gains Act 1992 has effect, in accordance with section 91(1) of this Act, in relation to the accounting periods mentioned in section 212(8), and the other repeals have effect in relation to accounting periods beginning on or after 1st January 1993.

(9) Overseas life insurance companies

Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In section 31(3), the word “445”.
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 11(3), the words “Subject to section 447,”. Section 445. Section 446(1). Section 447(1), (2) and (4). Section 448. Section 449. Section 724(5) to (8). In section 811(2), paragraph (c) and the word “and” immediately preceding it. In Schedule 19AB, paragraph 1(9).
1991 c. 31.	The Finance Act 1991.	In Schedule 7, paragraph 7(1)(a), (2), (4) and (5).

Chapter

Short title

Extent of repeal

1970 c. 9.

The Taxes Management Act 1970.

In section 31(3), the word “445”.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 11(3), the words “Subject to section 447,”.

Section 445.

Section 446(1).

Section 447(1), (2) and (4).

Section 448.

Section 449.

Section 724(5) to (8).

In section 811(2), paragraph (c) and the word “and” immediately preceding it.

In Schedule 19AB, paragraph 1(9).

1991 c. 31.

The Finance Act 1991.

In Schedule 7, paragraph 7(1)(a), (2), (4) and (5).

These repeals have effect in accordance with section 103 of this Act.

(10) Indexation

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 1(5). Section 257C(2).
1990 c. 29.	The Finance Act 1990.	Section 17(2).

Chapter

Short title

Extent of repeal

1988 c. 1.

The Income and Corporation Taxes Act 1988.

Section 1(5).

Section 257C(2).

1990 c. 29.

The Finance Act 1990.

Section 17(2).

These repeals have effect in accordance with section 107 of this Act.

(11) Pay and file

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 343(3), the word “claim”, in the second place where it occurs. In section 395, in the words after paragraph (c) of subsection (1) and in subsection (4), the words “to claim relief”. In section 400(2)(a), the words “or, if a claim had been made under that subsection, would be”.
1991 c. 31.	The Finance Act 1991.	In Schedule 15, paragraphs 2 and 9.

Chapter

Short title

Extent of repeal

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 343(3), the word “claim”, in the second place where it occurs.

In section 395, in the words after paragraph (c) of subsection (1) and in subsection (4), the words “to claim relief”.

In section 400(2)(a), the words “or, if a claim had been made under that subsection, would be”.

1991 c. 31.

The Finance Act 1991.

In Schedule 15, paragraphs 2 and 9.

The repeals in the Income and Corporation Taxes Act 1988 and the repeal of paragraph 9 of Schedule 15 to the Finance Act 1991 have effect in relation to accounting periods ending after the day appointed for the purposes of section 10 of the Income and Corporation Taxes Act 1988.

(12) Lloyd’s underwriters etc.

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Sections 450 to 457. Section 710(14). In section 711(8), the words “or section 725(9)” and the words “or straddling”, in both places where they occur. Section 720(3). In section 721, subsections (5) and (6). Section 725. In Schedule 4, paragraph 18. Schedule 19A.
1989 c. 26.	The Finance Act 1989.	In section 43, subsections (6) and (7). In section 92, subsections (4) to (7). In Schedule 11, paragraph 10.
1990 c. 29.	The Finance Act 1990.	In Schedule 10, paragraph 18.
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	Sections 206 to 209.
1993 c. 34.	The Finance Act 1993.	In section 183, subsections (4) to (8).

1

The repeal of section 450(6) of the Income and Corporation Taxes Act 1988 has effect in relation to acquisitions or disposals made, or treated as made, after 31st December 1993.

2

The following repeals, namely—

the repeals in sections 710, 711, 720 and 721 of and Schedule 4 to the Income and Corporation Taxes Act 1988 and the repeal of section 725 of that Act;
the repeal in Schedule 11 to the Finance Act 1989;
the repeal in Schedule 10 to the Finance Act 1990;
the repeals of sections 207 and 208 of the Taxation of Chargeable Gains Act 1992; and
the repeals of subsections (4) to (6) of section 183 of this Act,

have effect for the year 1994 and subsequent underwriting years.

3

The repeals in section 43 of the Finance Act 1989 have effect in relation to periods of account ending on or after 30th June 1993.

4

The following repeals, namely—

the repeals of subsections (2) to (5) of section 206 and subsections (1), (2) and (6) of section 209 of the Taxation of Chargeable Gains Act 1992; and
the repeals of subsections (7) and (8) of section 183 of this Act,

have effect for the year of assessment 1994-95 and subsequent years of assessment.

5

The other repeals have effect for the year 1992-93 and subsequent years of assessment.

Part IV Oil taxation

Chapter	Short title	Extent of repeal
1975 c. 22.	The Oil Taxation Act 1975.	In Schedule 2, in the Table in paragraph 1, in the modification relating to section 98 of the Taxes Management Act 1970, the words “or to paragraph 7 of this Schedule”; and paragraph 7.

Part V Inheritance tax

Chapter	Short title	Extent of repeal
1984 c. 51.	The Inheritance Tax Act 1984.	In section 267(4), the words “but without regard to any dwelling-house available in the United Kingdom for his use”.

This repeal has effect in accordance with section 208 of this Act.

Part VI Statutory effect of resolutions etc.

Chapter	Short title	Extent of repeal
1968 c. 2.	The Provisional Collection of Taxes Act 1968.	In section 1, in subsection (1) the words “car tax”and subsection (1A). In section 5(1), paragraph (c) and the word “or” immediately preceding it.
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 8, subsections (4) to (6).

Chapter

Short title

Extent of repeal

1968 c. 2.

The Provisional Collection of Taxes Act 1968.

In section 1, in subsection (1) the words “car tax”and subsection (1A).

In section 5(1), paragraph (c) and the word “or” immediately preceding it.

1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 8, subsections (4) to (6).

The repeals in the Provisional Collection of Taxes Act 1968 have effect in accordance with section 205 of this Act.

Part VII Trading funds

Chapter	Short title	Extent of repeal
1973 c. 63.	The Government Trading Funds Act 1973.	In section 2B, subsections (6) to (9).

1. Cigarettes	An amount equal to 20 per cent. of the retail price plus £48.75 per thousand cigarettes.
2. Cigars	£72.30 per kilogram.
3. Hand-rolling tobacco	£76.29 per kilogram.
4. Other smoking tobacco and chewing tobacco	£31.93 per kilogram.