Finance Act 1994

1994 c. 9

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.

[3rd May 1994] C1

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:—

Annotations:

Modifications etc. (not altering text)

Act restricted (1.5.1995) by 1995 c. 4, s. 86(11)(14) (with Sch. 8 paras. 55(2), 57(1))

Part I Customs and Excise

Chapter I General

Rates of duty

1 Wine, made-wine and cider.

1

For the Table of rates of duty in Schedule 1 to the M1Alcoholic Liquor Duties Act 1979 (wine and made-wine) there shall be substituted the Table in Schedule 1 to this Act.

2

In section 62(1) of that Act (cider) for “£22.39” there shall be substituted “ £22.82 ”.

3

This section shall be deemed to have come into force on 1st January 1994.

2 Tobacco products.

1

For the Table in Schedule 1 to the M2Tobacco Products Duty Act 1979 there shall be substituted—

TABLE
1. Cigarettes
An amount equal to 20 per cent. of the retail price plus £52.33 per thousand cigarettes.
2. Cigars
£77.58 per kilogram.
3. Hand-rolling tobacco
£81.86 per kilogram.
4. Other smoking tobacco and chewing tobacco
£34.26 per kilogram.

2

This section shall be deemed to have come into force at 6 o’clock in the evening of 30th November 1993.

3 Hydrocarbon oil.

1

In section 6(1) of the M3Hydrocarbon Oil Duties Act 1979 for “£0.3058” (duty on light oil) and “£0.2514” (duty on heavy oil) there shall be substituted “ £0.3314 ” and “ £0.2770 ” respectively.

2

In section 11(1) of that Act (rebate on heavy oil) for “£0.0105” (fuel oil) and “£0.0149” (gas oil) there shall be substituted “ £0.0116 ” and “ £0.0164 ” respectively.

3

In section 14(1) of that Act (rebate on light oil for use as furnace fuel) for “£0.0105” there shall be substituted “ £0.0116 ”.

4

This section shall be deemed to have come into force at 6 o’clock in the evening of 30th November 1993.

F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions

5 Vehicles excise duty: miscellaneous provisions.

Schedule 2 to this Act (which contains miscellaneous provisions relating to vehicles excise duty) shall have effect.

6 Gaming machine licence duty.

Schedule 3 to this Act (which makes amendments to the M4Betting and Gaming Duties Act 1981 about gaming machine licence duty) shall have effect.

C13Chapter II Appeals and Penalties

Annotations:

Modifications etc. (not altering text)

C13

Pt. 1 Chapter 2 (ss. 7-19) applied (17.3.2000) by S.I. 2000/426, art. 5

VAT and duties tribunals

I17VAT and duties tribunals.

F21

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

F22

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

3

In the following provisions of this Chapter references to an appeal tribunal are references to a VAT and duties tribunal.

4

Sections F385 and 87 of the Value Added Tax Act 1994 (settling of appeals by agreement and enforcement of decisions of tribunal) shall have effect as if—

a

the references to section F483 of that Act included references to this Chapter; and

b

references to value added tax included references to any relevant duty.

5

Without prejudice to the generality of the power conferred by paragraph 9 of Schedule F512 to the Value Added Tax Act 1994 (rules of procedure for tribunals), rules under that paragraph may provide for costs awarded against an appellant on an appeal by virtue of this Chapter to be recoverable, and for any directly applicable Community legislation relating to any relevant duty or any enactment so relating to apply, as if the amount awarded were an amount of duty which the appellant is required to pay.

6

In Part I of Schedule 1 to the M5Tribunals and Inquiries Act 1992 (tribunals under direct supervision of Council on Tribunals), for the entry beginning “Value added tax” there shall be substituted the following entry—

VAT and duties
44. VAT and duties tribunals for England and Wales and for Northern Ireland, constituted in accordance with Schedule 8 to the Value Added Tax Act 1983 (c. 55).

7

In Part II of Schedule 1 to that Act of 1992 (tribunals under supervision of Scottish Committee of the Council), for the entry beginning “Value added tax” there shall be substituted the following entry—

VAT and duties
63. VAT and duties tribunals for Scotland constituted in accordance with Schedule 8 to the Value Added Tax Act 1983 (c. 55).

Civil penalties

I28 Penalty for evasion of excise duty.

1

Subject to the following provisions of this section, in any case where—

a

any person engages in any conduct for the purpose of evading any duty of excise, and

b

his conduct involves dishonesty (whether or not such as to give rise to any criminal liability),

that person shall be liable to a penalty of an amount equal to the amount of duty evaded or, as the case may be, sought to be evaded.

2

References in this section to a person’s evading a duty of excise shall include references to his obtaining or securing, without his being entitled to it—

a

any repayment, rebate or drawback of duty;

b

any relief or exemption from or any allowance against duty; or

c

any deferral or other postponement of his liability to pay any duty or of the discharge by payment of any such liability,

and shall also include references to his evading the cancellation of any entitlement to, or the withdrawal of, any such repayment, rebate, drawback, relief, exemption or allowance.

3

In relation to any such evasion of duty as is mentioned in subsection (2) above, the reference in subsection (1) above to the amount of duty evaded or sought to be evaded shall be construed as a reference to the amount of the repayment, rebate, drawback, relief, exemption or allowance or, as the case may be, the amount of the payment which, or the liability to make which, is deferred or otherwise postponed.

4

Where a person is liable to a penalty under this section—

a

the Commissioners or, on appeal, an appeal tribunal may reduce the penalty to such amount (including nil) as they think proper; and

b

an appeal tribunal, on an appeal relating to a penalty reduced by the Commissioners under this subsection, may cancel the whole or any part of the reduction made by the Commissioners.

5

Neither of the following matters shall be a matter which the Commissioners or any appeal tribunal shall be entitled to take into account in exercising their powers under subsection (4) above, that is to say—

a

the insufficiency of the funds available to any person for paying any duty of excise 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 duty.

6

Statements made or documents produced by or on behalf of a person shall not be inadmissible in—

a

any criminal proceedings against that person in respect of any offence in connection with or in relation to any duty of excise, or

b

any proceedings against that person for the recovery of any sum due from him in connection with or in relation to any duty of excise,

by reason only that any of the matters specified in subsection (7) below has been drawn to his attention and that he was, or may have been, induced by that matter having been brought to his attention to make the statements or produce the documents.

7

The matters mentioned in subsection (6) above are—

a

that the Commissioners have power, in relation to any duty of excise, to assess an amount due by way of a civil penalty, instead of instituting criminal proceedings;

b

that it is the Commissioners’ practice, without being able to give an undertaking as to whether they will make such an assessment in any case, to be influenced in determining whether to make such an assessment by the fact (where it is the case) that a person has made a full confession of any dishonest conduct to which he has been a party and has given full facilities for an investigation;

c

that the Commissioners or, on appeal, an appeal tribunal have power to reduce a penalty under this section, as provided in subsection (4) above; and

d

that, in determining the extent of such a reduction in the case of any person, the Commissioners or tribunal will have regard to the extent of the co-operation which he has given to the Commissioners in their investigation.

8

Where, by reason of conduct falling within subsection (1) above, a person is convicted of an offence, that conduct shall not also give rise to liability to a penalty under this section.

a contravention of any provision made by or under any enactment consists in or involves a failure, before such time as may be specified in or determined in accordance with that provision, to send a return to the Commissioners showing the amount which any person is or may become required to pay by way of, or on account of, any duty of excise, and

b

that contravention attracts a penalty under this section,

that contravention shall also attract daily penalties.

6

c

any failure by any person to take or permit to be taken any step which he is required under Schedule 1 or 3 to the M6Betting and Gaming Duties Act 1981 F10or Schedule 1 to the Finance Act 1997 to take or to permit to be taken;

d

any unreasonable delay in performing any obligation the failure to perform which would be a default falling within this subsection.

F112A

In subsection (2)(a) and (b) above “enactment” includes directly applicable Community provision.

3

Where an amount has been assessed as due from any person and notified in accordance with this section, it shall, subject to any appeal under section 16 below, be deemed to be an amount of the duty in question due from that person and may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.

4

An assessment of the amount of any duty of excise due from any person shall not be made under this section at any time after whichever is the earlier of the following times, that is to say—

a

subject to subsection (5) below, the end of the period of F12three years beginning with the time when his liability to the duty arose; and

b

c

section 31(1) and (3) of the M8Finance Act 1993, and

d

section 41(1) and (3) below,

and also include references to attempting or conspiring to commit an offence of fraud or dishonesty and to inciting the commission of such an offence.

8

In this section “representative”, in relation to a person appearing to the Commissioners to be a person from whom any amount has become due in respect of any duty of excise, means his personal representative F14, trustee in bankruptcy or interim or permanent trustee, any receiver or liquidator appointed in relation to that person or any of his property or any other person acting in a representative capacity in relation to that person.

12AF15 Other assessments relating to excise duty matters.

1

This subsection applies where any relevant excise duty relief other than an excepted relief—

a

has been given but ought not to have been given, or

b

would not have been given had the facts been known or been as they later turn out to be.

2

Where subsection (1) above applies, the Commissioners may assess the amount of the relief given as being excise duty due from the liable person and notify him or his representative accordingly.

3

Where an amount has been assessed as due from any person under—

a

e

an amount by way of rebate has been allowed to a person;

f

the liability of a person to repay an amount paid by way of drawback of excise duty has been waived;

g

an amount has been paid to a person under section 20(3) of the Hydrocarbon Oil Duties Act 1979 (payments in respect of contaminated or accidentally mixed oil); or

h

an amount of relief has been allowed to a person by virtue of section 20AA F22or 20AB of that Act (power to allow reliefs), or in accordance with paragraph 10 of Schedule 3 to that Act (power to make regulations for the purpose of relieving from excise duty oil intended for exportation or shipment as stores);

and the amount of the relief is the amount mentioned in relation to the relief in this subsection.

2

For the purposes of section 12A above the relevant time is—

a

in the case of an assessment under section 61 of the Management Act, the time when the ship or aircraft in question returned to a place within the United Kingdom;

b

in the case of an assessment under section 94 of that Act, the time at which the goods in question were warehoused;

c

in the case of an assessment under that section as it has effect by virtue of section 95 of that Act, the time when the goods in question were lawfully taken from the warehouse;

d

in the case of an assessment under section 96 of that Act, the time when the goods in question were moved by pipe-line or notified as goods to be moved by pipe-line;

e

in the case of an assessment under section 167 of that Act—

i

if the assessment relates to unpaid duty, the time when the duty became payable or, if later, the time when the document in question was delivered or the statement in question was made; and

ii

if the assessment relates to an overpayment, the time when the overpayment was made;

F23ea

in the case of an assessment under section 8 or 10 of the Alcoholic Liquor Duties Act 1979, the time of delivery from warehouse;

eb

in the case of an assessment under section 11 of that Act, the time when the direction was made;

F24ec

in the case of an assessment under section 36G of that Act, the the time at which the requirement to pay the duty took effect (which time, in a case where there was an excise duty point for the beer fixed under section 1 of the Finance (No. 2) Act 1992, is that excise duty point);

f

in the case of an assessment under section 10, 13, F2513AB, 14 or 23 of the M10Hydrocarbon Oil Duties Act 1979, the time of the action which gave rise to the power to assess;

g

in the case of an assessment under section 24(4A) or (4B) of that Act, the time when the rebate was allowed or the oil was delivered without payment of duty (as the case may be);

F26ga

in the case of an assessment under section 8 of the Tobacco Products Duty Act 1979, the time when the Commissioners are satisfied of a failure to prove as mentioned in subsection (2)(a) or (b) of that section;

gb

in the case of an assessment under section 2 of the Finance (No. 2) Act 1992, the time when the sums were paid or credited in respect of the drawback;

h

in the case of an assessment under section 12A(2) above, the time when the relevant excise duty relief in question was given.

3

In section 12A above “the liable person” means—

a

in the case of excise duty which has been remitted or repaid under section 130 of the Management Act on the basis that goods were lost or destroyed while in a warehouse, the proprietor of the goods or the occupier of the warehouse;

b

in the case of a rebate which has been allowed on any oil under section 11 of the Hydrocarbon Oil Duties Act 1979, the person to whom the rebate was allowed or the occupier of any warehouse from which the oil was delivered for home use;

c

in the case of a rebate allowed on any petrol under section 13A of that Act, the person to whom the rebate was allowed or the occupier of any warehouse from which the petrol was delivered for home use;

d

in any other case, the person mentioned in subsection (1) above to whom the relief in question was given.

4

In section 12A above—

“excepted relief” means any relief which is given by the making of a repayment on a claim made under section 137A of the Management Act;
“representative”, in relation to any person from whom the Commissioners assess an amount as being excise duty due, means his personal representative, trustee in bankruptcy or interim or permanent trustee, any receiver or liquidator appointed in relation to him or any of his property or any other person acting in a representative capacity in relation to him.

I713 Assessments to penalties.

1

Where any person is liable to a penalty under this Chapter, the Commissioners may assess the amount due by way of penalty and notify that person, or his representative, accordingly.

2

An assessment under this section may be combined with an assessment under section 12 above, but any notification for the purposes of any such combined assessment shall separately identify any amount assessed by way of a penalty.

3

In the case of any amount due from any person by way of a penalty under section 9 above for conduct consisting in a contravention which attracts daily penalties—

a

a notification of an assessment under this section shall specify a date, being a date no later than the date of the notification, to which the penalty as assessed is to be calculated; and

b

if the contravention continues after that date, a further assessment, or (subject to this subsection) further assessments, may be made under this section in respect of any continuation of the contravention after that date.

4

If—

a

a person is assessed to a penalty in accordance with paragraph (a) of subsection (3) above, and

b

the contravention to which that penalty relates is remedied within such period after the date specified for the purposes of that subsection in the notification of assessment as may for the purposes of this subsection be notified to that person by the Commissioners,

that contravention shall be treated for the purposes of this Chapter as having been remedied, and accordingly the conduct shall be deemed to have ceased, immediately before that date.

5

If an amount has been assessed as due from any person and notified in accordance with this section, then unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced, that amount shall, subject to any appeal under section 16 below, be recoverable as if it were an amount due from that person as an amount of the appropriate duty.

6

In subsection (5) above “the appropriate duty” means—

a

the F27relevant duty (if any) by reference to an amount of which the penalty in question is calculated; or

b

where there is no such duty, the F27relevant duty the provisions relating to which are contravened by the conduct giving rise to the penalty or, if those provisions relate to more than one duty, such of the duties as appear to the Commissioners and are certified by them to be relevant in the case in question.

7

In this section “representative”, in relation to a person liable to a penalty under this Chapter, means his personal representative F28, trustee in bankruptcy or interim or permanent trustee, any receiver or liquidator appointed in relation to that person or any of his property or any other person acting in a representative capacity in relation to that person.

Customs and excise reviews and appeals

C9 I814 Requirement for review of a decision.

1

This section applies to the following decisions, not being decisions under this section or section 15 below, that is to say—

a

any decision by the Commissioners, in relation to any customs duty or to any agricultural levy of the European Community, as to—

i

whether or not, and at what time, anything is charged in any case with any such duty or levy;

ii

the rate at which any such duty or levy is charged in any case, or the amount charged;

iii

the person liable in any case to pay any amount charged, or the amount of his liability; or

iv

whether or not any person is entitled in any case to relief or to any repayment, remission or drawback of any such duty or levy, or the amount of the relief, repayment, remission or drawback to which any person is entitled;

b

so much of any decision by the Commissioners that a person is liable to any duty of excise, or as to the amount of his liability, as is contained in any assessment under section 12 above;

F29ba

any decision by the Commissioners to assess any person to excise duty under section 12A(2) above, section 61, 94, 96 or 167 of the Management Act F30, section 8, 10 F31, 11 or 36G of the Alcoholic Liquor Duties Act 1979, section 10, 13, F3213AB, 14, 23 or 24 of the M11Hydrocarbon Oil Duties Act 1979, F33section 8 of the Tobacco Products Duty Act 1979, section 2 of the Finance (No. 2) Act 1992, or as to the amount of duty to which a person is to be assessed under any of those provisions;

F34bb

any decision of the Commissioners on a claim under section 137A of the Customs and Excise Management Act 1979 for repayment of excise duty;

F35bc

any decision by the Commissioners as to whether or not any person is entitled to any drawback of excise duty by virtue of regulations under section 2 of the Finance (No. 2) Act 1992, or the amount of the drawback to which any person is so entitled;

c

so much of any decision by the Commissioners that a person is liable to any penalty under any of the provisions of this Chapter, or as to the amount of his liability, as is contained in any assessment under section 13 above;

F36ca

any decision as to whether or not—

i

an amount due in respect of customs duty or agricultural levy, or

ii

any repayment by the Commissioners of an amount paid by way of customs duty or agricultural levy,

is to carry interest, or as to the rate at which, or period for which, any such amount is to carry interest;

d

any decision by the Commissioners or any officer which is of a description specified in Schedule 5 to this Act.

2

Any person who is—

a

a person whose liability to pay any relevant duty or penalty is determined by, results from or is or will be affected by any decision to which this section applies,

b

a person in relation to whom, or on whose application, such a decision has been made, or

c

2

Where—

a

it is the duty of the Commissioners in pursuance of a requirement by any person under section 14 above to review any decision; and

b

they do not, within the period of forty-five days beginning with the day on which the review was required, give notice to that person of their determination on the review,

they shall be assumed for the purposes of this Chapter to have confirmed the decision.

3

The Commissioners shall not by virtue of any requirement under this Chapter to review a decision have any power, apart from their power in pursuance of section 8(4) above, to mitigate the amount of any penalty imposed under this Chapter.

In relation to other decisions, the powers of an appeal tribunal on an appeal under this section shall also include power to quash or vary any decision and power to substitute their own decision for any decision quashed on appeal.

6

On an appeal under this section the burden of proof as to—

a

the matters mentioned in subsection (1)(a) and (b) of section 8 above,

b

the question whether any person has acted knowingly in using any substance or liquor in contravention of section 114(2) of the Management Act, and

c

the question whether any person had such knowledge or reasonable cause for belief as is required for liability to a penalty to arise under section 22(1) or 23(1) of the M12Hydrocarbon Oil Duties Act 1979 (use of fuel substitute or road fuel gas on which duty not paid),

shall lie upon the Commissioners; but it shall otherwise be for the appellant to show that the grounds on which any such appeal is brought have been established.

7

An appeal tribunal shall not, by virtue of anything contained in this section, have any power, apart from their power in pursuance of section 8(4) above, to mitigate the amount of any penalty imposed under this Chapter.

8

F38Subject to subsection (9) below references in this section to a decision as to an ancillary matter are references to any decision of a description specified in Schedule 5 to this Act which is not comprised in a decision falling within section 14(1)(a) to (c) above.

F399

References in this section to a decision as to an ancillary matter do not include a reference to a decision of a description specified in F40the following paragraphs of Schedule 5—

a

paragraph 3(4);

b

paragraph 4(3);

c

paragraph 9(e);

d

paragraph 9A.

10

Nothing in this section shall be taken to confer on an appeal tribunal any power to vary an amount of interest specified in an assessment under paragraph 11A of Schedule 6 to this Act except in so far as it is necessary to reduce it to the amount which is appropriate under paragraph 7 of that Schedule.

Supplemental provisions

I1117 Interpretation.

1

Subject to the following provisions of this section, expressions used in this Chapter and in the Management Act have the same meanings in this Chapter as in that Act.

2

In this Chapter—

“appeal tribunal” shall be construed in accordance with section 7(3) above;
“conduct” includes any act, omission or statement;
“contravention” includes a failure to comply, and cognate expressions shall be construed accordingly;
“the Community Customs Code” means the Regulation of the Council of the European Communities dated 12 October 1992 (EEC) No. 2913/92 for establishing the Community Customs Code;
“the Management Act” means the M13Customs and Excise Management Act 1979;
“relevant duty” means any Community customs duty or agricultural levy of the European Community or any duty of excise; and
“subordinate legislation” has the same meaning as in the M14Interpretation Act 1978.

3

For the purposes of this Chapter a contravention consisting in a failure to do something at or before a particular time shall be taken to continue after that time until the thing is done, and references in this Chapter to the remedying of such a contravention shall be construed accordingly.

4

References in this Chapter to a duty of excise do not include references to F41vehicle excise duty.

I1218 Consequential modifications of enactments.

1

Subject to subsection (2) below, references in the Management Act to a penalty shall not include references to a penalty under this Chapter.

2

Section 117 of the Management Act (execution and distress against revenue traders) shall have effect—

a

as if any amount assessed as due from any person by way of a penalty under this Chapter F42. . . were an amount of excise duty payable by that person; F43. . .

F43b

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

3

Section 127 of the Management Act (determination of disputes as to duties on imported goods) shall cease to have effect; F44. . .

F454

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

5

In section 29A(1)(d) of that Act of 1981 (certificate to be evidence of certain matters), for the words “or estimate made in pursuance of this Act” there shall be substituted “ made in pursuance of this Act or in any assessment made under section 12 of the Finance Act 1994 ”.

6

In section 35(1)(c) of the M15Finance Act 1993 (certificate to be evidence of certain matters), for the words “in an estimate made under section 116A of the Customs and Excise Management Act 1979” there shall be substituted “ in any assessment made under section 12 of the Finance Act 1994 ”.

7

In section 827 of the Taxes Act 1988 (VAT penalties etc.), after subsection (1) there shall be inserted the following subsection—

1A
Where a person is liable to make a payment by way of a penalty under any of sections 8 to 11 of the Finance Act 1994 (penalties relating to excise), that payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

8

Subsections (1) F46and (2) above shall be without prejudice to section 13(5) above; and subsection (7) above shall have effect in relation to any chargeable period ending after the coming into force of the provision which provides for the imposition of the penalty in question.

I13 P119 Commencement of Chapter.

1

Where any information is preserved by approved means as mentioned in section 21(4) above, a copy of any document in which it is contained shall, subject to subsection (2) below, be admissible in evidence in any proceedings, whether civil or criminal, to the same extent as the records themselves.

2

A statement contained in a document produced by a computer shall not by virtue of subsection (1) above be admissible in evidence—

F47a

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

b

in criminal proceedings in England and Wales, except in accordance with F48sections 69 and 70 of the M17Police and Criminal Evidence Act 1984 and Part II of the M18Criminal Justice Act 1988;

c

in civil proceedings in Scotland, except in accordance with sections 5 and 6 of the M19Civil Evidence (Scotland) Act 1988;

d

in criminal proceedings in Scotland, except in accordance with F49Schedule 8 to the Criminal Procedure (Scotland) Act 1995;

F50e

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

f

in criminal proceedings in Northern Ireland, except in accordance with Article 68 of the M20Police and Criminal Evidence (Northern Ireland) Order 1989 and Part II of the M21Criminal Justice (Evidence, Etc.) (Northern Ireland) Order 1988.

23 Furnishing of information and production of documents.

1

Every person to whom this Chapter applies shall furnish the Commissioners, within such time and in such form as they may reasonably require, with such information relating to his business as they may reasonably specify.

2

Every person to whom this Chapter applies shall, if required to do so by an officer, produce or cause to be produced for inspection by the officer—

a

at that person’s principal place of business or at such other place as the officer may reasonably require, and

b

he may make an order under this section.

2

An order under this section is an order that the person who appears to the justice to be in possession of the information or documents to which the application relates shall—

a

furnish an officer with the information or produce the document,

b

permit an officer to take copies of or make extracts of any document produced, and

c

permit an officer to remove any document which he reasonably considers necessary,

not later than the end of the period of seven days beginning with the date of the order or the end of such longer period as the order may specify.

3

In this section “justice” means a justice of the peace or, in relation to Scotland, a justice within the meaning of F51section 308 of the Criminal Procedure (Scotland) Act 1995.

26 Procedure when documents are removed.

1

An officer who removes any document in the exercise of a power conferred under section 25 above shall, if so requested by a person showing himself—

a

to be the occupier of premises from which it was removed, or

b

to have had custody or control of it immediately before the removal,

provide that person with a record of what he removed.

2

The officer shall provide the record within a reasonable time from the making of the request for it.

3

Subject to subsection (7) below, if a request for permission to be granted access to any document which—

a

has been removed by an officer, and

b

is retained by the Commissioners for the purposes of investigating an offence,

is made to the officer in charge of the investigation by a person who had custody or control of the document immediately before it was so removed or by someone acting on behalf of such a person, the officer shall allow the person who made the request access to it under the supervision of an officer.

4

Subject to subsection (7) below, if a request for a photograph or copy of any such document is made to the officer in charge of the investigation by a person who had custody or control of the document immediately before it was so removed, or by someone acting on behalf of such a person, the officer shall—

a

allow the person who made the request access to it under the supervision of an officer for the purpose of photographing it or copying it, or

b

photograph or copy it, or cause it to be photographed or copied.

5

Where any document is photographed or copied under subsection (4)(b) above, the photograph or copy shall be supplied to the person who made the request.

6

The photograph or copy shall be supplied within a reasonable time from the making of the request.

7

There is no duty under this section to grant access to, or to supply a photograph or copy of, any document if the officer in charge of the investigation for the purposes of which it was removed has reasonable grounds for believing that to do so would prejudice—

a

that investigation;

b

the investigation of an offence other than the offence for the purposes of the investigation of which the document was removed; or

c

any criminal proceedings which may be brought as a result of—

i

the investigation of which he is in charge; or

ii

any such investigation as is mentioned in paragraph (b) above.

8

Any reference in this section to the officer in charge of the investigation is a reference to the person whose name and address are endorsed on the order concerned as being the officer in charge of it.

Sections 21 and 42(2) of the M23Interpretation Act (Northern Ireland) 1954 (rules and orders regulating procedure of courts etc and assignment of business to particular courts) shall apply as if any reference in those provisions to any enactment included a reference to this section.

Chapter IV Air Passenger Duty

The duty

28 Air passenger duty.

1

A duty to be known as air passenger duty shall be charged in accordance with this Chapter on the carriage on a chargeable aircraft of any chargeable passenger.

2

Subject to the provisions of this Chapter about accounting and payment, the duty in respect of any carriage on an aircraft of a chargeable passenger—

a

becomes due when the aircraft first takes off on the passenger’s flight, and

b

shall be paid by the operator of the aircraft.

3

Subject to section 29 below, every aircraft designed or adapted to carry persons in addition to the flight crew is a chargeable aircraft for the purposes of this Chapter.

4

Subject to sections 31 and 32 below, every passenger on an aircraft is a chargeable passenger for the purposes of this Chapter if his flight begins at an airport in the United Kingdom.

5

In this Chapter, “flight”, in relation to any person, means his carriage on an aircraft; and for the purposes of this Chapter, a person’s flight is to be treated as beginning when he first boards the aircraft and ending when he finally disembarks from the aircraft.

29 Chargeable aircraft.

1

Where—

a

the authorised take-off weight in respect of an aircraft is less than ten tonnes, or

b

an aircraft is not authorised to seat twenty or more persons (excluding members of the flight crew and cabin attendants),

the aircraft is not a chargeable aircraft for the purposes of this Chapter.

2

In this section “take-off weight”, in relation to an aircraft, means the total weight of the aircraft and its contents when taking off; and for the purposes of this section the authorised take-off weight of an aircraft is less than ten tonnes if—

a

there is a certificate of airworthiness in force in respect of the aircraft showing that the maximum authorised take-off weight (assuming the most favourable circumstances for take-off) is less than ten tonnes, or

b

the Commissioners are satisfied that the aircraft is not designed or adapted to take off when its take-off weight is ten tonnes or more (assuming the most favourable circumstances for take-off) or the aircraft belongs to a class or description of aircraft in respect of which the Commissioners are so satisfied.

3

For the purposes of this section an aircraft is not authorised as mentioned in subsection (1)(b) above if—

a

there is a certificate of airworthiness in force in respect of the aircraft showing that the maximum number of persons who may be seated on the aircraft (excluding members of the flight crew and cabin attendants) is less than twenty, or

b

the Commissioners are satisfied that the aircraft is not designed or adapted to seat twenty or more persons (excluding members of the flight crew and cabin attendants) or the aircraft belongs to a class or description of aircraft in respect of which the Commissioners are so satisfied.

4

In this section “certificate of airworthiness” has the same meaning as in the Air Navigation Order.

30 The rate of duty.

1

Air passenger duty shall be charged on the carriage of each chargeable passenger at the rate F52determined in accordance with subsections (2) to (4) below.

F532

F54If the place where the passenger’s journey ends is in the area specified in subsection (3) below and in—

a

the United Kingdom or another EEA State, F55. . .

b

any territory for whose external relations the United Kingdom or another member State is responsible

F56or

c

his journey ends for those purposes where the first flight not followed by a connected flight ends.

7

The journey of any passenger whose agreement for carriage is not evidenced by a ticket ends for those purposes where his flight ends.

8

For the purposes of this Chapter, successive flights are connected if (and only if) they are treated under an order as connected.

F619

In this section “EEA State” means a State which is a Contracting Party to the EEA Agreement but until the EEA Agreement comes into force in relation to Liechtenstein does not include the State of Liechtenstein; and “EEA Agreement” here means the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

F629A

In this section “qualifying territory” means each of the following territories—

Bulgaria	Latvia	Slovak Republic
Cyprus	Lithuania	Slovenia
Czech Republic	Malta	Switzerland
Estonia	Poland	Turkey.
Hungary	Romania

9B

The Treasury may by order amend the definition of “qualifying territory” in subsection (9A) above by adding, removing, or varying the description of, any territory.

F6310

In this section “standard class travel”, in relation to carriage on an aircraft, means—

a

in the case of an aircraft on which only one class of travel is available, that class of travel;

b

in any other case, the lowest class of travel available on the aircraft.

31 Passengers: exceptions.

F641

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

F642

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

3

A passenger whose agreement for carriage is evidenced by a ticket is not a chargeable passenger in relation to a flight which is the second or a subsequent flight on his journey if—

a

the prescribed particulars of the flight are shown on the ticket, and

b

that flight and the previous flight are connected.

4

A child who—

a

has not attained the age of two years, and

b

is not allocated a separate seat before he first boards the aircraft,

is not a chargeable passenger.

F654A

A passenger is not a chargeable passenger in relation to a flight if under his agreement for carriage (whether or not it is evidenced by a ticket)—

a

the flight is to depart from and return to the same airport, and

b

the duration of the flight (excluding any period during which the aircraft’s doors are open for boarding or disembarkation) is not to exceed 60 minutes.

F664B

A passenger is not a chargeable passenger in relation to a flight if under his agreement for carriage (whether or not it is evidenced by a ticket) the flight is to depart from an airport which is in a region of the United Kingdom designated by order.

4C

An order may be made for the purposes of subsection (4B) above in respect of any region which has a population density of not more than 12.5 persons per square kilometre.

4D

In subsections (4B) and (4C) above, references to a region are references to an area which is determined by the Treasury to constitute a region for the purposes of those subsections.

5

A passenger not carried for reward is not a chargeable passenger if he is carried—

c

but for this subsection he would by reason of the change be a chargeable passenger in relation to a number of flights exceeding the number of the proposed chargeable flights,

he shall not by reason of the change of circumstances be treated as a chargeable passenger in relation to that flight.

F684

Where—

a

at the time a passenger’s flight begins, by virtue of section 31(4A) above he would not (assuming there is no change of circumstances) be a chargeable passenger in relation to the flight, and

b

by reason only of a change of circumstances not attributable to any act or default of his, the flight does not return to the airport from which it departed or exceeds 60 minutes in duration (excluding any period during which the aircraft’s doors are open for boarding or disembarkation),

he shall not by reason of the change of circumstances be treated as a chargeable passenger in relation to that flight.

Persons liable for the duty

33 Registration of aircraft operators.

1

The Commissioners shall under this section keep a register of aircraft operators.

2

The operator of a chargeable aircraft becomes liable to be registered under this section if the aircraft is used for the carriage of any chargeable passengers.

3

A person who has become liable to be registered under this section ceases to be so liable if the Commissioners are satisfied at any time—

a

that he no longer operates any chargeable aircraft, or

b

that no chargeable aircraft which he operates will be used for the carriage of chargeable passengers.

4

A person who is not registered and has not given notice under this subsection shall, if he becomes liable to be registered at any time, give written notice of that fact to the Commissioners not later than the end of the prescribed period beginning with that time.

5

Notice under subsection (4) above shall be in such form, be given in such manner and contain such information as the Commissioners may direct.

6

If a person who is required to give notice under subsection (4) above fails to do so, his failure shall attract a penalty under section 9 above which, if any amount of duty is then due from him and unpaid, shall be calculated by reference to that amount.

7

Regulations may make provision as to the information to be included in, and the correction of, the register kept under this section.

8

In particular, the regulations may provide—

a

for the inclusion in the register of persons who have not given notice under this section but appear to the Commissioners to be liable to be registered,

b

for persons who are liable to be registered—

i

not to be included in, or

ii

to be removed from,

the register in prescribed circumstances,

c

for the removal from the register of persons who have ceased to be so liable, and

d

for the time from which an entry in the register is to be effective (which may be earlier than the time when the entry is first made in the register).

34 Fiscal representatives.

1

An aircraft operator who—

a

is or is liable to be registered, and

b

not to make him personally liable either to pay any such amounts or in respect of any failure by his principal to pay them.

3

The security that may be required by general directions given by the Commissioners for the purposes of this section is any such security for the payment of amounts of duty which are or may become due from the person providing the security as may be determined in accordance with the directions.

4

The power of the Commissioners under section 36 below to require the provision of security shall not include any power to require a fiscal representative of an aircraft operator whose appointment has effect in accordance with subsection (2) above to provide any security for the payment of amounts of duty which are or may become due from his principal.

5

In this section references to an amount of duty include references to any penalty or interest that is recoverable as if it were an amount of duty, but only in so far as the penalty or interest is in respect of a failure by an aircraft operator to pay an amount of duty, or to pay such an amount before a certain time.

35 Fiscal representatives: supplementary.

1

Regulations may make provision about—

a

the manner in which a person is to be appointed as a fiscal representative, and

b

the circumstances in which a person is to be treated as having ceased to be a fiscal representative.

2

If any aircraft operator who is required to have a fiscal representative fails to appoint such a representative before the prescribed time, his failure shall attract a penalty under section 9 above.

3

Any failure of a fiscal representative to give any notice which he is required to give by regulations under section 34(5)(b) above shall attract a penalty under section 9 above.

36 Security for payment of duty.

1

The Commissioners may require—

a

any operator of an aircraft who is or is liable to be registered, or

b

any fiscal representative,

to provide such security, or further security, as they may think appropriate for the payment of any duty which is or may become due from the operator.

2

Any failure by a person to provide any security which he is required by the Commissioners to provide under subsection (1) above shall attract a penalty under section 9 above.

3

For the purposes of this section, a person shall not be treated as having been required to provide security under subsection (1) above unless the Commissioners have either—

a

served notice of the requirement on him, or

b

taken all such other steps as appear to them to be reasonable for bringing the requirement to his attention.

37 Handling agents.

1

Any failure by any person to comply with regulations under this section shall, unless he is complying with the corresponding provisions of such a notice, attract a penalty under section 9 above and, in the case of any failure to keep accounts, daily penalties.

39 Schemes for simplifying operation of reliefs etc.

1

If in the opinion of the Commissioners it is expedient to do so in the light of difficulties encountered or expected to be encountered by any registered operator in obtaining and recording information about passengers and their journeys, they may in accordance with the provisions of this section prepare a scheme for the registered operator.

2

Any scheme so prepared shall specify the period for which it is to have effect.

F712A

A scheme may be either a standard scheme or an extended scheme.

3

F72A standard scheme for a registered operator shall relate only to passengers—

a

who are carried on chargeable aircraft operated by that operator,

b

whose flights begin in the United Kingdom, and

c

who are not passengers of a description mentioned in section 31(4) or (5) above;

and in this section any reference to the relevant passengers of a registered operator is a reference to passengers who fall within this subsection in relation to him.

4

F72A standard scheme for a registered operator shall provide, in relation to passengers who are relevant passengers of his in the period specified in the scheme, for methods of calculating—

a

how many of those relevant passengers may be treated as passengers who are not chargeable passengers, and

b

how many of them may be treated as passengers on the carriage of whom duty shall be charged

F73i

at the rate mentioned in paragraph (a) of section 30(3A) above, and

ii

at the rate mentioned in paragraph (b) of that provision

F744A

An extended scheme for a registered operator shall relate to all persons who are carried—

a

on chargeable aircraft operated by that operator, and

b

in circumstances where the aircraft take off in the United Kingdom;

and in this section any reference to persons travelling with a registered operator is a reference to persons who fall within this subsection in relation to him.

4B

An extended scheme for a registered operator shall provide, in relation to persons travelling with him in the period specified in the scheme, for methods of calculating—

a

how many of them may be treated as persons who are not passengers,

b

how many of them may be treated as passengers who are not chargeable passengers, and

c

how many of them may be treated as passengers on the carriage of whom duty shall be charged—

F75i

at the rate mentioned in paragraph (a) of section 30(3A) above, and

ii

at the rate mentioned in paragraph (b) of that provision

5

A calculation provided for by the scheme may be provided by reference to such factors as appear to the Commissioners to be expedient in the circumstances, including in particular information—

a

derived from surveys of F76persons carried on chargeable aircraft operated by the operator for whom the scheme is prepared, or

b

relating to airports and routes used by that operator,

whether obtained before or during the specified period.

6

No scheme prepared in accordance with this section shall be of any effect unless the registered operator for whom it is prepared elects in writing to be bound by it for the specified period.

7

If the registered operator makes such an election the scheme shall have effect for the specified period F77. . ..

8

F78Where a standard scheme has effect for the specified period, this Chapter shall have effect for that period as if, except in accordance with provision made to the contrary by the scheme (by virtue of subsection (4) above)—

a

each of the passengers who are relevant passengers of the registered operator were chargeable passengers, and

b

duty were charged—

F79i

on the carriage of each of those falling within paragraph (a) of section 30(4) above at the rate mentioned in that paragraph, and

ii

on the carriage of each of those falling within paragraph (b) of section 30(4) above at the rate mentioned in that paragraph

F808A

Where an extended scheme has effect for the specified period, this Chapter shall have effect for that period as if, except in accordance with provision made to the contrary by the scheme (by virtue of subsection (4B) above)—

a

each of the persons travelling with the registered operator were passengers of his,

b

each of those passengers were chargeable passengers, and

c

duty were charged—

F81i

on the carriage of each of those falling within paragraph (a) of section 30(4) above at the rate mentioned in that paragraph, and

ii

on the carriage of each of those falling within paragraph (b) of section 30(4) above at the rate mentioned in that paragraph

9

Regulations may make further provision with respect to schemes under this section, including in particular provision amending this section.

Administration and enforcement

40 Administration and enforcement.

1

Air passenger duty shall be a duty of excise and, accordingly, shall be under the care and management of the Commissioners.

2

Schedule 6 to this Act (administration and enforcement) shall have effect.

A person guilty of an offence under subsection (3) above is 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.

Supplementary

42 Regulations and orders.

1

In this Chapter “regulations” means regulations made by the Commissioners and “order” means an order made by the Treasury.

2

Regulations and orders may make different provision for different cases or circumstances and make incidental, supplemental, saving or transitional provision.

3

Any power to make regulations or an order is exercisable by statutory instrument.

4

No order which appears to the Treasury to extend the circumstances in which passengers are to be treated as chargeable passengers shall be made unless a draft of the order has been laid before and approved by the House of Commons.

5

Any other order, and any regulations, shall be subject to annulment in pursuance of a resolution of the House of Commons.

43 Interpretation.

1

In this Chapter—

“accounting period” means any period prescribed or allowed for the purposes of section 38 above,
“agreement for carriage”, in relation to the carriage of any person, means the agreement or arrangement under which he is carried, whether the carriage is by a single carrier or successive carriers,
“Air Navigation Order” has the same meaning as in the M24Civil Aviation Act 1982,
“airport” means any aerodrome (within the meaning of that Act),
“carriage” means carriage wholly or partly by air, and “carried” is to be read accordingly,
“connected”, in relation to any flights, has the meaning given by section 30(8) above,
“document” includes information recorded in any form,
“duty” means air passenger duty,
“fiscal representative” has the meaning given by section 34(2) above,
“flight” has the meaning given by section 28(5) above,
“operator”, in relation to any aircraft, means the person having the management of the aircraft for the time being,
“passenger”, in relation to any aircraft, means—
1. a
  where the operator is an air transport undertaking (within the meaning of the Air Navigation Order), any person carried on the aircraft other than—
  1. i
    a member of the flight crew,
  2. ii
    a cabin attendant, or
  3. iii
    a person who is not carried for reward, who is an employee of any aircraft operator and who satisfies such other requirements as may be prescribed, and
2. b
  in any other case, any person carried on the aircraft for reward,
“prescribed” means prescribed by regulations,
“reward”, in relation to the carriage of any person, includes any form of consideration received or to be received wholly or partly in connection with the carriage, irrespective of the person by whom or to whom the consideration has been or is to be given, and
“ticket” means a document or documents evidencing an agreement (wherever made) for the carriage of any person.

2

F82. . ., in this Chapter, in relation to a passenger whose agreement for carriage is evidenced by a ticket—

“journey” means the journey from his original place of departure to his final place of destination, and
“original place of departure” and “final place of destination” mean the original place of departure and the final place of destination indicated on his ticket.

F833

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

4

Subject to the preceding provisions of this section, expressions used in this Chapter and in the M25Customs and Excise Management Act 1979 have the same meaning as in that Act.

44 Commencement.

1

This Chapter applies to any carriage of a passenger on an aircraft which begins after 31st October 1994.

2

For the purpose of determining whether or not a person is a chargeable passenger in relation to any carriage on an aircraft beginning after that date, the provisions of section 31 above and any order made by virtue of that section shall be treated as having applied to any such carriage of that person which began on or before that date as they would apply to any such carriage of that person beginning after that date.

Part II Value Added Tax

F8445

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

46 Repayment supplement.

1

Section 20 of the Finance Act 1985 (repayment supplement) shall be amended as follows.

2

In subsection (1) (supplement of 5 per cent. or £30, whichever is greater) for “£30” there shall be substituted “ £50 ”.

3

In subsection (2)(a) (return or claim must be received not later than one month after last day on which it is required) the words “one month after” shall be omitted.

4

This section shall apply where the requisite return or claim is received after the expiry of the period of one month beginning with the day after that on which this Act is passed.

F8547

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

Part III Insurance Premium Tax

The basic provisions

48 Insurance premium tax.

1

A tax, to be known as insurance premium tax, shall be charged in accordance with this Part.

2

The tax shall be under the care and management of the Commissioners of Customs and Excise.

49 Charge to tax.

Tax shall be charged on the receipt of a premium by an insurer if the premium is received—

a

under a taxable insurance contract, and

b

on or after 1st October 1994.

50 Chargeable amount.

1

Tax shall be charged by reference to the chargeable amount.

2

For the purposes of this Part, the chargeable amount is such amount as, with the addition of the tax chargeable, is equal to the amount of the premium.

3

F86Subsections (1) and (2) above shall have effect subject to section 69 below.

51F87 Rate of tax.

1

Tax shall be charged—

a

at the higher rate, in the case of a premium which is liable to tax at that rate; and

b

at the standard rate, in any other case.

2

For the purposes of this Part—

a

the higher rate is 17.5 per cent.; and

b

the standard rate is F885 per cent..

51AF89 Premiums liable to tax at the higher rate.

1

A premium received under a taxable insurance contract by an insurer is liable to tax at the higher rate if it falls within one or more of the paragraphs of Part II of Schedule 6A to this Act.

2

Part I of Schedule 6A to this Act shall have effect with respect to the interpretation of that Schedule.

3

Provision may be made by order amending Schedule 6A as it has effect for the time being.

4

This section is subject to section 69 below.

52 Liability to pay tax.

1

Tax shall be payable by the person who is the insurer in relation to the contract under which the premium is received.

2

Subsection (1) above shall have effect subject to any regulations made under section 65 below.

52AF90 Certain fees to be treated as premiums under higher rate contracts.

1

This section applies where—

a

at or about the time when a higher rate contract is effected, and

b

b

in connection with that contract,

charges a fee in respect of an insurance-related service to a person who is or becomes the insured (or one of the insured) under the contract or to a person who acts for or on behalf of such a person.

F926

A person falls within this subsection if the higher rate contract mentioned in subsection (1) above falls within paragraph 2 or 3 of Schedule 6A to this Act (motor cars or motor cycles, or relevant goods) and the person is—

a

within the meaning of the paragraph in question, a supplier of motor cars or motor cycles or, as the case may be, of relevant goods; or

b

a person connected with a person falling within paragraph (a) above; or

c

a person who in the course of his business pays—

i

the whole or any part of the premium received under that contract, or

ii

a fee connected with the arranging of that contract,

to a person falling within paragraph (a) or (b) above.

6A

A person falls within this subsection if the higher rate contract mentioned in subsection (1) above falls within paragraph 4 of Schedule 6A to this Act (travel insurance) and the person is—

a

the insurer under that contract; or

b

a person through whom that contract is arranged in the course of his business; or

c

a person connected with the insurer under that contract; or

d

a person connected with a person falling within paragraph (b) above; or

e

a person who in the course of his business pays—

i

the whole or any part of the premium received under that contract, or

ii

a fee connected with the arranging of that contract,

to a person falling within any of paragraphs (a) to (d) above.

8

For the purposes of this section, any question whether a person is connected with another shall be determined in accordance with section 839 of the Taxes Act 1988.

9

In this section—

“insurance-related service” means any service which is related to, or connected with, insurance;
F93. . .

Administration

53 Registration of insurers.

1

A person who—

a

receives, as insurer, premiums in the course of a taxable business, and

b

requiring a person who has made a notification to notify the Commissioners if any information contained in or provided in connection with it is or becomes inaccurate;

e

as to the correction of entries in the register.

7

References in this section to receiving premiums are to receiving premiums on or after 1st October 1994.

53AAF98 Registration of taxable intermediaries.

1

A person who—

a

is a taxable intermediary, and

b

is not registered,

is liable to be registered.

2

The register kept under this section may contain such information as the Commissioners think is required for the purposes of the care and management of the tax.

3

A person who—

a

at any time forms the intention of charging taxable intermediary’s fees, and

b

is not already charging such fees in the course of another business,

shall notify the Commissioners of those facts.

4

A person who at any time—

a

ceases to have the intention of charging taxable intermediary’s fees in the course of his business, and

b

as to the correction of entries in the register.

9

In this Part “taxable intermediary’s fees” means fees which, to the extent of any payment in respect of them, are chargeable to tax by virtue of section 52A above.

pay tax at such times and in such manner as may be so determined.

55 Credit.

1

Regulations may provide that where an insurer F101or taxable intermediary has paid tax and all or part of the premium F102or taxable intermediary’s fee (as the case may be) is repaid, the insurer F101or taxable intermediary shall be entitled to credit of such an amount as is found in accordance with prescribed rules.

2

Regulations may provide that where—

a

by virtue of regulations made under section 68 below tax is charged in relation to a premium which is shown in the accounts of an insurer as due to him,

b

that tax is paid, and

c

the Commissioners may assess the amount of tax due from the person concerned to the best of their judgment and notify it to him.

2

Where a person has for an accounting period been paid an amount to which he purports to be entitled under regulations made under section 55 above, then, to the extent that the amount ought not to have been paid or would not have been paid had the facts been known or been as they later turn out to be, the Commissioners may assess the amount as being tax due from him for that period and notify it to him accordingly.

a person otherwise acting in a representative capacity in relation to another person,

shall be treated as notification to the person in relation to whom the person mentioned in paragraph (a) above, or the first person mentioned in paragraph (b) above, acts.

Tax representatives

57 Tax representatives.

1

Where at any time (a relevant time) a person who is an insurer F106or taxable intermediary—

a

is registered, or liable to be registered, under section 53 F107or, as the case may be, section 53AAabove, and

b

c

that person notifies the Commissioners accordingly,

the Commissioners shall be taken to have withdrawn their approval of that person at the time they inform the insurer F106or taxable intermediary that they have received the notification, and that person shall cease at that time to be the insurer’s F108or taxable intermediary’s tax representative.

9

Where subsection (8) above applies the insurer F106or taxable intermediary shall take action as mentioned in subsection (4) above.

10

If at any time after the insurer F106or taxable intermediary first falls within subsection (1) above—

a

the insurer F106or taxable intermediary (otherwise than in pursuance of a duty under subsection (3), (7) or (9) above) requests the Commissioners to approve a particular person as his tax representative, and

b

16

The relevant period for the purposes of subsection (4) above is—

a

where subsection (4) above applies by virtue of subsection (3) above, the period of 30 days beginning with the day on which the insurer F106or taxable intermediary first falls within subsection (1) above;

b

where subsection (4) above applies by virtue of subsection (7) above, the period of 30 days beginning with the day on which the requirement mentioned in subsection (7) above is made;

c

where subsection (4) above applies by virtue of subsection (9) above, the period of 30 days beginning with the day on which the person mentioned in subsection (8) above ceases to be the insurer’s F108or taxable intermediary’s tax representative;

but if in any case the Commissioners allow a longer period than that found under paragraphs (a) to (c) above, the relevant period is that longer period.

F11016A

For the purposes of subsections (2) and (3), “general representative” means a person resident in the United Kingdom who—

has not previously been given written notification of that decision, and

c

if given such a notification, will be entitled to require a review of the decision under this section.

5

A person shall be entitled to give a notice under this section requiring a decision to be reviewed for a second or subsequent time only if—

a

the grounds on which he requires the further review are that the Commissioners did not, on any previous review, have the opportunity to consider certain facts or other matters, and

b

6

Where the Commissioners are required in accordance with this section to review any decision, it shall be their duty to do so; and on the review they may withdraw, vary or confirm the decision.

7

In a case where—

a

it is the duty under this section of the Commissioners to review any decision, and

b

they do not, within the period of 45 days beginning with the day on which the review was required, give notice to the person requiring it of their determination on the review,

On an appeal against an assessment to a penalty under paragraph 12 of Schedule 7 to this Act, the burden of proof as to the matters specified in paragraphs (a) and (b) of sub-paragraph (1) of paragraph 12 shall lie upon the Commissioners.

10

Sections 25 and 29 of the M26Finance Act 1985 (settling of appeals by agreement and enforcement of certain decisions of tribunal) shall have effect as if—

a

the references to section 40 of the M27Value Added Tax Act 1983 included references to this section, and

b

the references to value added tax included references to insurance premium tax.

P261 Review and appeal: commencement.

Sections 59 and 60 above shall come into force on such day as may be appointed by order.

Miscellaneous

62 Partnership, bankruptcy, transfer of business, etc.

1

Regulations may make provision for determining by what persons anything required by this Part to be done by an insurer F116or taxable intermediary is to be done where the business concerned is carried on in partnership or by another unincorporated body.

2

The registration under this Part of an unincorporated body other than a partnership may be in the name of the body concerned; and in determining whether premiums are received by such a body no account shall be taken of any change in its members.

3

Regulations may make provision for determining by what person anything required by this Part to be done by an insurer is to be done in a case where insurance business is carried on by persons who are underwriting members of Lloyd’s and are members of a syndicate of such underwriting members.

4

Regulations may—

a

make provision for the registration for the purposes of this Part of a syndicate of underwriting members of Lloyd’s;

b

provide that for purposes prescribed by the regulations no account shall be taken of any change in the members of such a syndicate;

and regulations under paragraph (a) above may modify section 53 above.

5

b

b

an amount of tax is paid by the insurer in respect of an accounting period which corresponds to any extent with that period;

and the regulations may include provision for determining whether, or how much of, any of the tax paid as mentioned in paragraph (b) above is attributable to premiums received under the contract in the period mentioned in paragraph (a) above.

12

Regulations may—

a

make provision requiring the Commissioners, in prescribed circumstances, to furnish prescribed information to an insured person;

b

make provision requiring any person on whom a liability notice has been served to keep records, to furnish information, or to produce documents for inspection or cause documents to be produced for inspection;

c

make such provision as the Commissioners think is reasonable for the purpose of facilitating the recovery of tax from the persons having joint and several liability (rather than from the insurer alone);

d

modify the effect of any provision of this Part.

13

Regulations may provide for an insured person to be liable to pay tax assessed by virtue of the regulations notwithstanding that he has already paid an amount representing tax as part of a premium.

66 Directions as to amounts of premiums.

1

This section applies where—

a

anything is received by way of premium under a taxable insurance contract, and

b

the amount of the premium is less than it would be if it were received under the contract in open market conditions.

2

The Commissioners may direct that the amount of the premium shall be taken for the purposes of this Part to be such amount as it would be if it were received under the contract in open market conditions.

3

A direction under subsection (2) above shall be given by notice in writing to the insurer, and no direction may be given more than three years after the time of the receipt.

4

Where the Commissioners make a direction under subsection (2) above in the case of a contract they may also direct that if—

a

anything is received by way of premium under the contract after the giving of the notice or after such later date as may be specified in the notice, and

b

the amount of the premium is less than it would be if it were received under the contract in open market conditions,

the amount of the premium shall be taken for the purposes of this Part to be such amount as it would be if it were received under the contract in open market conditions.

5

c

the premium, or any part of it, is attributable to such of the period of cover as falls after 30th September 1995.

3

For the purposes of this Part—

a

so much of the premium as is attributable to such of the period of cover as falls after 30th September 1995 shall be taken to be received on 1st October 1994;

In a case where—

a

a premium under a contract of insurance is received by the insurer on or after the date of the announcement but before the concessionary date, and

b

the period of cover for the risk begins on or after the date of the change,

so much of the premium as is attributable to any given risk shall be taken for the purposes of section 67A(2), 67A(3) and (4), 67B(3) or 67B(4) and (5) above, as the case may be, to be a separate premium relating to that risk,

c

those provisions shall then apply separately in the case of each given risk and the separate premium relating to it, and

d

any further attribution required by section 67A(3) and (4) or 67B(4) and (5) above shall be made accordingly,

and subsections (1) and (2) above shall apply accordingly.

4

Any attribution under this section shall be made on such basis as is just and reasonable.

68 Special accounting schemes.

1

Regulations may make provision establishing a scheme in accordance with the following provisions of this section; and in this section “a relevant accounting period”, in relation to an insurer, means an accounting period as regards which the scheme applies to the insurer.

2

Regulations may provide that if an insurer notifies the Commissioners that the scheme should apply to him as regards accounting periods beginning on or after a date specified in the notification and prescribed conditions are fulfilled, then, subject to any provision made under subsection (9) below, the scheme shall apply to the insurer as regards accounting periods beginning on or after that date.

3

Regulations may provide that where—

a

an entry is made in the accounts of an insurer showing a premium under a taxable insurance contract as due to him, and

b

the entry is made as at a particular date which falls within a relevant accounting period,

then (whether or not that date is one on which the premium is actually received by the insurer or on which the premium would otherwise be treated for the purposes of this Part as received by him) the premium shall for the purposes of this Part be taken to be received by the insurer on that date or, in prescribed circumstances, to be received by him on a different date determined in accordance with the regulations.

4

Where regulations make provision under subsection (3) above they may also provide that, for the purposes of this Part, the amount of the premium shall be taken to be the amount which the entry in the accounts treats as its amount.

Regulations may provide that where—

“the standard rate element” is the difference between—

i

the non-exempt premium; and

ii

the higher rate element.

6

In a case falling within subsection (4) above, tax shall be charged separately—

a

at the standard rate, by reference to the standard rate chargeable amount, and

b

at the higher rate, by reference to the higher rate chargeable amount,

and the tax chargeable in respect of the premium is the aggregate of those amounts of tax.

7

For the purposes of this section—

“the higher rate chargeable amount” is such amount as, with the addition of the tax chargeable at the higher rate, is equal to the higher rate element;
“the standard rate chargeable amount” is such amount as, with the addition of the tax chargeable at the standard rate, is equal to the standard rate element.

8

References in this Part to the chargeable amount shall, in a case falling within subsection (4) above, be taken as referring separately to the standard rate chargeable amount and the higher rate chargeable amount.

9

In applying subsection (2)(b) above, any amount that is included in the premium as being referable to tax (whether or not the amount corresponds to the actual amount of tax payable in respect of the premium) shall be taken to be wholly attributable to the non-exempt matter or matters.

10

In applying subsection (5)(a) above, any amount that is included in the premium as being referable to tax at the higher rate (whether or not the amount corresponds to the actual amount of tax payable at that rate in respect of the premium) shall be taken to be wholly attributable to the higher rate element.

11

Subject to subsections (9) and (10) above, any attribution under subsection (2)(b) or (5)(a) above shall be made on such basis as is just and reasonable.

12

For the purposes of this section—

a

an “exempt matter” is any matter such that, if it were the only matter for which the contract provided cover, the contract would not be a taxable insurance contract;

b

a “non-exempt matter” is a matter which is not an exempt matter;

c

a “standard rate matter” is any matter such that, if it were the only matter for which the contract provided cover, tax at the standard rate would be chargeable on the chargeable amount;

d

a “higher rate matter” is any matter such that, if it were the only matter for which the contract provided cover, tax at the higher rate would be chargeable on the chargeable amount.

13

If the contract relates to a lifeboat and lifeboat equipment, the lifeboat and the equipment shall be taken together in applying this section.

14

For the purposes of this section “lifeboat” and “lifeboat equipment” have the same meaning as in paragraph 6 of Schedule 7A to this Act.

Supplementary

70 Interpretation: taxable insurance contracts.

1

Subject to F123subsection (1A) below, any contract of insurance is a taxable insurance contract.

F1241A

A contract is not a taxable insurance contract if it falls within one or more of the paragraphs of Part I of Schedule 7A to this Act.

1B

Part II of Schedule 7A to this Act (interpretation of certain provisions of Part I) shall have effect.

F1252

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

F1253

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

F1254

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

F1255

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

F1256

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

F1257

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

F1258

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

F1259

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

F12510

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

11

This section has effect subject to section 71 below.

12

This section and section 71 below have effect for the purposes of this Part.

71 Taxable insurance contracts: power to change definition.

1

Provision may be made by order that—

a

a contract of insurance that would otherwise not be a taxable insurance contract shall be a taxable insurance contract if it falls within a particular description;

b

a contract of insurance that would otherwise be a taxable insurance contract shall not be a taxable insurance contract if it falls within a particular description.

2

A description referred to in subsection (1) above may be by reference to the nature of the insured or by reference to such other factors as the Treasury think fit.

3

Provision under this section may be made in such way as the Treasury think fit, and in particular may be made by amending this Part.

4

An order under this section may amend or modify the effect of section 69 above in such way as the Treasury think fit.

Where any person is authorised by or on behalf of an employee to deduct from anything due to the employee under his contract of employment an amount in respect of a payment due under a taxable insurance contract, subsection (7) above shall not apply to the receipt on behalf of the insurer by the person so authorised of the amount deducted.

8

In a case where—

a

a payment under a taxable insurance contract is made to a person (the intermediary) by or on behalf of the insured, and

b

the whole or part of the payment is referable to commission to which the intermediary is entitled,

in determining for the purposes of subsection (7) above whether, or how much of, the payment is received by the intermediary on behalf of the insurer any of the payment that is referable to that commission shall be regarded as received by the intermediary on behalf of the insurer notwithstanding the intermediary’s entitlement.

F1288A

Where, by virtue of subsection (7A) above, subsection (7) above does not apply to the receipt of an amount by a person and the whole or part of the amount is referable to commission to which he is entitled—

a

if the whole of the amount is so referable, the amount shall be treated as received by the insurer when it is deducted by that person; and

b

otherwise, the part of the amount that is so referable shall be treated as received by the insurer when the remainder of the payment concerned is or is treated as received by him.

9

References in subsection (8) above to a payment include references to a payment in a form other than money.

10

This section has effect for the purposes of this Part.

73 Interpretation: other provisions.

1

Unless the context otherwise requires—

“accounting period” shall be construed in accordance with section 54 above;
“appeal tribunal” means a VAT and duties tribunal;
“authorised person” means any person acting under the authority of the Commissioners;
“the Commissioners” means the Commissioners of Customs and Excise;
“conduct” includes any act, omission or statement;
F129“the higher rate” shall be construed in accordance with section 51 above;
F130“insurance business” means a business which consists of or includes the provision of insurance;
“insurer” means a person or body of persons (whether incorporated or not) carrying on insurance business;
“legislation relating to insurance premium tax” means this Part (as defined by subsection (9) below), any other enactment (whenever passed) relating to insurance premium tax, and any subordinate legislation made under any such enactment;
“prescribed” means prescribed by an order or regulations under this Part;
F129“the standard rate” shall be construed in accordance with section 51 above;
“tax” means insurance premium tax;
“tax representative” shall be construed in accordance with section 57 above;
“taxable business” means a business which consists of or includes the provision of insurance under taxable insurance contracts;
“taxable insurance contract” shall be construed in accordance with section 70 above.
F131“taxable intermediary” shall be construed in accordance with section 52A above;
F131“taxable intermediary’s fees” has the meaning given by section 53AA(9) above.

10

This section has effect for the purposes of this Part.

74 Orders and regulations.

1

The power to make an order under section 61 above shall be exercisable by the Commissioners, and the power to make an order under any other provision of this Part shall be exercisable by the Treasury.

2

Any power to make regulations under this Part shall be exercisable by the Commissioners.

3

Any power to make an order or regulations under this Part shall be exercisable by statutory instrument.

4

An order under section F13451A or 71 above shall be laid before the House of Commons; and unless it is approved by that House before the expiration of a period of 28 days beginning with the date on which it was made it shall cease to have effect on the expiration of that period, but without prejudice to anything previously done under the order or to the making of a new order.

5

In reckoning any such period as is mentioned in subsection (4) above no account shall be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than four days.

6

A statutory instrument containing an order or regulations under this Part (other than an order under section F13551A or 71 above) shall be subject to annulment in pursuance of a resolution of the House of Commons.

7

Any power to make an order or regulations under this Part—

a

may be exercised as regards prescribed cases or descriptions of case;

b

may be exercised differently in relation to different cases or descriptions of case.

8

An order or regulations under this Part may include such supplementary, incidental, consequential or transitional provisions as appear to the Treasury or the Commissioners (as the case may be) to be necessary or expedient.

9

No specific provision of this Part about an order or regulations shall prejudice the generality of subsections (7) and (8) above.

Part IV Income Tax, Corporation Tax and Capital Gains Tax

Chapter I General

Income tax: charge, rates and reliefs

75 Charge and rates of income tax for 1994-95.

1

Income tax shall be charged for the year 1994-95, 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 1994-95 section 1(2) of the Taxes Act 1988 shall apply as if—

a

the amount specified in paragraph (aa) were £3,000 (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 1994-95.

76 Personal allowance.

Section 257 of the Taxes Act 1988 (personal allowance) shall apply for the year 1994-95 as if the amounts specified in it were the same as the amounts specified in it as it applies for the year 1993-94, and accordingly section 257C(1) of that Act (indexation) so far as relating to section 257 shall not apply for the year 1994-95.

77 Rate of relief to married couples etc.

1

“ The provisions of section 256 of the Taxes Act 1988 (general provision as to personal reliefs) shall become subsection (1) of that section and after that subsection there shall be inserted the following subsections— ”

2
Where under any provision of this Chapter the relief to which a person is entitled for any year of assessment consists in an income tax reduction calculated by reference to a specified amount, the effect of that relief shall be that the amount of that person’s liability for that year to income tax on his total income shall be the amount to which he would have been liable apart from that provision less whichever is the smaller of—
a
the amount equal to 20 per cent. of the specified amount; and
b
the amount which reduces his liability to nil.
3
In determining for the purposes of subsection (2) above the amount of income tax to which a person would be liable apart from any provision providing for an income tax reduction, no account shall be taken—
a
where that provision is section 259 or 261A, of any income tax reduction under any of the other provisions of this Chapter;
b
where that provision is section 262(1), of any income tax reduction under any of the other provisions of this Chapter except section 259 or 261A; or
c
whatever that provision—
i
of any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 or by way of a credit under section 790(1); or
ii
of any tax at the basic rate on so much of that person’s income as is income the income tax on which he is entitled to charge against any other person or to deduct, retain or satisfy out of any payment;
but paragraph (a) above, so far as it relates to any income tax reduction under section 261A, is without prejudice to the provisions of subsection (2) of that section.

2

In section 257A of that Act (married couple’s allowance)—

F136a

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

b

in subsection (2), for the words from “to a deduction” to “the deduction” there shall be substituted “ for that year to an income tax reduction calculated by reference to £2,665 (instead of to the reduction ”; and

c

in subsection (3), for the words from “to a deduction” to “the deduction” there shall be substituted “ for that year to an income tax reduction calculated by reference to £2,705 (instead of to the reduction ”.

F1373

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

F1374

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

F1385

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

6

The Taxes Act 1988 and the M31Taxes Management Act 1970 shall have effect with the amendments specified in Schedule 8 to this Act (which supplements the provisions of this section).

7

This section and Schedule 8 to this Act shall have effect for the year 1994-95 and, subject to the following provisions of this section, for subsequent years of assessment.

8

For the year 1995-96 and subsequent years of assessment section 256(2)(a) of the Taxes Act 1988 shall have effect with the substitution of “ 15 per cent ” for the words “20 per cent.”

9

For the year 1995-96, section 257A of the Taxes Act 1988 shall have effect—

a

as if the same amount (namely £1,720) were specified in subsection (1) as is specified in that subsection as it applies for the year 1994-95;

b

as if the amount specified in subsection (2) were “£2,995”; and

c

as if the amount specified in subsection (3) were “£3,035”.

10

Section 257C(1) of the Taxes Act 1988 (indexation), so far as relating to section 257A (1) to (3) of that Act, shall not apply for the year 1994-95 or for the year 1995-96 but shall not be prevented by anything in this section from applying for the year 1996-97 or any subsequent year of assessment.

78 Amount by reference to which MCA is reduced.

Section 257A(5) of the Taxes Act 1988 (reduction of married couple’s allowance if claimant’s total income exceeds a certain amount) shall apply for the year 1994-95 as if the amount specified in it were the same as the amount specified in it as it applies for the year 1993-94, and accordingly section 257C(1) of that Act (indexation) so far as relating to section 257A(5) shall not apply for the year 1994-95.

79 Relief for maintenance payments.

1

Sections 347A and 347B of the M32Taxes Act 1988 F139. . . (which contain provision with respect to the deductions from income allowed on account of maintenance payments) shall have effect in relation to payments becoming due on or after 6th April 1994 with the following modifications.

F1402

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

3

In subsection (2) of section 347B (relief for qualifying maintenance payments)—

a

the words “Notwithstanding section 347A(1)(a) but” shall be omitted; and

b

for the words from “in computing” to “to deduct” there shall be substituted “ for a year of assessment to an income tax reduction calculated by reference to ”.

4

In subsection (3) of section 347B (restriction of relief to amount of married couple’s allowance), for the words from the beginning to “exceed” there shall be substituted “ The amount by reference to which any income tax reduction is to be calculated under this section shall be limited to ”.

F1405

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

6

After subsection (5) of section 347B there shall be inserted the following subsections—

5A
Where any person is entitled under this section for any year of assessment to an income tax reduction calculated by reference to the amount determined in accordance with subsections (2) to (5) above (“the relevant amount”), the amount of that person’s liability for that year to income tax on his total income shall be the amount to which he would have been liable apart from this section less whichever is the smaller of—
a
the amount equal to the appropriate percentage of the relevant amount; and
b
the amount which reduces his liability to nil;
and in this subsection “the appropriate percentage” means 20 per cent. for the year 1994-95 and 15 per cent. for the year 1995-96 and subsequent years of assessment.
5B
In determining for the purposes of subsection (5A) above the amount of income tax to which a person would be liable apart from any income tax reduction under this section, no account shall be taken of—
a
any income tax reduction under Chapter I of Part VII;
b
any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 or by way of a credit under section 790(1); or
c
any tax at the basic rate on so much of that person’s income as is income the income tax on which he is entitled to charge against any other person or to deduct, retain or satisfy out of any payment.

F1407

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

F1408

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

80 Limit on relief for interest.

For each of the years 1994-95 and 1995-96 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.

81 Mortgage interest relief etc.

1

For subsection (1) of section 353 of the Taxes Act 1988 (general provision for relief for interest payments) there shall be substituted the following subsection—

1
Where a person pays interest in any year of assessment, that person, if he makes a claim to the relief, shall for that year of assessment be entitled (subject to sections 354 to 368) to relief in accordance with this section in respect of so much (if any) of the amount of that interest as is eligible for relief under this section by virtue of sections 354 to 365.

2

After that subsection there shall be inserted the following subsections—

1A
Where a person is entitled for any year of assessment to relief under this section in respect of any amount of interest which—
a
is eligible for that relief by virtue of section 354 or 365, and
b
so far as eligible by virtue of section 354, is so eligible in a case which falls, or is treated as falling, within section 355(1)(a), 356 or 358,
that relief shall consist in an income tax reduction for that year calculated by reference to that amount.
1B
Where a person is entitled for any year of assessment to relief under this section in respect of any amount of interest which—
a
is eligible for that relief otherwise than by virtue of section 354 or 365, or
b
is eligible for that relief by virtue of section 354 in a case falling within section 355(1)(b),
that relief shall consist (subject to sections 237(5)(b) and 355(4)) in a deduction or set-off of that amount from or against that person’s income for that year.
1C
Without prejudice to subsection (1E) below, where the whole or any part of an amount of interest is eligible for relief under this section by virtue of section 354 in a case which (apart from this subsection) would fall, or be treated as falling, within both section 355(1)(a) or 356 and section 355(1)(b), then that case shall be treated for the purposes of this section and the following provisions of this Act—
a
except in relation to payments to which an election made for the purposes of this subsection by the person entitled to the relief applies, as falling within section 355(1)(b) and not within section 355(1)(a) or 356; and
b
in relation to payments to which such an election does apply, as falling within section 355(1)(a) or, as the case may be, 356, and not within section 355(1)(b).
1D
An election for the purposes of subsection (1C)—
a
shall be made, and may be withdrawn, by the giving of written notice to an officer of the Board;
b
shall apply to every payment of interest which—
i
is made after the time specified in the notice of that election as the time as from which it takes effect; and
ii
is not made after a time specified in a notice of the withdrawal of that election as the time as from which that election is withdrawn;
c
shall not be made so as to take effect as from any time except the beginning of a year of assessment or a time as from which the conditions for the case to fall, or be treated as falling, within both section 355(1)(a) or 356 and section 355(1)(b) have begun to be satisfied in relation to payments of interest on the loan in question;
d
shall not be withdrawn except as from the beginning of a year of assessment; and
e
shall not be made so as to take effect, and shall not be withdrawn, as from any time before the beginning of the year of assessment immediately before that in which the notice of the election or, as the case may be, of the withdrawal is given to an officer of the Board.
1E
Where any person is entitled for any year of assessment to relief under this section in respect of any amount of interest as is eligible for that relief partly as mentioned in subsection (1A) above and partly as mentioned in subsection (1B) above, that amount of interest shall be apportioned between the cases to which each of those subsections applies without regard to what parts of the total amount borrowed remain outstanding but according to the following factors, that is to say—
a
the proportions of the total amount borrowed which were applied for different purposes; and
b
in the case of so much of any amount of interest which is, or in pursuance of an apportionment under paragraph (a) above is treated as, eligible for relief by virtue of section 354, the different uses to which the land or other property in question is put from time to time;
and subsection (1A) or (1B) above shall apply accordingly in relation to the interest apportioned to the case to which that subsection applies.
1F
Where any person is entitled under this section for any year of assessment to an income tax reduction calculated by reference to an amount of interest, the amount of that person’s liability for that year to income tax on his total income shall be the amount to which he would have been liable apart from this section less whichever is the smaller of—
a
the amount equal to the applicable percentage of that amount of interest; and
b
the amount which reduces his liability to nil.
1G
In subsection (1F) above “the applicable percentage”—
a
in relation to so much of any interest as is eligible for relief under this section by virtue of section 354, means 20 per cent.; and
b
in relation to so much of any interest as is eligible for relief under this section by virtue of section 365, means the percentage which is the basic rate for the year of assessment in question;
but, in relation to any payment of interest which (whenever falling due) is made in the year 1995-96 or any subsequent year of assessment, paragraph (a) above shall have effect with the substitution of “15 per cent.” for “20 per cent.”
1H
In determining for the purposes of subsection (1F) above the amount of income tax to which a person would be liable apart from any income tax reduction under this section, no account shall be taken of—
a
any income tax reduction under Chapter I of Part VII or section 347B;
b
any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 or by way of a credit under section 790(1); or
c
any tax at the basic rate on so much of that person’s income as is income the income tax on which he is entitled to charge against any other person or to deduct, retain or satisfy out of any payment.

F1413

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

4

For subsections (3) to (5B) of section 369 of that Act (provisions balancing deduction of relevant loan interest from income against charge to tax) there shall be substituted the following subsection—

3
The following payments, that is to say—
a
payments of relevant loan interest to which this section applies, and
b
payments which would be such payments but for section 373(5),
shall not be allowable as deductions for any purpose of the Income Tax Acts except in so far as they fall to be treated as such payments by virtue only of section 375(2) and would be allowable apart from this subsection.

5

Schedule 9 to this Act (which for the purposes of or in connection with the provisions of this section makes further modifications of certain enactments in relation to tax relief on interest payments) shall have effect.

6

The preceding provisions of this section and that Schedule—

a

shall have effect in relation to payments of interest made on or after 6th April 1994 (whenever falling due); and

b

shall also have effect, so far as they relate to relevant loan interest, in relation to any payments of interest becoming due on or after 6th April 1994 which have been made at any time before that date but on or after 30th November 1993.

7

Any provision made before the passing of this Act by reference to the basic rate of income tax and contained in any instrument or agreement under or in accordance with which payments of relevant loan interest have been or are to be made shall be taken, in relation to any such payment as is mentioned in subsection (6)(a) or (b) above, to have been made, instead, by reference to a rate which, in the case of that payment, is the applicable percentage for the purposes of subsection (1) of section 369 of the Taxes Act 1988.

F1418

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

9

In this section “relevant loan interest” has the same meaning as in Part IX of the Taxes Act 1988.

82 Relief for blind persons.

1

In section 265(1) of the Taxes Act 1988 (blind person’s allowance) for “£1,080” there shall be substituted “ £1,200 ”.

2

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

F14283. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14384. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporation tax charge and rate

85 Charge and rate of corporation tax for 1994.

Corporation tax shall be charged for the financial year 1994 at the rate of 33 per cent.

86 Small companies.

1

For the financial year 1994—

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.

2

In section 13(3) of that Act (limits of marginal relief) in paragraphs (a) and (b)—

a

for “£250,000” there shall be substituted “ £300,000 ”, and

b

for “£1,250,000” there shall be substituted “ £1,500,000 ”.

3

Subsection (2) above shall have effect for the financial year 1994 and subsequent financial years; and where by virtue of that subsection section 13 of the Taxes Act 1988 has effect with different relevant maximum amounts in relation to different parts of a company’s accounting period, then for the purposes of that section those parts shall be treated as if they were separate accounting periods and the profits and basic profits of the company for that period shall be apportioned between those parts.

Benefits in kind

87 Car fuel.

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
£640
More than 1,400 but not more than 2,000
£810
More than 2,000
£1,200
TABLE AB
Cylinder capacity of car in cubic centimetres
Cash equivalent
2,000 or less
£580
More than 2,000
£750
TABLE B
Description of car
Cash equivalent
Any car
£1,200

TABLE A
Cylinder capacity of car in cubic centimetres	Cash equivalent
1,400 or less	£640
More than 1,400 but not more than 2,000	£810
More than 2,000	£1,200

TABLE AB
Cylinder capacity of car in cubic centimetres	Cash equivalent
2,000 or less	£580
More than 2,000	£750

TABLE B
Description of car	Cash equivalent
Any car	£1,200

2

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

88 Beneficial loan arrangements.

1

In section 160(1) of the Taxes Act 1988 (charge to tax of benefit of loan obtained by reason of employment) for the words following paragraph (b) there shall be substituted—

an amount equal to whatever is the cash equivalent of the benefit of the loan for that year shall, subject to the provisions of this Chapter, be treated as emoluments of the employment, and accordingly chargeable to tax under Schedule E; and where that amount is so treated, the employee is to be treated as having paid interest on the loan in that year of the same amount.
1A
Interest treated as paid by virtue of subsection (1) above—
a
shall be treated as paid for all the purposes of the Tax Acts (other than this Chapter, including Schedule 7), but shall not be treated for any purpose as income of the person making the loan or be treated as relevant loan interest to which section 369 applies, and
b
shall be treated as accruing during, and paid by the employee at the end of, the year or, if different, the period in the year during which he is employed in employment to which this Chapter applies and the loan is outstanding.
1B
All the loans between the same lender and borrower which—
a
are outstanding at any time, as to any amount, in any year,
b
are not qualifying loans, and
c
are made in the same currency,
are, if a cash equivalent for them falls to be ascertained, to be treated for the purposes of subsections (1) and (1A) above and Part II of Schedule 7 as a single loan.
1C
In this section and section 161 “qualifying loan” means any loan made to any person where, assuming interest is being paid on the loan (whether or not it is in fact being paid), the whole or any part of the interest—
a
is eligible for relief under section 353 or would be so eligible but for subsection (2) of that section or section 357(1)(b), or
b
is deductible in computing the amount of the profits or gains to be charged under Case I or II of Schedule D in respect of a trade, profession or vocation carried on by him.

2

At the end of section 160(5) of that Act (interpretation, including “official rate of interest”) there shall be added—

and, without prejudice to the generality of section 178 of the Finance Act 1989, regulations under that section may make different provision in relation to a loan outstanding for the whole or part of a year if—
i
it was made in the currency of a country or territory outside the United Kingdom,
ii
the benefit of the loan is obtained by reason of the employment of a person who normally lives in that country or territory, and
iii
that person has lived in that country or territory at some time in the period of six years ending with that year

3

For section 161(1) of that Act (exemption for loans the cash equivalent of which does not exceed £300) there shall be substituted—

1
The cash equivalent of the benefit of any such loan as is referred to in section 160(1) is not to be treated as emoluments of the employment if—
a
at no time in the year does the amount outstanding on the loan (or, if two or more such loans as are referred to in section 160(1) are outstanding in the year, the aggregate of the amounts outstanding on them) exceed £5000, or
b
where paragraph (a) above does not apply, the loan is not a qualifying loan and at no time in the year does the amount outstanding on the loan (or, if two or more such loans as are referred to in section 160(1) and are not qualifying loans are outstanding in the year, the aggregate of the amounts outstanding on them) exceed £5000.
1A
Section 160(1) does not in any year apply to a loan made at any time in that or an earlier year by a person in the ordinary course of a business carried on by him which includes the lending of money if—
a
comparable loans were available, at the time the loan in question was made, to all those who might be expected to avail themselves of the services which he provides in the course of that business,
b
of the total number of the loan in question and comparable loans made by him at or about the time the loan in question was made, a substantial proportion were made to members of the public at large with whom he was dealing at arm’s length, and
c
the loan in question, and comparable loans in general made by him at or about that time to members of the public at large with whom he was dealing at arm’s length, are held on the same terms and, if those terms differ from the terms applicable immediately after the loan was first made, they were imposed in the ordinary course of his business.
1B
For the purposes of subsection (1A) above, a loan is comparable to the loan in question if it is made for the same or similar purposes, and on the same terms and conditions, as that loan.

4

In Schedule 7 to that Act (beneficial loan arrangements)—

a

in paragraph 1(5) for “Sub-paragraph (2) above does” there shall be substituted “ Sub-paragraphs (2) and (4) above do ” and the words “his employer, being” shall cease to have effect, and

b

Parts III to V shall cease to have effect.

F1445

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

6

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

89 Vouchers and credit-tokens.

1

Section 141 of the Taxes Act 1988 (non-cash vouchers) shall be amended as follows.

2

In subsection (1)—

a

in paragraph (a), for the words from “the expense incurred” to “exchanged;” there shall be substituted

the expense incurred (“the chargeable expense”)—
i
by the person at whose cost the voucher and the money, goods or services for which it is capable of being exchanged are provided,
ii
in or in connection with that provision;

b

the words following paragraph (b) shall be omitted.

3

In subsection (6B), in paragraph (a) for the words “the person providing the non-cash voucher” there shall be substituted “ the person at whose cost the voucher and the entertainment are provided ”.

4

Section 142 of the Taxes Act 1988 (credit-tokens) shall be amended as follows.

5

In subsection (1)(a), for the words from “the expense incurred” to “obtained;” there shall be substituted

the expense incurred—
i
by the person at whose cost the money, goods or services are provided,
ii
in or in connection with that provision;

6

In subsection (3) for the words “providing the credit-token as mentioned in subsection (1)(a) above” there shall be substituted “ mentioned in subsection (1)(a)(i) above ”.

7

In subsection (3B), in paragraph (a) for the words “providing the credit-token” there shall be substituted “ mentioned in subsection (1)(a)(i) above ”.

8

Section 143 of the Taxes Act 1988 (cash vouchers) shall be amended as follows.

9

In subsection (1) for the words from “(and in particular section 203)” to “paid by his employer” there shall be substituted

—
a
he shall be treated as having received

For the year 1994-95 section 3 of the M33Taxation 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.

91 Relief on re-investment.

1

Schedule 11 to this Act (which extends the relief on re-investment for individuals and trustees provided by Chapter IA of Part V of the Taxation of Chargeable Gains Act 1992) shall have effect.

2

That Schedule shall have effect in relation to disposals made on or after 30th November 1993.

3

In section 164H(1) of that Act—

a

for “is greater than” there shall be substituted “ exceeds ”, and

b

at the end there shall be added “ or half the value of the company’s assets as a whole (whichever is the greater); and section 294(3) and (4) of the Taxes Act (meaning of value of company’s assets as a whole) applies for the purposes of this subsection as it applies for the purposes of section 294 of that Act ”.

4

Subsection (3) above shall apply to determine whether a company is a qualifying company on or after 30th November 1993.

F14592. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93 Indexation losses.

1

In section 53 of the Taxation of Chargeable Gains Act 1992 (indexation allowance), in subsection (1), for the words following “contrary” to the end of paragraph (c) there shall be substituted

if on the disposal of an asset there is an unindexed gain, an allowance (“the indexation allowance”) shall be allowed against the unindexed gain—
a
so as to give the gain for the purposes of this Act, or
b
if the indexation allowance equals or exceeds the unindexed gain, so as to extinguish it (in which case the disposal shall be one on which, after taking account of the indexation allowance, neither a gain nor a loss accrues)

2

In subsection (2) of that section—

a

for “subsection (1) above” there shall be substituted “ this Chapter ”,

b

for paragraph (a) there shall be substituted—

a
“unindexed gain” means the amount of the gain on the disposal computed in accordance with this Part

c

in paragraph (b), for “gain or loss” there shall be substituted “ gain ”.

3

After that subsection there shall be inserted—

2A
Notwithstanding anything in section 16 of this Act, this section shall not apply to a disposal on which a loss accrues.

4

In section 55 of that Act (assets acquired on a no gain/no loss disposal), after subsection (6) there shall be inserted—

7
The rules in subsection (8) below apply (after the application of section 53 but before the application of section 35(3) or (4)) to give the gain or loss for the purposes of this Act where—
a
subsection (6) above applies to the disposal (the “disposal in question”) of an asset by any person (the “transferor”), and
b
but for paragraph (b) of that subsection, the consideration the transferor would be treated as having given for the asset would include an amount or amounts of indexation allowance brought into account by virtue of section 56(2) on any disposal made before 30th November 1993.
8
The rules are as follows—
a
where (apart from this subsection) there would be a loss, an amount equal to the rolled-up indexation shall be added to it so as to increase it,
b
where (apart from this subsection) the unindexed gain or loss would be nil, there shall be a loss of an amount equal to the rolled-up indexation, and
c
where (apart from this subsection)—
i
there would be an unindexed gain, and
ii
the gain or loss would be nil but the amount of the indexation allowance used to extinguish the gain would be less than the rolled-up indexation,
the difference shall constitute a loss.
9
In this section the “rolled-up indexation” means, subject to subsections (10) and (11) below, the amount or, as the case may be, the aggregate of the amounts referred to in subsection (7)(b) above; and subsections (10) and (11) below shall, as well as applying on the disposal in question, be treated as having applied on any previous part disposal by the transferor.
10
Where, for the purposes of any disposal of the asset by the transferor, any amount falling within any, or any combination of, paragraphs (a) to (c) of section 38(1) is required by any enactment to be excluded, reduced or written down, the amount or aggregate referred to in subsection (9) above (or so much of it as remains after the application of this subsection and subsection (11) below on a previous part disposal) shall be reduced in proportion to any reduction made in the amount falling within the paragraph, or the combination of paragraphs, in question.
11
Where the transferor makes a part disposal of the asset at any time, then, for the purposes of that and any subsequent disposal, the amount or aggregate referred to in subsection (9) above (or so much of it as remains after the application of this subsection and subsection (10) above on a previous part disposal by him or after the application of subsection (10) above on the part disposal) shall be apportioned between the property disposed of and the property which remains in the same proportions as the sums falling within section 38(1)(a) and (b).

5

In section 56 of that Act (amount of consideration on no gain/no loss disposals)—

a

in subsection (2) for the words preceding paragraph (a) there shall be substituted “ On a no gain/no loss disposal by any person (“the transferor”) ”, and

b

after that subsection there shall be added—

3
Where apart from this subsection—
a
a loss would accrue on the disposal of an asset, and
b
the sums allowable as a deduction in computing that loss would include an amount attributable to the application of the assumption in subsection (2) above on any no gain/no loss disposal made on or after 30th November 1993,
those sums shall be determined as if that subsection had not applied on any such disposal made on or after that date and the loss shall be reduced accordingly or, if those sums are then equal to or less than the consideration for the disposal, the disposal shall be one on which neither a gain nor a loss accrues.
4
For the purposes of this section a no gain/no loss disposal is one which, by virtue of any enactment other than section 35(4), 53(1) or this section, is treated as a disposal on which neither a gain nor a loss accrues to the person making the disposal.

6

In section 110 of that Act (indexation allowance for share pools), after subsection (6) there shall be inserted—

6A
Where a disposal to a person acquiring or adding to a new holding is treated by virtue of any enactment as one on which neither a gain nor a loss accrues to the person making the disposal—
a
section 56(2) shall not apply to the disposal (and, accordingly, the amount of the consideration shall not be calculated on the assumption that a gain of an amount equal to the indexation allowance accrues to the person making the disposal), but
b
an amount equal to the indexation allowance on the disposal shall be added to the indexed pool of expenditure for the holding acquired or, as the case may be, held by the person to whom the disposal is made (and, where it is added to the indexed pool of expenditure for a holding so held, it shall be added after any increase required by subsection (8)(a) below).

7

Sections 103 (collective investment schemes, etc.), 111 (building society etc. shares), 182 to 184 (groups and associated companies) and 200 (oil industry assets) of that Act (all of which relate to indexation allowance) shall cease to have effect.

8

In Schedule 7A to that Act (restriction on set-off of pre-entry losses), in paragraph 2—

a

in sub-paragraph (2), for the definitions of “B” and “C” there shall be substituted—

B is the amount of the item of relevant allowable expenditure for which an amount falls to be determined under this paragraph;
C is the total amount of all the relevant allowable expenditure

b

in sub-paragraph (4), “except in relation to the calculation of any indexed rise” shall cease to have effect,

c

after sub-paragraph (8) there shall be inserted—

8A
Where by virtue of section 55(8) the allowable loss accruing on the disposal of a pre-entry asset, or any part of the loss, is attributable to an amount (“the rolled-up amount”) of rolled-up indexation (as defined in section 55(9) to (11)), then, for the purposes of this paragraph—
a
the total amount of all the relevant allowable expenditure shall be treated as increased by the rolled-up amount, and
b
the amount of each item of relevant allowable expenditure shall be treated as increased by so much (if any) of the rolled-up amount as is attributable to that item.
8B
Where—
a
section 56(3) applies on the disposal of a pre-entry asset on which an allowable loss accrues, and
b
in accordance with that subsection, the total amount of all the relevant allowable expenditure is reduced by any amount (“the global reduction”),
the amount of each item of relevant allowable expenditure shall be treated for the purposes of this paragraph as reduced by so much (if any) of the global reduction as is attributable to that item

d

in sub-paragraph (9), the definition of “indexed rise” shall cease to have effect.

9

In paragraph 4 of that Schedule—

a

in sub-paragraph (12) the words from “together” to the end, and

b

sub-paragraph (13),

shall cease to have effect.

10

In paragraph 5 of that Schedule, after sub-paragraph (2) there shall be inserted—

2A
In determining for the purposes of sub-paragraph (2)(a) above the amount of any loss which would have accrued if the asset had been disposed of at the relevant time at its market value at that time—
a
it shall be assumed that the amendments of this Act made by section 93(1) to (5) of the Finance Act 1994 (indexation losses) had effect in relation to that disposal and, accordingly,
b
references in those amendments and in subsection (11) of that section to 30th November 1993 shall be read as references to the day on which the relevant time falls.

11

This section shall have effect in relation to disposals made on or after 30th November 1993 and Schedule 12 to this Act (which gives transitional relief) shall have effect for the years 1993–94 and 1994–95.

94 Set-off of pre-entry losses.

1

Schedule 7A to the M34Taxation of Chargeable Gains Act 1992 (set off of pre-entry losses) shall be amended as follows.

2

In sub-paragraph (3)(a) of paragraph 2 (calculation of pre-entry proportion of loss), for “assumption applying by virtue of sub-paragraphs (4) and (5)” there shall be substituted “ assumptions applying by virtue of sub-paragraphs (4) to (6B) ”, and for sub-paragraph (7) of that paragraph there shall be substituted the following sub-paragraphs—

6A
Notwithstanding anything in section 56(2), where in the case of the disposal of any pre-entry asset—
a
any company has at any time between the relevant time and the time of the disposal acquired that asset or the equivalent asset, and
b
the acquisition was either an acquisition in pursuance of a disposal on which there is treated by virtue of section 171 as having been neither a gain nor a loss accruing or an acquisition by virtue of which an asset is treated as the equivalent asset,
the items of relevant allowable expenditure and the times when those items shall be treated as having been incurred shall be determined for the purposes of this paragraph on the assumptions specified in sub-paragraph (6B) below.
6B
Those assumptions are that—
a
the company by reference to which the asset in question is a pre-entry asset, and
b
the company mentioned in sub-paragraph (6A) above and every other company which has made an acquisition which, in relation to the disposal of that asset, falls within that sub-paragraph,
were the same person and, accordingly, that the pre-entry asset had been acquired by the company disposing of it at the time when it or the equivalent asset would have been treated for the purposes of this paragraph as acquired by the company mentioned in paragraph (a) above.
7
In sub-paragraphs (5) to (6B) above the references to the equivalent asset, in relation to another asset acquired or disposed of by any company, are references to any asset which falls in relation to that company to be treated (whether by virtue of paragraph 1(8) above or otherwise) as the same as the other asset or which would fall to be so treated after applying, as respects other assets, the assumptions for which those sub-paragraphs provide.

3

2

In Chapter II of Part III (settlements) the following section shall be inserted after section 98—

98A Settlements with foreign element: information.
Schedule 5A to this Act (which contains general provisions about information relating to settlements with a foreign element) shall have effect.

3

The following Schedule shall be inserted after Schedule 5—

SCHEDULE 5A Settlements with Foreign Element: Information
Section 98A.
1
In this Schedule “the commencement day” means the day on which the Finance Act 1994 was passed.
2
1
This paragraph applies if—
a
a settlement was created before 19th March 1991,
b
on or after the commencement day a person transfers property to the trustees otherwise than under a transaction entered into at arm’s length and otherwise than in pursuance of a liability incurred by any person before that day,
c
the trustees are not resident or ordinarily resident in the United Kingdom at the time the property is transferred, and
d
the transferor knows, or has reason to believe, that the trustees are not so resident or ordinarily resident.
2
Before the expiry of the period of twelve months beginning with the relevant day, the transferor shall deliver to the Board a return which—
a
identifies the settlement, and
b
specifies the property transferred, the day on which the transfer was made, and the consideration (if any) for the transfer.
3
For the purposes of sub-paragraph (2) above the relevant day is the day on which the transfer is made.
3
1
This paragraph applies if a settlement is created on or after the commencement day, and at the time it is created—
a
the trustees are not resident or ordinarily resident in the United Kingdom, or
b
the trustees are resident or ordinarily resident in the United Kingdom but fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.
2
Any person who—
a
is a settlor in relation to the settlement at the time it is created, and
b
at that time fulfils the condition mentioned in sub-paragraph (3) below,
shall, before the expiry of the period of three months beginning with the relevant day, deliver to the Board a return specifying the particulars mentioned in sub-paragraph (4) below.
3
The condition is that the person concerned is domiciled in the United Kingdom and is either resident or ordinarily resident in the United Kingdom.
4
The particulars are—
a
the day on which the settlement was created;
b
the name and address of the person delivering the return;
c
the names and addresses of the persons who are the trustees immediately before the delivery of the return.
5
For the purposes of sub-paragraph (2) above the relevant day is the day on which the settlement is created.
4
1
This paragraph applies if a settlement is created on or after 19th March 1991, and at the time it is created—
a
the trustees are not resident or ordinarily resident in the United Kingdom, or
b
the trustees are resident or ordinarily resident in the United Kingdom but fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.
2
Any person who—
a
is a settlor in relation to the settlement at the time it is created,
b
at that time does not fulfil the condition mentioned in sub-paragraph (3) below, and
c
first fulfils that condition at a time falling on or after the commencement day,
shall, before the expiry of the period of twelve months beginning with the relevant day, deliver to the Board a return specifying the particulars mentioned in sub-paragraph (4) below.
3
The condition is that the person concerned is domiciled in the United Kingdom and is either resident or ordinarily resident in the United Kingdom.
4
The particulars are—
a
the day on which the settlement was created;
b
the name and address of the person delivering the return;
c
the names and addresses of the persons who are the trustees immediately before the delivery of the return.
5
For the purposes of sub-paragraph (2) above the relevant day is the day on which the person first fulfils the condition as mentioned in paragraph (c) of that sub-paragraph.
5
1
This paragraph applies if—
a
the trustees of a settlement become at any time (the relevant time) on or after the commencement day neither resident nor ordinarily resident in the United Kingdom, or
b
the trustees of a settlement, while continuing to be resident and ordinarily resident in the United Kingdom, become at any time (the relevant time) on or after the commencement day trustees who fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.
2
Any person who was a trustee of the settlement immediately before the relevant time shall, before the expiry of the period of twelve months beginning with the relevant day, deliver to the Board a return specifying—
a
the day on which the settlement was created,
b
the name and address of each person who is a settlor in relation to the settlement immediately before the delivery of the return, and
c
the names and addresses of the persons who are the trustees immediately before the delivery of the return.
3
For the purposes of sub-paragraph (2) above the relevant day is the day when the relevant time falls.
6
1
Nothing in paragraph 2, 3, 4 or 5 above shall require information to be contained in the return concerned to the extent that—
a
before the expiry of the period concerned the information has been provided to the Board by any person in pursuance of the paragraph concerned or of any other provision, or
b
after the expiry of the period concerned the information falls to be provided to the Board by any person in pursuance of any provision other than the paragraph concerned.
2
Nothing in paragraph 2, 3, 4 or 5 above shall require a return to be delivered if—
a
before the expiry of the period concerned all the information concerned has been provided to the Board by any person in pursuance of the paragraph concerned or of any other provision, or
b
after the expiry of the period concerned all the information concerned falls to be provided to the Board by any person in pursuance of any provision other than the paragraph concerned.

4

In Schedule 5, paragraphs 11 to 14 (information) shall be omitted.

5

Subsection (4) above shall have effect where the relevant day falls on or after the day on which this Act is passed.

6

In the Table in section 98 of the M38Taxes Management Act 1970 (penalties) at the end of the second column there shall be inserted—

“ Paragraphs 2 to 6 of Schedule 5A to the 1992 Act. ”

Profit-related pay

F14698. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14799. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Retirement benefits schemes

103 The administrator.

1

The following section shall be inserted after section 611 of the Taxes Act 1988—

611AA Definition of the administrator.
1
In this Chapter references to the administrator, in relation to a retirement benefits scheme, are to the person who is, or the persons who are, for the time being the administrator of the scheme by virtue of the following provisions of this section.
2
Subject to subsection (7) below, where—
a
the scheme is a trust scheme, and
b
at any time the trustee, or any of the trustees, is or are resident in the United Kingdom,
the administrator of the scheme at that time shall be the trustee or trustees of the scheme.
3
Subject to subsection (7) below, where—
a
the scheme is a non-trust scheme, and
b
at any time the scheme sponsor, or any of the scheme sponsors, is or are resident in the United Kingdom,
the administrator of the scheme at that time shall be the scheme sponsor or scheme sponsors.
4
At any time when the trustee of a trust scheme is not resident in the United Kingdom or (if there is more than one trustee) none of the trustees is so resident, the trustee or trustees shall ensure that there is a person, or there are persons—
a
resident in the United Kingdom, and
b
appointed by the trustee or trustees to be responsible for the discharge of all duties relating to the scheme which are imposed on the administrator under this Chapter.
5
At any time when the scheme sponsor of a non-trust scheme is not resident in the United Kingdom or (if there is more than one scheme sponsor) none of the scheme sponsors is so resident, the scheme sponsor or scheme sponsors shall ensure that there is a person, or there are persons—
a
resident in the United Kingdom, and
b
appointed by the scheme sponsor or scheme sponsors to be responsible for the discharge of all duties relating to the scheme which are imposed on the administrator under this Chapter.
6
Without prejudice to subsections (4) and (5) above—
a
the trustee or trustees of a trust scheme, or
b
the scheme sponsor or scheme sponsors of a non-trust scheme,
may at any time appoint a person who is, or persons who are, resident in the United Kingdom to be responsible for the discharge of all duties relating to the scheme which are imposed on the administrator under this Chapter.
7
Where at any time there is or are a person or persons—
a
for the time being appointed under subsection (4), (5) or (6) above as regards a scheme, and
b
resident in the United Kingdom,
the administrator of the scheme at that time shall be that person or those persons (and no other person).
8
Any appointment under subsection (4), (5) or (6) above—
a
must be in writing, and
b
if made after the time when the scheme is established, shall constitute an alteration of the scheme for the purposes of section 591B(2).
9
In this section—
a
references to a trust scheme are to a retirement benefits scheme established under a trust or trusts;
b
references to the trustee or trustees, in relation to a trust scheme and to a particular time, are to the person who is the trustee, or the persons who are the trustees, of the scheme at that time;
c
references to a non-trust scheme are to a retirement benefits scheme not established under a trust or trusts, and
d
references to the scheme sponsor or scheme sponsors, in relation to a retirement benefits scheme and to a particular time, are references to any person who established the scheme and is in existence at that time or, if more than one, all such persons.

2

In consequence of subsection (1) above, in section 612(1) of the Taxes Act 1988 (interpretation of Chapter I of Part XIV) the definition of “administrator” shall cease to have effect.

3

This section—

a

so far as it relates to section 591B(1) of the Taxes Act 1988, shall apply in relation to notices given on or after the day on which this Act is passed;

b

so far as it relates to section 593(3) of that Act, shall apply in relation to contributions paid on or after that day;

c

so far as it relates to section 596A(3) of that Act, shall apply in relation to benefits received on or after that day;

d

so far as it relates to sections 598(2) and (4), 599(3) and 599A(2) of that Act, shall apply in relation to payments made on or after that day;

e

so far as it relates to section 602(1) and (2) of that Act and regulations made under section 602, shall apply in relation to amounts becoming recoverable on or after that day;

f

so far as it relates to section 604(1) of that Act, shall apply in relation to applications made on or after that day;

g

so far as it relates to section 605(1) and (4) of that Act, shall apply in relation to notices given on or after that day.

104 Default of administrator etc.

1

The following section shall be substituted for section 606 of the Taxes Act 1988—

606 Default of administrator etc.
1
This section applies in relation to a retirement benefits scheme if at any time—
a
there is no administrator of the scheme, or
b
the person who is, or all of the persons who are, the administrator of the scheme cannot be traced, or
c
the person who is, or all of the persons who are, the administrator of the scheme is or are in default for the purposes of this section.
2
If the scheme is a trust scheme, then—
a
if subsection (1)(b) or (c) above applies and at the time in question the condition mentioned in subsection (3) below is fulfilled, the trustee or trustees shall at that time be responsible for the discharge of all duties imposed on the administrator under this Chapter (whenever arising) and liable for any tax due from the administrator in the administrator’s capacity as such (whenever falling due);
b
if subsection (1)(a) above applies, or subsection (1)(b) or (c) above applies and at the time in question the condition mentioned in subsection (3) below is not fulfilled, the employer shall at that time be so responsible and liable;
and paragraph (b) above shall apply to a person in his capacity as the employer even if he is also the administrator, or a trustee, of the scheme.
3
The condition is that there is at least one trustee of the scheme who—
a
can be traced,
b
is resident in the United Kingdom, and
c
is not in default for the purposes of this section.
4
If the scheme is a non-trust scheme, then—
a
if subsection (1)(b) or (c) above applies and at the time in question the condition mentioned in subsection (5) below is fulfilled, the scheme sponsor or scheme sponsors shall at that time be responsible for the discharge of all duties imposed on the administrator under this Chapter (whenever arising) and liable for any tax due from the administrator in the administrator’s capacity as such (whenever falling due);
b
if subsection (1)(a) above applies, or subsection (1)(b) or (c) above applies and at the time in question the condition mentioned in subsection (5) below is not fulfilled, the employer shall at that time be so responsible and liable;
and paragraph (b) above shall apply to a person in his capacity as the employer even if he is also the administrator of the scheme, or a scheme sponsor.
5
The condition is that there is at least one scheme sponsor who—
a
can be traced,
b
is resident in the United Kingdom, and
c
is not in default for the purposes of this section.
6
Where at any time—
a
paragraph (b) or (c) of subsection (1) above applies in relation to a scheme, and
b
a person is by virtue of this section responsible for the discharge of any duties, or liable for any tax, in relation to the scheme,
then at that time the person or persons mentioned in paragraph (b) or (as the case may be) paragraph (c) of subsection (1) above shall not, by reason only of being the administrator of the scheme, be responsible for the discharge of those duties or liable for that tax.
7
Where the scheme is a trust scheme and the employer is not a contributor to the scheme, subsection (2) above shall have effect as if—
a
for “the employer”, in the first place where those words occur, there were substituted “the scheme sponsor or scheme sponsors”, and
b
for “the employer”, in the second place where those words occur, there were substituted “scheme sponsor”.
8
Where the scheme is a non-trust scheme and the employer is not a contributor to the scheme, subsection (4) above shall have effect as if paragraph (b) and the words after that paragraph were omitted.
9
No liability incurred under this Chapter—
a
by the administrator of a scheme, or
b
by a person by virtue of this section,
shall be affected by the termination of a scheme or by its ceasing to be an approved scheme or to be an exempt approved scheme.
10
Where by virtue of this section a person becomes responsible for the discharge of any duties, or liable for any tax, the Board shall, as soon as is reasonably practicable, notify him of that fact; but any failure to give such notification shall not affect that person’s being responsible or liable by virtue of this section.
11
A person is in default for the purposes of this section if—
a
he has failed to discharge any duty imposed on him under this Chapter, or
b
he has failed to pay any tax due from him by virtue of this Chapter,
and (in either case) the Board consider the failure to be of a serious nature.
12
References in this section to a trust scheme, a non-trust scheme, trustees and scheme sponsors shall be construed in accordance with section 611AA.
13
References in this section to the employer include, where the employer is resident outside the United Kingdom, references to any branch or agent of the employer in the United Kingdom, and in this subsection “branch or agent” has the meaning given by section 118(1) of the Management Act.
14
This section does not apply for the purposes of sections 602 and 603 and Schedule 22.

2

In consequence of subsection (1) above, in section 607(3)(b)(iii) of the Taxes Act 1988 for the words “section 606(1) and (3)” there shall be substituted “ section 606(2)(b), (4)(b), (7), (8) and (13) ”.

3

This section shall apply where the time in question falls on or after the day on which this Act is passed.

P3 I16105 Information.

1

The Taxes Act 1988 shall be amended in accordance with subsections (2) and (3) below.

2

In section 605 (information) at the beginning there shall be inserted the following subsections—

1A
The Board may by regulations make any of the following provisions—
a
provision requiring prescribed persons to furnish to the Board at prescribed times information relating to any of the matters mentioned in subsection (1B) below;
b
provision enabling the Board to serve a notice requiring prescribed persons to furnish to the Board, within a prescribed time, particulars relating to any of those matters;
c
provision enabling the Board to serve a notice requiring prescribed persons to produce to the Board, within a prescribed time, documents relating to any of those matters;
d
provision enabling the Board to serve a notice requiring prescribed persons to make available for inspection on behalf of the Board books, documents and other records, being books, documents and records which relate to any of those matters;
e
provision requiring prescribed persons to preserve for a prescribed time books, documents and other records, being books, documents and records which relate to any of those matters.
1B
The matters referred to in subsection (1A) above are—
a
an approved scheme;
b
a relevant statutory scheme;
c
an annuity contract by means of which benefits provided under an approved scheme or a relevant statutory scheme have been secured;
d
a retirement benefits scheme which is not an approved scheme but in relation to which an application for approval for the purposes of this Chapter has been made.
1C
A person who fails to comply with regulations made under subsection (1A)(e) above shall be liable to a penalty not exceeding £3,000.
1D
Regulations under subsection (1A) above may make different provision for different descriptions of case.
1E
In subsection (1A) above “prescribed” means prescribed by regulations made under that subsection.

3

Subsections (1) and (2) of section 605 shall cease to have effect.

4

In section 98 of the M40Taxes Management Act 1970 (penalties for failure to provide information etc.)—

a

in the first column of the Table after the entry “regulations under section 602;” there shall be inserted the entry “ regulations under section 605(1A)(b) to (d); ”;

b

in the first column of the Table for the entry “section 605(1), (2), (3)(b) and (4);” there shall be substituted the entry “ section 605(3)(b) and (4); ”;

c

in the second column of the Table after the entry “regulations under section 602;” there shall be inserted the entry “ regulations under section 605(1A)(a); ”.

5

Subsections (3) and (4)(b) above shall come into force on such day as the Treasury may by order appoint.

106 False statements etc.

1

The following section shall be inserted after section 605 of the Taxes Act 1988—

605A False statements etc.
1
A person who fraudulently or negligently makes a false statement or false representation on making an application for the approval for the purposes of this Chapter of—
a
a retirement benefits scheme, or
b
an alteration in such a scheme,
shall be liable to a penalty not exceeding £3,000.
2
In a case where—
a
a person fraudulently or negligently makes a false statement or false representation, and
b
in consequence that person, or any other person, obtains relief from or repayment of tax under this Chapter,
the person mentioned in paragraph (a) above shall be liable to a penalty not exceeding £3,000.

2

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

107 Discretionary approval.

1

Section 591 of the Taxes Act 1988 (discretionary approval of retirement benefits schemes) shall be amended as follows.

2

In subsection (2)(g) (annuity contracts)—

a

after “relevant benefits” there shall be inserted “ falling within subsection (2A) below ”;

b

the words “approved by the Board and” shall be omitted.

3

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

2A
Relevant benefits fall within this subsection if they correspond with benefits that could be provided by an approved scheme, and for this purpose—
a
a hypothetical scheme (rather than any particular scheme) is to be taken, and
b
benefits provided by a scheme directly (rather than by means of an annuity contract) are to be taken.

4

This section shall apply in relation to a scheme not approved by virtue of section 591 of the Taxes Act 1988 before 1st July 1994.

108 Taxation of benefits of non-approved schemes.

1

Section 596A of the Taxes Act 1988 (taxation of benefits under non-approved schemes) shall be amended as follows.

2

In subsection (4), at the beginning there shall be inserted “ Subject to subsection (9) below ”.

3

For subsection (6) there shall be substituted—

6
Tax shall not be charged under this section in the case of—
a
any pension or annuity which is chargeable to tax under Schedule E by virtue of section 19(1); or
b
any pension or other benefit chargeable to tax under section 58.

4

In subsection (7)—

a

for the words “by virtue of section 19(1)1”, in the first place where they occur, there shall be substituted “ as mentioned in subsection (6)(a) above ”;

b

in paragraph (a), for the words “subsection (6) above” there shall be substituted “ subsection (6)(a) above ”; and

c

in paragraph (b) for the words “section 19(1)1” there shall be substituted “ section 19(1) ”.

5

For subsections (8) and (9) there shall be substituted—

8
Subject to subsection (9) below, tax shall not be charged under this section (or section 19(1) or 148) in the case of a lump sum where—
a
the employer has paid any sum or sums with a view to the provision of any relevant benefits under a retirement benefits scheme;
b
an employee has been assessed to tax in respect of the sum or sums by virtue of section 595(1); and
c
the lump sum is provided under the scheme to the employee, any person falling within section 595(5) in relation to the employee or any other individual designated by the employee.
9
Where any of the income or gains accruing to the scheme under which the lump sum is provided is not brought into charge to tax, tax shall be charged under this section on the amount of the lump sum received less any deduction applicable under subsection (10) or (11) below.
10
Subject to subsection (11) below, the deduction applicable is the aggregate of—
a
any sum or sums in respect of which the employee has been assessed as mentioned in subsection (8)(b) above, and
b
any sum or sums paid by the employee,
which in either case were paid by way of contribution to the provision of the lump sum.
11
Where—
a
the lump sum is provided under the scheme on the disposal of a part of any asset or the surrender of any part of or share in any rights in any asset, and
b
the employee, any person falling within section 595(5) in relation to the employee or any person connected with the employee has any right to receive or any expectation of receiving a further lump sum (or further lump sums) under the scheme on a further disposal of any part of the asset or a further surrender of any part of or share in any rights in the asset,
the deduction applicable shall be determined in accordance with the formula in subsection (12) below.
12
The formula is—
$D = S x \frac{A}{B}$
13
For the purposes of the formula in subsection (12) above—
D is the deduction applicable;
S is the aggregate amount of any sum or sums of a description mentioned in paragraphs (a) and (b) of subsection (10) above;
A is the amount of the lump sum received in relation to which the deduction applicable falls to be determined;
B is the market value of the asset in relation to which the disposal or surrender occurred, on the assumption that the valuation is made immediately before the disposal or surrender.
14
An individual may not claim that a deduction is applicable in relation to a lump sum more than once.
15
For the purposes of subsections (8) and (9) above, it shall be assumed unless the contrary is shown—
a
that no sums have been paid, and the employee has not been assessed in respect of any sums paid, with a view to the provision of relevant benefits;
b
that the income or gains accruing to a scheme under which the benefit is provided are not brought into charge to tax; and
c
that no deduction is applicable under subsection (10) or (11) above.
16
Section 839 shall apply for the purposes of subsection (11) above.
17
In subsection (13) above “market value” shall be construed in accordance with section 272 of the 1992 Act.

6

The amendments of section 596A made by this section shall have effect in relation to retirement benefit schemes—

a

entered into on or after 1st December 1993, or

b

entered into before that day if the scheme is varied on or after that day with a view to the provision of the benefit.

7

Subject to subsection (8) below, in the Taxes Act 1988—

a

in section 188(1), paragraph (c), and

b

in section 189, paragraph (b),

(exemption from tax where recipient of benefit or lump sum chargeable to tax in respect of sums paid or treated as paid with a view to the provision of the benefit or lump sum) shall cease to have effect in relation to any benefit provided or lump sum paid on or after 1st December 1993.

8

The repeals made by subsection (7) above shall not have effect in relation to any benefit provided or lump sum paid on or after 1st December 1993 in pursuance of a scheme or arrangement entered into before that day unless the scheme or arrangement is varied on or after that day with a view to the provision of the benefit or lump sum.

Annuities

109 Annuities derived from personal pension schemes.

1

In Chapter IV of Part XIV of the Taxes Act 1988 (personal pension schemes) the following shall be inserted after section 648—

Annuities: charge to tax
648A Annuities: charge under Schedule E.
1
Subject to subsection (2) below, where funds held for the purposes of an approved personal pension scheme are used to acquire an annuity—
a
the annuity shall be charged to tax under Schedule E and section 203 shall apply accordingly;
b
the annuity shall not be charged to tax under Case III of Schedule D.
2
As respects any approved personal pension scheme the Board may direct that, until such date as the Board may specify, annuities acquired with funds held for the purposes of the scheme shall be charged to tax as annual payments under Case III of Schedule D, and tax shall be deductible under sections 348 and 349 accordingly.

2

This section shall apply in relation to payments which are made under annuities on or after 6th April 1995.

110 Annuities derived from retirement benefits schemes.

1

In section 597 of the Taxes Act 1988 (pensions paid under retirement benefits schemes generally charged under Schedule E) the following subsection shall be inserted after subsection (2)—

3
Without prejudice to subsection (1) above, where funds held for the purposes of any scheme which is approved or is being considered for approval under this Chapter are used to acquire an annuity—
a
the annuity shall be charged to tax under Schedule E and section 203 shall apply accordingly;
b
the annuity shall not be charged to tax under Case III of Schedule D.

2

This section shall apply in relation to payments which are made under annuities on or after the day on which this Act is passed.

Authorised unit trusts

F148111. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

112 Distributions of authorised unit trusts.

Schedule 14 to this Act (distributions of authorised unit trusts) shall have effect.

113 Umbrella schemes.

1

In section 468 of the Taxes Act 1988 (authorised unit trusts), in subsection (6) (definitions) at the beginning there shall be inserted “ Subject to subsections (7) to (9) below ”.

2

After that subsection there shall be added—

7
Each of the parts of an umbrella scheme shall be regarded for the purposes of this Chapter as an authorised unit trust and the scheme as a whole shall not be so regarded.
8
In this section, “umbrella scheme” means a unit trust scheme—
a
which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them;
b
under which the participants are entitled to exchange rights in one pool for rights in another; and
c
in the case of which an order under section 78 of the Financial Services Act 1986 is in force;
and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.
9
In relation to a part of an umbrella scheme, any reference—
a
to investments subject to the trusts of an authorised unit trust, shall have effect as a reference to such of the investments as under the arrangements form part of the separate pool to which the part of the umbrella scheme relates; and
b
to a unit holder, shall have effect as a reference to a person for the time being having rights in that separate pool.

3

In section 469 of the Taxes Act 1988 (other unit trusts)—

a

in subsection (1)(a) (application of section) for the words “that is not an authorised unit trust” there shall be substituted “ that is neither an authorised unit trust nor an umbrella scheme ”; and

b

after subsection (6) there shall be inserted—

6A
In this section “umbrella scheme” has the same meaning as in section 468.

4

Subject to what follows, the amendments made by subsections (1) to (3) above shall have effect on and after 1st April 1994 in relation to unit trust schemes and their participants.

5

Nothing in those amendments shall have effect before the relevant date in relation to a unit trust scheme which immediately before 1st April 1994 falls within the definition of an umbrella scheme contained in those amendments.

6

In this section “the relevant date”, means, in relation to a unit trust scheme, the day after the end of the last distribution period of the scheme which commences before 1st April 1994.

7

On and after the relevant date, the amendments made by subsections (1) to (3) above shall have effect in relation to a scheme—

a

to which subsection (5) above applies, and

b

which immediately before the relevant date falls within the definition of an umbrella scheme contained in those amendments,

subject to subsections (8) to (10) below.

8

The amendments made by subsections (1) to (3) above shall not prevent the trustees of the scheme on and after the relevant date—

a

making a claim under section 239(3) of the Taxes Act 1988 (carry back of surplus advance corporation tax) in respect of accounting periods of the scheme ending before the relevant date; or

b

continuing anything which immediately before that date was in the process of being done for the purposes of tax in relation to such accounting periods.

9

Where immediately before the relevant date the trustees of the scheme are entitled to carry forward an excess under—

a

section 75(3) of the Taxes Act 1988 (carry forward of management expenses and sums treated as management expenses), or

b

section 241 of that Act (carry forward of franked investment income),

then, on the relevant date, that right shall be translated into a right in each successor company to carry forward a proportionate part of that excess.

10

Where immediately before the relevant date the trustees of the scheme have an amount of surplus advance corporation tax which—

a

has not been dealt with under subsection (3) of section 239 of the Taxes Act 1988, and

b

is due to be treated under subsection (4) of that section as if it were advance corporation tax paid by them in their next accounting period,

then, on and after the relevant date, a proportionate part of that amount shall be treated as paid under subsection (4) of that section by each successor company in its first accounting period.

11

In subsections (9) and (10) above “successor company” means, in relation to a scheme, each part of the scheme which on the relevant date becomes an authorised unit trust.

Exchange gains and losses

114 Assets and liabilities.

F149. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115 Currency contracts: net payments.

F150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

116 Currency contracts: matching.

F151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital allowances

F152117. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

118 Expenditure on machinery or plant: notification.

F1531

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

F1532

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

F1533

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

F1533A

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

F1534

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

F1535

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

6

For the purposes of—

F154 F155a

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

b

section 44(4) of the Finance Act 1971 (provision corresponding to section 25(1) applicable to earlier chargeable periods),

expenditure which has not formed part of a person’s qualifying expenditure for a previous chargeable period may not form part of his qualifying expenditure for a subsequent chargeable period unless the machinery or plant on which the expenditure was incurred belongs to that person at some time in that subsequent period F156. . .

F1537

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

F1538

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

F1539

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

119 Transactions between connected persons.

F1571

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

2

Paragraph 4(2) of Schedule 7 to the M41Capital Allowances Act 1968 (provision corresponding to section 158(2)) shall be assumed always to have had effect subject to amendments corresponding to those made to section 158(2) of the 1990 Act by section 117(2) and (3) of the Finance Act 1993.

F158120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F159121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Securities

122 Sale and repurchase of securities: deemed manufactured payments.

After section 737 of the Taxes Act 1988 there shall be inserted the following sections—

737A Sale and repurchase of securities: deemed manufactured payments.
1
This section applies where on or after the appointed day a person (the transferor) agrees to sell any securities, and under the same or any related agreement the transferor or another person connected with him—
a
is required to buy back the securities, or
b
acquires an option, which he subsequently exercises, to buy back the securities;
but this section does not apply unless the conditions set out in subsection (2) below are fulfilled.
2
The conditions are that—
a
as a result of the transaction, a dividend which becomes payable in respect of the securities is receivable otherwise than by the transferor,
b
the dividend is not, by virtue of any other provision of the Tax Acts, treated as income of the transferor,
c
there is no requirement under any agreement mentioned in subsection (1) above for a person to pay to the transferor on or before the relevant date an amount representative of the dividend, and
d
it is reasonable to assume that, in arriving at the repurchase price of the securities, account was taken of the fact that the dividend is receivable otherwise than by the transferor.
3
For the purposes of subsection (2) above the relevant date is the date when the repurchase price of the securities becomes due.
4
Where it is a person connected with the transferor who is required to buy back the securities, or who acquires the option to buy them back, references in the following provisions of this section to the transferor shall be construed as references to the connected person.
5
Where this section applies, section 737 and Schedule 23A and dividend manufacturing regulations shall apply as if—
a
the relevant person were required, under the arrangements for the transfer of the securities, to pay to the transferor an amount representative of the dividend mentioned in subsection (2)(a) above,
b
a payment were made by that person to the transferor in discharge of that requirement, and
c
the payment were made on the date when the repurchase price of the securities becomes due.
6
In subsection (5) above “the relevant person” means—
a
where subsection (1)(a) above applies, the person from whom the transferor is required to buy back the securities;
b
where subsection (1)(b) above applies, the person from whom the transferor has the right to buy back the securities;
and in that subsection “dividend manufacturing regulations” means regulations under Schedule 23A (whenever made).
737B Interpretation of section 737A.
1
In section 737A and this section “securities” means United Kingdom equities, United Kingdom securities or overseas securities; and—
a
where the securities mentioned in section 737A(1) are United Kingdom securities, references in section 737A to a dividend shall be construed as references to a periodical payment of interest;
b
where the securities mentioned in section 737A(1) are overseas securities, references in section 737A to a dividend shall be construed as references to an overseas dividend.
2
In this section “United Kingdom equities”, “United Kingdom securities”, “overseas securities” and “overseas dividend” have the meanings given by paragraph 1(1) of Schedule 23A.
3
For the purposes of section 737A agreements are related if each is entered into in pursuance of the same arrangement (regardless of the date on which either agreement is entered into).
4
In section 737A “the repurchase price of the securities” means—
a
where subsection (1)(a) of that section applies, the amount which, under any agreement mentioned in section 737A(1), the transferor or connected person is required to pay for the securities bought back, or
b
where subsection (1)(b) of that section applies, the amount which under any such agreement the transferor or connected person is required, if he exercises the option, to pay for the securities bought back.
5
In section 737A and subsection (4) above references to buying back securities include references to buying similar securities.
6
For the purposes of subsection (5) above securities are similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred; and “interest” here includes dividends.
7
For the purposes of section 737A and subsection (4) above—
a
a person who is connected with the transferor and is required to buy securities sold by the transferor shall be treated as being required to buy the securities back notwithstanding that it was not he who sold them, and
b
a person who is connected with the transferor and acquires an option to buy securities sold by the transferor shall be treated as acquiring an option to buy the securities back notwithstanding that it was not he who sold them.
8
Section 839 shall apply for the purposes of section 737A and this section.
9
In section 737A “the appointed day” means such day as the Treasury may by order appoint, and different days may be appointed in relation to—
a
United Kingdom equities,
b
United Kingdom securities, and
c
overseas securities.
737C Deemed manufactured payments: further provisions.
1
This section applies where section 737A applies.
2
Subsection (3) below applies where—
a
the dividend mentioned in section 737A(2)(a) is a dividend on United Kingdom equities, and
b
by virtue of section 737A(5), section 737 and paragraph 2 of Schedule 23A apply, or paragraph 2 of Schedule 23A applies, in relation to the payment which is treated under section 737A(5) as having been made;
and in subsection (3) below “the deemed manufactured dividend” means that payment.
3
Where this subsection applies—
a
the amount of the deemed manufactured dividend shall be taken to be an amount equal to the amount of the dividend mentioned in section 737A(2)(a);
b
the repurchase price of the securities shall be treated, for the purposes of the Tax Acts other than section 737A and of the 1992 Act, as increased by an amount equal to the gross amount of the deemed manufactured dividend.
4
In subsection (3) above the reference to the gross amount of the deemed manufactured dividend is to the aggregate of—
a
the amount of the deemed manufactured dividend, and
b
the amount of the tax credit that would have been issued in respect of the deemed manufactured dividend had the deemed manufactured dividend in fact been a dividend on the United Kingdom equities.
5
Subsection (6) below applies where—
a
the dividend mentioned in section 737A(2)(a) is a periodical payment of interest on United Kingdom securities, and
b
by virtue of section 737A(5), section 737 applies in relation to the payment which is treated under section 737A(5) as having been made;
and in subsection (6) below “the deemed manufactured interest” means the payment referred to in paragraph (b) above.
6
Where this subsection applies, the amount of the deemed manufactured interest shall be taken to be an amount equal to the gross amount of the periodical payment referred to in subsection (5)(a) above reduced by an amount equal to income tax thereon at the basic rate for the year of assessment in which that periodical payment is made.
7
Subsection (8) below applies where—
a
the dividend mentioned in section 737A(2)(a) is a periodical payment of interest on United Kingdom securities, and
b
by virtue of section 737A(5), paragraph 3 of Schedule 23A applies in relation to the payment which is treated under section 737A(5) as having been made (whether or not section 737 also applies in relation to that payment);
and in subsection (8) below “the deemed manufactured interest” means the payment referred to in paragraph (b) above.
8
Where this subsection applies—
a
the gross amount of the deemed manufactured interesthall be taken to be the amount found under paragraph 3(4) of Schedule 23A;
b
any deduction which, by v 3 of Schedule 23A, is required to be made out of the gross amount of the deemed manufactured interest shall be deemed to have been made.
9
Where subsections (6) and (8) above apply, or where subsection (8) above applies, the repurchase price of the securities shall be treated, for the purposes of the Tax Acts other than section 737A and of the 1992 Act, as increased by the gross amount of the deemed manufactured interest.
10
Subsection (11) below applies where—
a
the dividend mentioned in section 737A(2)(a) is an overseas dividend, and
b
by virtue of section 737A(5), paragraph 4 of Schedule 23A applies in relation to the payment which is treated under section 737A(5) as having been made;
and in subsection (11) below “the deemed manufactured overseas dividend” means that payment.
11
Where this subsection applies—
a
the gross amount of the deemed manufactured overseas dividend shall be taken to be the amount found under paragraph 4(5)(b) and (c) of Schedule 23A;
b
any deduction which, by virtue of paragraph 4 of Schedule 23A, is required to be made out of the gross amount of the deemed manufactured overseas dividend shall be deemed to have been made;
c
the repurchase price of the securities shall be treated, for the purposes of the Tax Acts other than section 737A and of the 1992 Act, as increased by the gross amount of the deemed manufactured overseas dividend.
12
In this section—
a
“United Kingdom equities”, “United Kingdom securities” and “overseas dividend” have the meanings given by paragraph 1(1) of Schedule 23A;
b
“the repurchase price of the securities” shall be construed in accordance with section 737B(4).

123 Manufactured payments.

1

In section 715 of the Taxes Act 1988 (exceptions from provisions about deemed sums and reliefs under the accrued income scheme) in subsection (6) (exceptions in certain cases where section 737 has effect) after “section 737” there shall be inserted “ or paragraph 3 or 4 of Schedule 23A ”.

F1602

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

F1603

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

F1604

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

F1605

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

6

Subsection (1) above shall apply where any of the contracts mentioned in section 715(6) of the Taxes Act 1988 is made on or after 30th November 1993.

F1607

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

F161124. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PAYE

125 Payment by intermediary.

After section 203A of the Taxes Act 1988 there shall be inserted—

203BPAYE: payment by intermediary.
1
Subject to subsection (2) below, where any payment of, or on account of, assessable income of an employee is made by an intermediary of the employer, the employer shall be treated, for the purposes of PAYE regulations, as making a payment of that income of an amount equal to the amount determined in accordance with subsection (3) below.
2
Subsection (1) above does not apply if the intermediary (whether or not he is a person to whom section 203 and PAYE regulations apply) deducts income tax from the payment he makes and accounts for it in accordance with PAYE regulations.
3
The amount referred to is—
a
if the amount of the payment made by the intermediary is an amount to which the recipient is entitled after deduction of any income tax, the aggregate of the amount of that payment and the amount of any income tax due; and
b
in any other case, the amount of the payment made by the intermediary.
4
For the purposes of this section, a payment of, or on account of, assessable income of an employee is made by an intermediary of the employer if it is made—
a
by a person acting on behalf of the employer and at the expense of the employer or a person connected with him; or
b
by trustees holding property for any persons who include or class of persons which includes the employee.
5
Section 839 applies for the purposes of subsection (4) above.

126 Employees working for persons other than their employers, etc.

1

After section 203B of the Taxes Act 1988 (which is inserted by section 125 above) there shall be inserted—

203CPAYE: employee of non-UK employer.
1
This subsection applies where—
a
an employee during any period works for a person (“the relevant person”) who is not his employer;
b
any payment of, or on account of, assessable income of the employee in respect of work done in that period is made by a person who is the employer or an intermediary of the employer;
c
PAYE regulations do not apply to the person making the payment or, if he makes the payment as an intermediary of the employer, the employer; and
d
income tax is not deducted or accounted for in accordance with the regulations by the person making the payment or, if he makes the payment as an intermediary of the employer, the employer.
2
Where subsection (1) above applies, the relevant person shall be treated, for the purposes of PAYE regulations, as making a payment of the assessable income of the employee of an amount equal to the amount determined in accordance with subsection (3) below.
3
The amount referred to is—
a
if the amount of the payment actually made is an amount to which the recipient is entitled after deduction of any income tax, the aggregate of the amount of that payment and the amount of any income tax due; and
b
in any other case, the amount of the payment actually made.
4
In this section and sections 203D and 203E “work”, in relation to an employee, means the performance of any duties of the office or employment of the employee and any reference to his working shall be construed accordingly.
5
Subsections (4) and (5) of section 203B apply for the purposes of this section as they apply for the purposes of that section.
203DPAYE: employee non-resident, etc.
1
This section applies in relation to an employee in a year of assessment only if—
a
he is not resident or, if resident, not ordinarily resident in the United Kingdom; and
b
he works or will work in the United Kingdom and also works or is likely to work outside the United Kingdom.
2
Where in relation to any year of assessment it appears to an officer of the Board that—
a
some of the income of an employee to whom this section applies is assessable to income tax under Case II of Schedule E, but
b
an as yet unascertainable proportion of the income may prove not to be assessable,
the officer may, on an application made by the appropriate person, give a direction for determining a proportion of any payment made in that year of, or on account of, income of the employee which shall be treated for the purposes of PAYE regulations as a payment of assessable income of the employee.
3
In this section “the appropriate person” means—
a
the person designated by the employer for the purposes of this section; or
b
if no person is so designated, the employer.
4
An application for a direction under subsection (2) above shall provide such information as is available and is relevant to the giving of the direction.
5
A direction under subsection (2) above—
a
shall specify the employee to whom and the year of assessment to which it relates;
b
shall be given by notice to the appropriate person; and
c
may be withdrawn by notice to the appropriate person from a date specified in the notice.
6
The date so specified may not be earlier than thirty days from the date on which the notice of the withdrawal is given.
7
Where—
a
a direction under subsection (2) above has effect in relation to an employee to whom this section applies, and
b
a payment of, or on account of, the income of the employee is made in the year of assessment to which the direction relates,
the proportion of the payment determined in accordance with the direction shall be treated for the purposes of PAYE regulations as a payment of assessable income of the employee.
8
Where in any year of assessment—
a
no direction under subsection (2) above has effect in relation to an employee to whom this section applies, and
b
any payment is made of, or on account of, the income of the employee,
the entire payment shall be treated for the purposes of PAYE regulations as a payment of assessable income of the employee.
9
Subsections (7) and (8) above are without prejudice to—
a
any assessment in respect of the income of the employee in question; and
b
any right to repayment of income tax overpaid and any obligation to pay income tax underpaid.
203EPAYE: mobile UK workforce.
1
This subsection applies where it appears to the Board that—
a
a person (“the relevant person”) has entered into or is likely to enter into an agreement that employees of another person (“the contractor”) shall in any period work for, but not as employees of, the relevant person;
b
payments of, or on account of, assessable income of the employees in respect of work done in that period are likely to be made by or on behalf of the contractor; and
c
PAYE regulations would apply on the making of such payments but it is likely that income tax will not be deducted or accounted for in accordance with the regulations.
2
Where subsection (1) above applies, the Board may give a direction that, if—
a
any employees of the contractor work in any period for, but not as employees of, the relevant person, and
b
any payment is made by the relevant person in respect of work done by the employees in that period,
income tax shall be deducted in accordance with the provisions of this section by the relevant person on making that payment.
3
A direction under subsection (2) above—
a
shall specify the relevant person and the contractor to whom it relates;
b
shall be given by notice to the relevant person; and
c
may at any time be withdrawn by notice to the relevant person.
4
The Board shall take such steps as are reasonably practicable to ensure that the contractor is supplied with a copy of any notice given under subsection (3) above which relates to him.
5
Where—
a
a direction under subsection (2) above has effect, and
b
any employees of the contractor specified in the direction work for, but not as employees of, the relevant person so specified,
income tax shall, subject to and in accordance with PAYE regulations, be deducted by the relevant person on making any payment in respect of that work as if so much of the payment as is attributable to work done by each employee were a payment of assessable income of that employee.

127 Tradeable assets.

After section 203E of the Taxes Act 1988 (which is inserted by section 126 above) there shall be inserted—

203FPAYE: tradeable assets.
1
Where any assessable income of an employee is provided in the form of a tradeable asset, the employer shall be treated, for the purposes of PAYE regulations, as making a payment of that income of an amount equal to the amount specified in subsection (3) below.
2
For the purposes of subsection (1) above “tradeable asset” means—
a
any asset capable of being sold or otherwise realised on a recognised investment exchange (within the meaning of the Financial Services Act 1986) or the London Bullion Market;
b
any asset capable of being sold or otherwise realised on any market for the time being specified in PAYE regulations; and
c
any other asset for which, at the time when the asset is provided, trading arrangements exist.
3
The amount referred to is—
a
in the case of an asset falling within subsection (2)(a) or (b) above, the amount for which it is capable of being sold or the amount for which it can be realised on the exchange or market in question; and
b
in the case of an asset for which trading arrangements exist at the time when the asset is provided, the amount which is obtained under those arrangements.
4
For the purposes of subsection (2) above, “asset” does not include—
a
any payment actually made of, or on account of, assessable income;
b
any non-cash voucher, credit-token or cash voucher (as defined in sections 141 to 143); or
c
any description of property for the time being excluded from the scope of this section by PAYE regulations.
5
Subject to subsection (4) above, for the purposes of subsection (2) above “asset” includes any property and in particular any right or interest falling within any paragraph in Part I of Schedule 1 to the Financial Services Act 1986.

128 Non-cash vouchers.

After section 203F of the Taxes Act 1988 (which is inserted by section 127 above) there shall be inserted—

203GPAYE: non-cash vouchers.
1
Where a non-cash voucher to which this section applies is received by an employee, the employer shall be treated, for the purposes of PAYE regulations, as making a payment of assessable income of the employee of an amount equal to the amount ascertained in accordance with section 141(1)(a).
2
This section applies to a non-cash voucher to which section 141(1) applies if—
a
either of the two conditions set out below is fulfilled with respect to the voucher; and
b
the voucher is not of a description for the time being excluded from the scope of this section by PAYE regulations.
3
The first condition is fulfilled with respect to a voucher if it is capable of being exchanged for goods—
a
which, at the time when the voucher is provided, are capable of being sold or otherwise realised on an exchange or market falling within section 203F(2)(a) or (b); or
b
for which, at the time when the voucher is provided, trading arrangements exist.
4
The second condition is fulfilled with respect to a voucher if, at the time when the voucher is provided, the voucher itself—
a
is capable of being sold or otherwise realised on an exchange or market falling within section 203F(2)(a) or (b); or
b
is a voucher for which trading arrangements exist.

129 Credit-tokens.

After section 203G of the Taxes Act 1988 (which is inserted by section 128 above) there shall be inserted—

203HPAYE: credit-tokens.
1
Subject to subsection (3) below, on each occasion on which an employee uses a credit-token provided to him by reason of his employment to obtain—
a
money, or
b
goods falling within subsection (2) below,
the employer shall be treated, for the purposes of PAYE regulations, as making a payment of assessable income of the employee of an amount equal to the amount ascertained in accordance with section 142(1)(a).
2
Goods fall within this subsection if, at the time when they are obtained, they are goods—
a
which are capable of being sold or otherwise realised on an exchange or market falling within section 203F(2)(a) or (b); or
b
for which trading arrangements exist.
3
PAYE regulations may make provision for excluding from the scope of this section any description of use of a credit-token.
4
In this section “credit-token” has the same meaning as in section 142.

130 Cash vouchers.

After section 203H of the Taxes Act 1988 (which is inserted by section 129 above) there shall be inserted—

203IPAYE: cash vouchers.
1
Subject to subsection (2) below, where a cash voucher to which section 143(1) applies is received by an employee, the employer shall be treated, for the purposes of PAYE regulations, as making a payment of assessable income of the employee of an amount equal to the amount ascertained in accordance with section 143(1)(a).
2
PAYE regulations may make provision for excluding from the scope of this section the provision of cash vouchers in such description of circumstances as may be specified in the regulations.

131 Supplementary.

After section 203I of the Taxes Act 1988 (which is inserted by section 130 above) there shall be inserted—

203J S.203B to s.203I: accounting for tax.
1
Where an employer makes a notional payment of assessable income of an employee, the obligation to deduct income tax shall have effect as an obligation on the employer to deduct income tax at such time as may be prescribed by PAYE regulations from any payment or payments he actually makes of, or on account of, such income of that employee.
2
For the purposes of this section—
a
a notional payment is a payment treated as made by virtue of any of sections 203B, 203C and 203F to 203I, other than a payment whose amount is determined in accordance with section 203B(3)(a) or 203C(3)(a); and
b
any reference to an employer includes a reference to a person who is treated as making a payment by virtue of section 203C(2).
3
Where, by reason of an insufficiency of payments actually made, the employer is unable to deduct the amount (or the full amount) of the income tax as required by virtue of subsection (1) above, the obligation to deduct income tax shall have effect as an obligation on the employer to account to the Board at such time as may be prescribed by PAYE regulations for an amount of income tax equal to the amount of income tax he is required, but is unable, to deduct.
4
PAYE regulations may make provision—
a
with respect to the time when any notional payment (or description of notional payment) is made;
b
applying (with or without modifications) any specified provisions of the regulations for the time being in force in relation to deductions from actual payments to amounts accounted for in respect of any notional payments;
c
with respect to the collection and recovery of amounts accounted for in respect of notional payments.
5
Any amount which an employer deducts or for which he accounts as mentioned in subsections (1) and (3) above shall be treated as an amount paid by the employee in question in respect of his liability to income tax for such year of assessment as may be specified in PAYE regulations.
203K Trading arrangements.
1
“Trading arrangements” in sections 203F to 203H shall be construed in accordance with this section.
2
Trading arrangements—
a
for an asset, are arrangements for the purpose of enabling the person to whom the asset is provided to obtain an amount similar to the expense incurred in the provision of the asset;
b
for goods for which a non-cash voucher is capable of being exchanged, are arrangements for the purpose of enabling the person to whom the voucher is provided to obtain an amount similar to the expense incurred in the provision of the goods;
c
for a non-cash voucher, are arrangements for the purpose of enabling the person to whom the voucher is provided to obtain an amount similar to the expense incurred as mentioned in section 141(1)(a);
d
for goods obtained by the use of a credit-token, are arrangements for the purpose of enabling the person to whom the credit-token is provided to obtain an amount similar to the expense incurred in the provision of the goods.
3
For the purposes of subsection (2) above—
a
any reference to enabling a person to obtain an amount includes—
i
a reference to enabling a class or description of persons which includes that person to obtain the amount; and
ii
a reference to enabling an amount to be obtained by any means, including in particular by using an asset or goods as security for a loan or an advance; and
b
an amount is similar to an expense incurred if it is greater than, equal to or not substantially less than that expense.
4
PAYE regulations may exclude any description of arrangements from being trading arrangements for the purposes of sections 203F to 203H.
203L S.203B to s.203K: interpretation, etc.
1
In sections 203B to 203J “employee” means a person holding an office or employment under or with any other person, and (subject to section 203J(2)(b)) any reference to the employer is a reference to that other person.
2
In sections 203B to 203J “assessable” means assessable to income tax under Schedule E.
3
In sections 203B to 203K and this section “PAYE regulations” means regulations under section 203.
4
PAYE regulations made by virtue of any of sections 203B to 203K may—
a
make different provision for different classes of case;
b
contain such incidental, consequential and supplementary provision as appears to the Board to be expedient.

132 Payments etc. received free of tax.

After section 144 of the Taxes Act 1988 there shall be inserted—

144A Payments etc. received free of tax.
1
In any case where—
a
an employer is treated, by virtue of any of sections 203B to 203I, as having made a payment of income of an employee which is assessable to income tax under Schedule E,
b
the employer is required, by virtue of section 203J(3), to account for an amount of income tax (“the due amount”) in respect of that payment, and
c
the employee does not, before the end of the period of thirty days from the date on which the employer is treated as making that payment, make good the due amount to the employer,
the due amount shall be treated as income of the employee which arises on the date mentioned in paragraph (c) above and is assessable to income tax under Schedule E.
2
In this section any reference to an employer includes a reference to a person who is treated as making a payment by virtue of section 203C(2).

133PAYE regulations: past cases.

1

Regulation 4 of the 1993 Regulations (intermediate employers) is hereby revoked; but in relation to any time before its revocation it shall be deemed to have been validly made.

2

Regulation 3 of the 1973 Regulations (intermediate employers) shall, in relation to any time before its revocation, be deemed to have been validly made.

3

Where, at any time before the passing of this Act—

a

a payment has been made of, or on account of, any income of an employee not resident or, if resident, not ordinarily resident in the United Kingdom,

b

at the time when the payment was made it appeared that some of the income would be assessable to income tax under Case II of Schedule E, but that some of the income might prove not to be assessable to income tax under that Schedule, and

c

the payment or any proportion of it was treated for the purposes of the 1993 Regulations or the 1973 Regulations as a payment to which the regulations applied,

then the treatment of that payment or that proportion of the payment as being a payment to which the regulations applied shall be deemed to have been lawful.

4

In this section—

a

“employee” means a person holding an office or employment under or with any other person;

b

“the 1993 Regulations” means the M42Income Tax (Employments) Regulations 1993; and

c

“the 1973 Regulations” means the M43Income Tax (Employments) Regulations 1973.

Miscellaneous provisions about companies

134 Controlled foreign companies.

1

In Schedule 25 to the Taxes Act 1988, Part I (acceptable distribution policy) shall be amended as follows.

2

In paragraph 2 (acceptable distribution policies for both trading and non-trading companies)—

a

in sub-paragraph (1)—

i

for “sub-paragraph (2)” there is substituted “ paragraph 2A ”,

ii

in paragraph (a), “or for some other period which, in whole or in part, falls within that accounting period” is omitted,

iii

in paragraph (b), for “the period for which it is paid” there is substituted “ that period ”,

iv

in paragraph (d) for “proportion” there is substituted “ amount ” and for “represents at least” there is substituted “ is not less than ”, and

v

the words following paragraph (d) are omitted,

b

sub-paragraph (2) is omitted, and

c

for sub-paragraph (3) there is substituted—

3
For the purposes of this paragraph and paragraph 2A below, a dividend which is not paid for the period or periods the profits of which are, in relation to the dividend, the relevant profits for the purposes of section 799 shall be treated (subject to sub-paragraph (3A) below) as so paid.
3A
For the purposes of this paragraph and paragraph 2A below—
a
where a dividend is paid for a period which is not an accounting period but falls wholly within an accounting period, it shall be treated as paid for that accounting period, and
b
where a dividend (“the actual dividend”) is paid for a period which falls within two or more accounting periods—
i
it shall be treated as if it were a number of separate dividends each of which is paid for so much of the period as falls wholly within an accounting period, and
ii
the nece contract as regardsssary apportionment of the amount of the actual dividend shall be made to determine the amount of the separate dividends.

3

After that paragraph there is inserted—

2A
1
Paragraph 2 above shall have effect in accordance with this paragraph to determine whether a controlled foreign company which is not a trading company pursues an acceptable distribution policy in respect of a particular accounting period (“the relevant accounting period”).
2
Subject to sub-paragraph (4) below, where the distribution condition is satisfied in relation to the relevant accounting period, then, in addition to any dividend which falls within paragraph 2(1)(a) above apart from this paragraph—
a
any dividend which is paid for the accounting period (“the preceding period”) which immediately precedes the relevant accounting period and is not an excluded period shall be treated as falling within that paragraph, and
b
if the distribution condition is satisfied in relation to the preceding period, any dividend which is paid for the accounting period which immediately precedes the preceding period and is not an excluded period shall be treated as falling within that paragraph,
and so on; and in this sub-paragraph “dividend” means a dividend not paid out of specified profits.
3
For the purposes of this paragraph, the distribution condition is satisfied in relation to any accounting period if—
a
a dividend or dividends are paid for the period to persons resident in the United Kingdom,
b
the amount or, as the case may be, aggregate amount of any dividends falling within paragraph (a) above is not less than—
i
the relevant profits for that period, or
ii
where paragraph 2(4) or (5) above applies (with the modifications of paragraph 2 made by sub-paragraph (5) below), the appropriate portion of those profits, and
c
any dividends falling within that paragraph are paid not later than the time by which any dividend paid for the relevant accounting period is required by paragraph 2(1)(b) above to be paid;
or if there are no relevant profits for the period.
4
Where, by reason only of the fact that a company pursued an acceptable distribution policy in respect of any accounting period (“the earlier period”) earlier than the relevant accounting period, no direction could be given in respect of the earlier period under section 747(1), sub-paragraph (2) above shall apply to any dividend required to be taken into account for the purpose of showing that the company pursued an acceptable distribution policy in respect of the earlier period only to the extent (if any) to which that dividend was not required to be taken into account for that purpose.
5
The modifications of paragraph 2 above referred to in sub-paragraph (3)(b) above are that—
a
the references in sub-paragraphs (4) and (5) to the accounting period in question are to be read as references to the accounting period for which the dividend or dividends are paid,
b
the references in those sub-paragraphs to sub-paragraph (1)(d) are to be read as references to sub-paragraph (3)(b) above, and
c
the reference in the definition of “X” in sub-paragraph (6) to available profits is to be read as a reference to relevant profits.
6
Paragraph 2(1)(d) above shall have effect as if for “50 per cent. of the company’s available profits” there were substituted “90 per cent. of the company’s net chargeable profits”.
7
In paragraph 2(6) above, the definition of “X” shall have effect as if the reference to available profits were a reference to net chargeable profits.
8
For the purposes of this paragraph—
a
a period is an excluded period if it is an accounting period in respect of which a direction is given under section 747(1), and
b
relevant profits for any accounting period are the profits which would be the relevant profits of that period for the purposes of section 799 if a dividend were actually paid for that period.

4

In paragraph 3 of that Schedule (available profits)—

a

after sub-paragraph (4) there is inserted—

4A
Subject to sub-paragraph (5) below, for the purposes of this Part of this Schedule, the net chargeable profits of a controlled foreign company for any accounting period are—
a
its chargeable profits for that period, less
b
the amount (if any) which, if a direction were given under section 747(1) in respect of the period, would be the company’s unrestricted creditable tax for that period;
and for the purposes of this sub-paragraph “unrestricted creditable tax” in relation to a company’s accounting period means the amount which would be its creditable tax for that period if the reference in section 751(6)(a) to Part XVIII did not include section 797

b

in sub-paragraph (5), after “available profits” there is inserted “ or, where the company is not a trading company, the chargeable profits ”.

5

This section shall apply to determine whether a controlled foreign company pursues an acceptable distribution policy in respect of accounting periods ending on or after 30th November 1993.

135 Prevention of avoidance of corporation tax.

1

In the Taxes Act 1988, immediately before section 768 there shall be inserted—

767A Change in company ownership: corporation tax.
1
Where it appears to the Board that—
a
there has been a change in the ownership of a company (“the tax-payer company”),
b
any corporation tax assessed on the tax-payer company for an accounting period beginning before the change remains unpaid at any time after the relevant date, and
c
any of the three conditions mentioned below is fulfilled,
any person mentioned in subsection (2) below may be assessed by the Board and charged (in the name of the tax-payer company) to an amount of corporation tax in accordance with this section.
2
The persons are—
a
any person who at any time during the relevant period before the change in the ownership of the tax-payer company had control of it;
b
any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before that change.
3
In subsection (2) above, “the relevant period” means—
a
the period of three years before the change in the ownership of the tax-payer company; or
b
if during the period of three years before that change (“the later change”) there was a change in the ownership of the tax-payer company (“the earlier change”), the period elapsing between the earlier change and the later change.
4
The first condition is that—
a
at any time during the period of three years before the change in the ownership of the tax-payer company the activities of a trade or business of that company cease or the scale of those activities become small or negligible; and
b
there is no significant revival of those activities before that change occurs.
5
The second condition is that at any time after the change in the ownership of the tax-payer company, but under arrangements made before that change, the activities of a trade or business of that company cease or the scale of those activities become small or negligible.
6
The third condition is that—
a
at any time during the period of six years beginning three years before the change in the ownership of the tax-payer company there is a major change in the nature or conduct of a trade or business of that company;
b
there is a transfer or there are transfers of assets of the tax-payer company to a person mentioned in subsection (7) below or to any person under arrangements which enable any of those assets or any assets representing those assets to be transferred to a person mentioned in subsection (7) below;
c
that transfer occurs or those transfers occur during the period of three years before the change in the ownership of the tax-payer company or after that change but under arrangements made before that change; and
d
the major change mentioned in paragraph (a) above is attributable to that transfer or those transfers.
7
The persons are—
a
any person mentioned in subsection (2)(a) above; and
b
any person connected with him.
8
The amount of tax charged in an assessment made under this section must not exceed the amount of the tax which, at the time of that assessment, remains unpaid by the tax-payer company.
9
For the purposes of this section the relevant date is the date six months from the date on which the corporation tax is assessed as mentioned in subsection (1)(b) above.
10
Any assessment made under this section shall not be out of time if made within three years from the date on which the liability of the tax-payer company to corporation tax for the accounting period mentioned in subsection (1)(b) above is finally determined.
767B Change of company ownership: supplementary.
1
In relation to corporation tax assessed under section 767A—
a
section 86 of the Management Act (interest on overdue tax), in so far as it has effect in relation to accounting periods ending on or before 30th September 1993, and
b
section 87A of that Act (corresponding provision for corporation tax due for accounting periods ending after that date),
shall have effect as if the references in section 86 to the reckonable date and in section 87A to the date when the tax becomes due and payable were, respectively, references to the date which is the reckonable date in relation to the tax-payer company and the date when the tax became due and payable by the tax-payer company.
2
A payment in pursuance of an assessment under section 767A shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes; but any person making such a payment shall be entitled to recover an amount equal to the payment from the tax-payer company.
3
In subsection (2) above the reference to a payment in pursuance of an assessment includes a reference to a payment of interest under section 86 or 87A of the Management Act (as they have effect by virtue of subsection (1) above).
4
For the purposes of section 767A, “control”, in relation to a company, shall be construed in accordance with section 416 as modified by subsections (5) and (6) below.
5
In subsection (2)(a) for “the greater part of” there shall be substituted “50 per cent. of”.
6
For subsection (3) there shall be substituted—
”
Where two or more persons together satisfy any of the conditions in subsection (2) above and do so by reason of having acted together to put themselves in a position where they will in fact satisfy the condition in question, each of those persons shall be treated as having control of the company.”
7
In section 767A(6) “a major change in the nature or conduct of a trade or business” includes any change mentioned in any of paragraphs (a) to (d) of section 245(4); and also includes a change falling within any of those paragraphs which is achieved gradually as the result of a series of transfers.
8
In section 767A(6) “transfer”, in relation to an asset, includes any disposal, letting or hiring of it, and any grant or transfer of any right, interest or licence in or over it, or the giving of any business facilities with respect to it.
9
Section 839 shall apply for the purposes of section 767A(7).
10
Subsection (9) of section 768 shall apply for the purposes of section 767A as it applies for the purposes of section 768.

2

Section 769 (rules for ascertaining change of ownership of company) shall be amended as follows.

3

In subsections (1), (2) and (5) for the words “sections 768”, in each place where they occur, there shall be substituted “ sections 767A, 768 ”.

4

After subsection (2) there shall be inserted—

2A
Where—
a
persons, whether company members or not, possess extraordinary rights or powers under the articles of association or under any other document regulating the company, and
b
because of that fact ownership of the ordinary share capital may not be an appropriate test of whether there has been a change in the ownership of the company,
then, in considering whether there has been a change in the ownership of the company for the purposes of section 767A, holdings of all kinds of share capital, including preference shares, or of any particular category of share capital, or voting power or any other kind of special power may be taken into account instead of ordinary share capital.

5

After subsection (8) there shall be inserted—

9
Subsection (8) above shall not apply in relation to section 767A.

6

The amendments made by this section shall have effect in relation to any change in ownership occurring on or after 30th November 1993 other than a change occurring in pursuance of a contract entered into before that day.

136 Parts of trades: computations in different currencies.

1

The following section shall be inserted after section 94 of the M44Finance Act 1993 (computations in different currencies for different parts of trades)—

94A Parts of trades: petroleum extraction companies.
1
If a trade carried on by a petroleum extraction company is a ring fence trade—
a
subsection (1) of section 94 above shall not apply as regards the trade, but
b
regulations may make provision under that section as regards a case where in an accounting period the company carries on the trade and the condition mentioned in subsection (2) below is fulfilled.
2
The condition is that—
a
part of the trade consists of activities which relate to oil and are carried on under the authority of a petroleum licence in the United Kingdom or a designated area, and
b
part of the trade consists of activities which relate to gas and are carried on under the authority of a petroleum licence in the United Kingdom or a designated area.
3
For the purposes of this section—
a
a petroleum licence is a licence granted under the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964;
b
a petroleum extraction company is a company which carries on activities under the authority of such a licence;
c
a designated area is an area designated by Order in Council under section 1(7) of the Continental Shelf Act 1964.
4
For the purposes of this section “ring fence trade” means activities which—
a
fall within any of paragraphs (a) to (c) of subsection (1) of section 492 of the Taxes Act 1988 (oil extraction etc.), and
b
constitute a separate trade (whether by virtue of that subsection or otherwise).
5
For the purposes of this section—
a
“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.

2

In section 95(6) of the M45Finance Act 1993 (commencement of provisions about currency to be used for computations) for “94” there shall be substituted “ 94A ”.

Miscellaneous

137 Enterprise investment scheme.

1

Schedule 15 to this Act shall have effect to revive Chapter III of Part VII of the Taxes Act 1988 (relief for investment in corporate trades) in relation to shares issued on or after 1st January 1994.

2

That Chapter shall have effect in relation to such shares with the amendments made by that Schedule; and, in relation to such shares, that Chapter as so amended shall apply for the year 1993-94 and subsequent years of assessment.

3

The M46Taxation of Chargeable Gains Act 1992 shall have effect with the amendments made by that Schedule.

138 Foreign income dividends.

Schedule 16 to this Act (which contains provisions about foreign income dividends) shall have effect.

139 Taxation of incapacity benefit.

1

For the year 1995-96 and subsequent years of assessment incapacity benefit, except—

a

benefit payable for an initial period of incapacity, and

b

so much of any benefit as is attributable in any case to an increase in respect of a child,

shall be treated as income for the purposes of the Income Tax Acts and charged to income tax under Schedule E.

2

Subsection (1) above shall not apply to incapacity benefit to which a person is entitled for any day of incapacity for work falling in a period of incapacity for work which is treated for the purposes of that benefit as having begun before 13th April 1995 if the part of that period which is treated as having fallen before that date includes a day for which that person was entitled to invalidity benefit.

3

Incapacity benefit shall for the purposes of this section be a benefit in relation to which section 41 of the M47Finance Act 1989 (year of assessment in which benefit to be charged) applies.

4

Enactments relating to the payment of incapacity benefit shall have effect subject to such provision as may be contained for the purposes of this section in regulations under section 203 of the Taxes Act 1988 (PAYE regulations).

5

In this section—

“incapacity benefit” means any benefit which by virtue of provisions contained in the Social Security (Incapacity for Work) Act 1994 or any corresponding provisions made for Northern Ireland is to be known as incapacity benefit;
F162“initial period of incapacity”, in relation to incapacity benefit, means any period for which short-term incapacity benefit is payable otherwise than at the higher rate; and
“invalidity benefit” means invalidity benefit under Part II of the M48Social Security Contributions and Benefits Act 1992 or under Part II of the M49Social Security Contributions and Benefits (Northern Ireland) Act 1992.

F1636

The reference in subsection (5) above to short-term incapacity benefit payable at the higher rate shall be construed in accordance with sections 30B(5), 40(8) and 41(7) of the M50Social Security Contributions and Benefits Act 1992 and the corresponding provisions of the M51Social Security Contributions and Benefits (Northern Ireland) Act 1992.

140 Restriction on deduction from income.

1

Section 808 of the Taxes Act 1988 (restriction on deduction of interest or dividends from trading income) shall be amended as follows—

a

for “a banking business, an insurance business or a business consisting wholly or partly in dealing in securities” there shall be substituted “ a business ”;

b

for “or dividend” there shall be substituted “ , dividend or royalties ”;

c

the words “In this section “securities” includes stocks and shares” shall be omitted.

2

This section shall apply where it is sought to exclude receipts from income or profits of an accounting period beginning on or after 30th November 1993.

141 Expenditure involving crime.

1

Section 577A of the Taxes Act 1988 (certain expenditure involving crime not to be deducted and not to be included in expenses of management) shall be amended as follows.

2

After subsection (1) there shall be inserted—

1A
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 induced by a demand constituting—
a
the commission in England or Wales of the offence of blackmail under section 21 of the Theft Act 1968,
b
the commission in Northern Ireland of the offence of blackmail under section 20 of the Theft Act (Northern Ireland) 1969, or
c
the commission in Scotland of the offence of extortion.

3

In subsection (2) for “Such expenditure” there shall be substituted “ Any expenditure mentioned in subsection (1) or (1A) above ”.

4

This section shall apply in relation to expenditure incurred on or after 30th November 1993.

142 Mortgage interest payable under deduction of tax: qualifying lenders.

F1641

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

2

The following section shall be inserted in the Taxes Act 1988 after section 376—

376A The register of qualifying lenders.
1
The Board shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of section 376(4).
2
If the Board are satisfied that an applicant for registration is entitled to be registered, they may register the applicant generally or in relation to any description of loan specified in the register, with effect from such date as may be so specified; and a body which is so registered shall become a qualifying lender in accordance with the terms of its registration.
3
The registration of any body may be varied by the Board—
a
where it is general, by providing for it to be in relation to a specified description of loan, or
b
where it is in relation to a specified description of loan, by removing or varying the reference to that description of loan,
and where they do so, they shall give the body written notice of the variation and of the date from which it is to have effect.
4
If it appears to the Board at any time that a body which is registered under this section would not be entitled to be registered if it applied for registration at that time, the Board may by written notice given to the body cancel its registration with effect from such date as may be specified in the notice.
5
The date specified in a notice under subsection (3) or (4) above shall not be earlier than the end of the period of 30 days beginning with the date on which the notice is served.
6
Any body which is aggrieved by the failure of the Board to register it under this section, or by the variation or cancellation of its registration, may, by notice given to the Board before the end of the period of 30 days beginning with the date on which the body is notified of the Board’s decision, require the matter to be determined by the Special Commissioners; and the Special Commissioners shall thereupon hear and determine the matter in like manner as an appeal.

3

Any body which is, immediately before the date on which this Act is passed, a prescribed body for the purposes of section 376 of the Taxes Act 1988 (by virtue of an order made under subsection (5) of that section) shall be entitled to be entered in the register maintained under section 376A of that Act as a qualifying lender except that if it was, immediately before that date, a qualifying lender only in relation to such description of loan as was specified in the order, it shall be entitled to be entered in the register as a qualifying lender only in relation to that description of loan.

4

Until such time as the Board enter any such body in the register, that body shall be deemed to have been registered in accordance with its entitlement.

F165143. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

144 Debts released in voluntary arrangement: relief from tax.

1

In the Taxes Act 1988, in section 74 (general rules as to deductions not allowable), for paragraph (j) (debts not allowable except in certain circumstances) there shall be substituted—

j
any debts except—
i
a bad debt proved to be such;
ii
a debt or part of a debt released by the creditor wholly and exclusively for the purposes of his trade, profession or vocation as part of a relevant arrangement or compromise; and
iii
a doubtful debt to the extent estimated to be bad, meaning, in the case of the bankruptcy or insolvency of the debtor, the debt except to the extent that any amount may reasonably be expected to be received on the debt;

2

The provisions of that section shall become subsection (1) of that section and after that subsection there shall be inserted—

2
In paragraph (j) of subsection (1) above “relevant arrangement or compromise” means—
a
a voluntary arrangement which has taken effect under or by virtue of the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989; or
b
a compromise or arrangement which has taken effect under section 425 of the Companies Act 1985 or Article 418 of the Companies (Northern Ireland) Order 1986.

3

In the Taxes Act 1988—

a

in section 94 (debts deducted and subsequently released) after the word “released” where it first occurs, and

b

in section 103(4)(b) (debts deducted before, but released after, discontinuance of trade, etc.) after the word “released”,

there shall be inserted “ otherwise than as part of a relevant arrangement or compromise ”.

4

The provisions of section 94 of the Taxes Act 1988 shall become subsection (1) of that section and after that subsection there shall be inserted—

2
In subsection (1) above “relevant arrangement or compromise” has the same meaning as in section 74.

5

After section 103(4) of the Taxes Act 1988 there shall be inserted—

4A
In subsection (4)(b) above “relevant arrangement or compromise” has the same meaning as in section 74.

6

Subsection (1) above shall have effect, for the purposes of determining (in computing the amount of profits or gains to be charged under Case I or Case II of Schedule D) whether any sum should be deducted in respect of any debt, in relation to debts—

a

proved to be bad,

b

released as part of—

i

a voluntary arrangement which has taken effect under or by virtue of the M52Insolvency Act 1986 or the M53Insolvency (Northern Ireland) Order 1989, or,

ii

a compromise or arrangement which has taken effect under section 425 of the M54Companies Act 1985 or Article 418 of the M55Companies (Northern Ireland) Order 1986, and

c

estimated to be bad,

if the proof, release or estimation occurs on or after 30th November 1993.

7

Subsection (3) above shall have effect in relation to the release on or after 30th November 1993 of the whole or any part of any debt.

145 Relief for business donations.

F1661

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

2

Section 79A of that Act shall be amended as follows.

3

In subsection (1), after “training and enterprise council” there shall be inserted “ business link organisation ” and in subsection (3) after “council” there shall be inserted “ organisation ”.

4

In subsection (5), before paragraph (a) there shall be inserted—

aa
“business link organisation” means any person authorised by or on behalf of the Secretary of State to use a service mark (within the meaning of the Trade Marks (Amendment) Act 1984) designated by the Secretary of State for the purposes of this paragraph

5

In subsection (7), after “1st April 1990” there shall be inserted “ or, in the case of a contribution to a business link organisation, 30th November 1993 ”.

146 Minor corrections.

Schedule 17 to this Act (which corrects various mistakes made in or introduced into the Taxes Act 1988) shall have effect.

C19 C20 C21 C22Chapter II Interest Rate and Currency Contracts

Annotations:

Modifications etc. (not altering text)

C19

Pt. IV Chapter II (ss. 147-177) restricted (31.7.1998) by 1988 c. 1, Sch. 28AA para. 8(1)(b) (as inserted (31.7.1998) by 1998 c. 36, s. 108, Sch. 16)

C20

Pt. IV Chapter II (ss. 147-177) applied (29.4.1996 with effect as mentioned in s. 105(1) of the applying Act) by 1996 c. 8, s. 105, Sch. 15 para. 25(4) (with savings etc. in Pt. IV Chapter II (ss. 80-105))

C21

Pt. IV Chapter II (ss. 147-177) modified (29.4.1996 with effect as mentioned in s. 105(1) of the modifying Act) by 1996 c. 8, s. 105, Sch. 15 para. 25(2) (with savings etc. in Pt. IV Chapter II (ss. 80-105))

C22

Pt. IV Chapter II (ss. 147-177) excluded (29.4.1996 with effect as mentioned in s. 105(1) of the excluding Act) by 1996 c. 8, s. 101(1) (with savings etc. in Pt. IV Chapter II (ss. 80-105))

Qualifying contracts

147 Qualifying contracts.

F167. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

147A Debt contracts and options to be qualifying contracts.

F168. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

148 Contracts which may become qualifying contracts.

F169. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest rate and currency contracts and options

a

the acquisition spot price exceeds the acquisition contract price, or

b

the sale contract price exceeds the sale spot price;

and the amount of the forward discount is the amount of the excess mentioned in paragraph (a) or (b) above, as the case may be.

8

For the purposes of subsection (5)(b) above, the cases where a forward premium arises under a currency contract from a company are those cases where—

a

the acquisition contract price exceeds the acquisition spot price, or

b

the sale spot price exceeds the sale contract price;

and the amount of the forward premium is the amount of the excess mentioned in paragraph (a) or (b) above, as the case may be.

9

In subsections (7) and (8) above—

“the acquisition contract price” means the amount of any currency (other than the reporting currency) to be acquired under the contract by the company, expressed in the reporting currency, using the rate of exchange determined by the terms of the contract;
“the acquisition spot price” means the amount of any currency (other than the reporting currency) to be acquired under the contract by the company, expressed in the reporting currency, using such rate of exchange for the date on which the company becomes entitled to rights and subject to duties under the contract as is used for the purposes of the company’s accounts (as defined in section 156(6) below);
“the sale contract price” means the amount of any currency (other than the reporting currency) to be disposed of under the contract by the company, expressed in the reporting currency, using the rate of exchange determined by the terms of the contract;
“the sale spot price” means the amount of any currency (other than the reporting currency) to be disposed of under the contract by the company, expressed in the reporting currency, using such rate of exchange for the date on which the company becomes entitled to rights and subject to duties under the contract as is used for the purposes of the company’s accounts (as defined in section 156(6) below).

10

Where this subsection has effect in accordance with subsection (6)(b) above, the amounts of any forward premiums and discounts arising under the contract are the amounts which, in accordance with generally accepted accounting practice, are brought into account in the same way as any forward premiums and discounts which fall to be determined in accordance with subsections (7) and (8) above.

11

Subsection (5) above is subject to subsection (12) below.

12

Where a qualifying company is using, as respects a qualifying contract which is a currency contract, a basis of accounting which conforms to generally accepted accounting practice and—

a

an amount which would, but for this subsection, fall to be treated as a qualifying payment by virtue of subsection (5) above is brought into account by the company, in accordance with that basis of accounting, as a qualifying payment made or received by the company but otherwise than by virtue of being a forward premium or discount, or

b

that basis of accounting is such that no forward premiums or discounts are treated as arising under a qualifying contract,

subsection (5) above shall not have effect in relation to that amount or, as the case may be, in relation to that contract.

13

In this section “the reporting currency” means sterling, unless the case is one where section 93 of the Finance Act 1993 (use of foreign currency) applies, in which case it means the currency which is the relevant foreign currency for the purposes of that section.

154 Qualifying companies.

F175. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accrual of profits and losses

155 Accrual of profits and losses.

F176. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

156 Basis of accounting: general.

1

Where, for the purposes of a qualifying company’s accounts, profits and losses for an accounting period on a qualifying contract held by the company are computed on—

a

a mark to market basis of accounting which satisfies the requirements of this section, or

b

a

in the case of a company formed and registered under the M188Companies Act 1985, as references to its accounts drawn up in accordance with the requirements of that Act;

b

in the case of a company formed and registered under the M189Companies (Northern Ireland) Order 1986, as references to its accounts drawn up in accordance with the requirements of that Order;

c

in any other case, as references to the accounts which it is required to keep under the law of its home State or, if it is not so required to keep accounts, such of its accounts as most closely correspond to the accounts mentioned in paragraph (a) above;

and for the purposes of paragraph (c) above the home State of a company is the country or territory under whose law the company is incorporated.

7

In this section—

“fair value”, in relation to a qualifying contract, means the amount which, if the qualifying company disposed of the contract to a knowledgeable and willing party dealing at arm’s length, it would be able to obtain or, as the case may be, would have to pay;
“reciprocal payment”, in relation to a relevant payment, means another such payment which is the consideration or part of the consideration for that payment;
“relevant payment” means a qualifying payment made or received, or falling to be made or received, by the company.

8

In the above definition of “reciprocal payment”, the second reference to a relevant payment includes a reference to any payment which—

a

is subject to a condition precedent, and

b

would be a relevant payment if the condition were fulfilled.

157 Basis of accounting for linked currency options.

F177. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

158 Adjustments for changes in basis of accounting.

F178. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of profits and losses

159 Trading profits and losses.

F179. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

160 Non-trading profits and losses.

F180. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special cases

161 Termination etc. of qualifying contracts.

F181. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

162 Exchange gains and losses on currency contracts.

F182. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

163 Irrecoverable payments.

F183. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

164 Released payments.

F184. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

169 Insurance and mutual trading companies.

F189. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170 Investment trusts.

F190. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F191171. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

172 Partnerships involving qualifying companies.

F192. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental

173 Prevention of double charging etc.

F193. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

174 Prevention of deduction of tax.

F194. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

175 Transitional provisions.

F195. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

176 Minor and consequential amendments.

F1961

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

2

In Schedule 27 to that Act (distributing funds) in paragraph 5 (United Kingdom equivalent profits) the following sub-paragraph shall be substituted for sub-paragraph (2A)—

2A
In applying sub-paragraph (1) above the effect of the following shall be ignored, namely—
a
sections 125 to 133 of the Finance Act 1993 (exchange gains and losses), and
b
sections 159 and 160 of, and paragraph 1 of Schedule 18 to, the Finance Act 1994 (treatment of profits and losses on interest rate and currency contracts).

177 Interpretation of Chapter II.

F197. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter III Management: Self-Assessment etc.

Income tax and capital gains tax

178 Personal and trustee’s returns.

1

For subsection (1) of section 8 of the Management Act (personal return) there shall be substituted the following subsections—

1
For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, he may be required by a notice given to him by an officer of the Board—
a
to make and deliver to the officer, on or before the day mentioned in subsection (1A) below, a return containing such information as may reasonably be required in pursuance of the notice, and
b
to deliver with the return such accounts, statements and documents, relating to information contained in the return, as may reasonably be so required.
1A
The day referred to in subsection (1) above is—
a
the 31st January next following the year of assessment, or
b
where the notice under this section is given after the 31st October next following the year, the last day of the period of three months beginning with the day on which the notice is given.
1B
In the case of a person who carries on a trade, profession, or business in partnership with one or more other persons, a return under this section shall include each amount which, in any relevant statement, is stated to be equal to his share of any income, loss or charge for the period in respect of which the statement is made.
1C
In subsection (1B) above “relevant statement” means a statement which, as respects the partnership, falls to be made under section 12AB of this Act for a period which includes, or includes any part of, the year of assessment or its basis period.

2

For subsection (1) of section 8A of the Management Act (trustee’s return) there shall be substituted the following subsections—

1
For the purpose of establishing the amounts in which a trustee of a settlement, and the settlors and beneficiaries, are chargeable to income tax and capital gains tax for a year of assessment, an officer of the Board may by a notice given to the trustee require the trustee—
a
to make and deliver to the officer, on or before the day mentioned in subsection (1A) below, a return containing such information as may reasonably be required in pursuance of the notice, and
b
to deliver with the return such accounts, statements and documents, relating to information contained in the return, as may reasonably be so required;
and a notice may be given to any one trustee or separate notices may be given to each trustee or to such trustees as the officer thinks fit.
1A
The day referred to in subsection (1) above is—
a
the 31st January next following the year of assessment, or
b
where the notice under this section is given after the 31st October next following the year, the last day of the period of three months beginning with the day on which the notice is given.

179 Returns to include self-assessment.

For section 9 of the Management Act there shall be substituted the following section—

9 Returns to include self-assessment.
1
Subject to subsection (2) below, every return under section 8 or 8A of this Act shall include an assessment (a self-assessment) of the amounts in which, on the basis of the information contained in the return, the person making the return is chargeable to income tax and capital gains tax for the year of assessment.
2
A person shall not be required to comply with subsection (1) above if he makes and delivers his return for a year of assessment—
a
on or before the 30th September next following the year, or
b
where the notice under section 8 or 8A of this Act is given after the 31st July next following the year, within the period of two months beginning with the day on which the notice is given.
3
Where, in making and delivering a return, a person does not comply with subsection (1) above, an officer of the Board shall if subsection (2) above applies, and may in any other case—
a
make the assessment on his behalf on the basis of the information contained in the return, and
b
send him a copy of the assessment so made;
and references in the following provisions of this Act to a person’s self-assessment include references to an assessment made on a person’s behalf under this subsection.
4
Subject to subsection (5) below—
a
at any time before the end of the period of nine months beginning with the day on which a person’s return is delivered, an officer of the Board may by notice to that person so amend that person’s self-assessment as to correct any obvious errors or mistakes in the return (whether errors of principle, arithmetical mistakes or otherwise); and
b
at any time before the end of the period of twelve months beginning with the filing date, a person may by notice to an officer of the Board so amend his self-assessment as to give effect to any amendments to his return which he has notified to such an officer.
5
No amendment of a self-assessment may be made under subsection (4) above at any time during the period—
a
beginning with the day on which an officer of the Board gives notice of his intention to enquire into the return, and
b
ending with the day on which the officer’s enquiries into the return are completed.
6
In this section and section 9A of this Act “the filing date” means the day mentioned in section 8(1A) or, as the case may be, section 8A(1A) of this Act.

F198180. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporation tax

F199181. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F200182. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F201183. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Partnerships

184 Partnership return.

After section 12 of the Management Act there shall be inserted the following section—

Partnerships
12AA Partnership return.
1
Where a trade, profession or business is carried on by two or more persons in partnership, for the purpose of facilitating—
a
the assessment to income tax for a year of assessment, and
b
the assessment to corporation tax for any period,
of each partner who is liable to be so assessed, an officer of the Board may act under subsection (2) or (3) below (or both).
2
An officer of the Board may by a notice given to the partners require such person as is identified in accordance with rules given with the notice—
a
to make and deliver to the officer in respect of such period as may be specified in the notice, on or before such day as may be so specified, a return containing such information as may reasonably be required in pursuance of the notice, and
b
to deliver with the return such accounts and statements as may reasonably be so required.
3
An officer of the Board may by notice given to any partner require the partner—
a
to make and deliver to the officer in respect of such period as may be specified in the notice, on or before such day as may be so specified, a return containing such information as may reasonably be required in pursuance of the notice, and
b
to deliver with the return such accounts and statements as may reasonably be so required;
and a notice may be given to any one partner or separate notices may be given to each partner or to such partners as the officer thinks fit.
4
In the case of a partnership which includes one or more individuals, the day specified in a notice under subsection (2) or (3) above shall not be earlier than—
a
the 31st January next following the year of assessment concerned, or
b
where the notice under this section is given after the 31st October next following the year, the last day of the period of three months beginning with the day on which the notice is given.
5
In the case of a partnership which includes one or more companies, the day specified in a notice under subsection (2) or (3) above shall not be earlier than—
a
the first anniversary of the end of the relevant period, or
b
where the notice under this section is given more than nine months after the end of the relevant period, the last day of the period of three months beginning with the day on which the notice is given;
and the relevant period for the purposes of this subsection and subsection (6) below is the period in respect of which the return is required.
6
Every return under this section shall include—
a
a declaration of the name, residence and tax reference of each of the persons who have been partners—
i
for the whole of the relevant period, or
ii
for any part of that period,
and, in the case of a person falling within sub-paragraph (ii) above, of the part concerned; and
b
a declaration by the person making the return to the effect that it is to the best of his knowledge correct and complete.
7
Every return under this section shall also include, if the notice under subsection (2) or (3) above so requires—
a
with respect to any disposal of partnership property during a period to which any part of the return relates, the like particulars as if the partnership were liable to tax on any chargeable gain accruing on the disposal, and
b
with respect to any acquisition of partnership property, the particulars required under section 12(2) of this Act.
8
A notice under this section may require different information, accounts and statements for different periods or in relation to different descriptions of source of income.
9
Notices under this section may require different information, accounts and statements in relation to different descriptions of partnership.
10
In this section “residence”, in relation to a company, means its registered office.

185 Partnership return to include partnership statement.

After section 12AA of the Management Act there shall be inserted the following section—

12AB Partnership return to include partnership statement.
1
Every return under section 12AA of this Act shall include a statement (a partnership statement) of the following amounts, namely—
a
in the case of each period of account ending within the period in respect of which the return is made—
i
the amount of income or loss from each source which, on the basis of the information contained in the return, has accrued to or has been sustained by the partnership for that period, and
ii
the amount of each charge which, on that basis, was a charge on the income of the partnership for that period; and
b
in the case of each such period and each of the partners, the amount which, on that basis, is equal to his share of that income, loss or charge.
2
Subject to subsection (3) below—
a
at any time before the end of the period of nine months beginning with the day on which a person’s return is delivered, an officer of the Board may by notice to that person so amend that person’s partnership statement as to correct any obvious errors or mistakes in the return (whether errors of principle, arithmetical mistakes or otherwise); and
b
at any time before the end of the period of twelve months beginning with the filing date, a person may by notice to an officer of the Board so amend his partnership statement as to give effect to any amendments to his return which he has notified to such an officer.
3
No amendment of a partnership statement may be made under subsection (2) above at any time during the period—
a
beginning with the day on which an officer of the Board gives notice of his intention to enquire into the return, and
b
ending with the day on which the officer’s enquiries into the return are completed.
4
Where a partnership statement is amended under subsection (2) above, the officer shall by notice to the partners so amend their self-assessments under section 9 or 11AA of this Act as to give effect to the amendments of the partnership statement.
5
In this section—
“filing date” means the day specified in the notice under subsection (2) or, as the case may be, subsection (3) of section 12AA of this Act;
“period of account”, in relation to a partnership, means any period for which accounts are drawn up.

F202186. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enquiries: procedure

187 Power to call for documents.

Immediately before section 20 of the Management Act there shall be inserted the following section—

19A Power to call for documents for purposes of certain enquiries.
1
This section applies where an officer of the Board gives notice under section 9A(1), 11AB(1) or 12AC(1) of this Act to any person (the taxpayer) of his intention to enquire into—
a
the return on the basis of which the taxpayer’s self-assessment or partnership statement was made, or
b
any amendment of that return on the basis of which that assessment or statement has been amended by the taxpayer.
2
For the purpose of enquiring into the return or amendment, the officer may at the same or any subsequent time by notice in writing require the taxpayer, within such time (which shall not be less than 30 days) as may be specified in the notice—
a
to produce to the officer such documents as are in the taxpayer’s possession or power and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which the return is incorrect or incomplete or the amendment is incorrect, and
b
to furnish the officer with such accounts or particulars as he may reasonably require for that purpose.
3
To comply with a notice under subsection (2) above, copies of documents may be produced instead of originals; but—
a
the copies must be photographic or otherwise by way of facsimile; and
b
if so required by a notice in writing given by the officer, in the case of any document specified in the notice, the original must be produced for inspection by him within such time (which shall not be less than 30 days) as may be specified in the notice.
4
The officer may take copies of, or make extracts from, any document produced to him under subsection (2) or (3) above.
5
A notice under subsection (2) above does not oblige the taxpayer to produce documents or furnish accounts or particulars relating to the conduct of any pending appeal by him.
6
An appeal may be brought against any requirement imposed by a notice under subsection (2) above to produce any document or to furnish any accounts or particulars.
7
An appeal under subsection (6) above must be brought within the period of 30 days beginning with the date on which the notice under subsection (2) above is given.
8
Subject to subsection (9) below, the provisions of this Act relating to appeals shall have effect in relation to an appeal under subsection (6) above as they have effect in relation to an appeal against an assessment to tax.
9
On an appeal under subsection (6) above section 50(6) to (8) of this Act shall not apply but the Commissioners may—
a
if it appears to them that the production of the document or the furnishing of the accounts or particulars was reasonably required by the officer of the Board for the purpose mentioned in subsection (2) above, confirm the notice under that subsection so far as relating to the requirement; or
b
if it does not so appear to them, set aside that notice so far as so relating.
10
Where, on an appeal under subsection (6) above, the Commissioners confirm the notice under subsection (2) above so far as relating to any requirement, the notice shall have effect in relation to that requirement as if it had specified 30 days beginning with the determination of the appeal.
11
Neither the taxpayer nor the officer of the Board shall be entitled to require a case to be stated under section 56 of this Act following the determination of an appeal under subsection (6) above.
12
Where this section applies by virtue of a notice given under section 12AC(1) of this Act, any reference in this section to the taxpayer includes a reference to any predecessor or successor of his.

F203188. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F204189. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Determinations and assessments to protect revenue

190 Determination of tax where no return delivered.

After section 28B of the Management Act there shall be inserted the following section—

28C Determination of tax where no return delivered.
1
Where—
a
a notice has been given to any person under section 8, 8A or 11 of this Act (the relevant section), and
b
the required return is not delivered on or before the filing date,
an officer of the Board may make a determination of the amounts in which, to the best of his information and belief, the person who should have made the return is chargeable to income tax and capital gains tax for the year of assessment or (as the case may be) is chargeable to corporation tax for the accounting period.
2
Notice of any determination under this section shall be served on the person in respect of whom it is made and shall state the date on which it is issued.
3
Until such time (if any) as it is superseded by a self-assessment made under section 9 or 11AA of this Act (whether by the taxpayer or an officer of the Board) on the basis of information contained in a return under the relevant section, a determination under this section shall have effect for the purposes of Parts VA, VI, IX and XI of this Act as if it were such a self-assessment.
4
Where—
a
an officer of the Board has commenced any proceedings for the recovery of any tax charged by a determination under this section; and
b
before those proceedings are concluded, the determination is superseded by such a self-assessment as is mentioned in subsection (3) above,
those proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.
5
No determination under this section, and no self-assessment superseding such a determination, shall be made otherwise than—
a
before the end of the period of five years beginning with the filing date; or
b
in the case of such a self-assessment, before the end of the period of twelve months beginning with the date of the determination.
6
In this section “the filing date” means the day mentioned in section 8(1A), section 8A(1A) or, as the case may be, section 11(4) of this Act.

191 Assessment where loss of tax discovered.

1

For section 29 of the Management Act there shall be substituted the following section—

29 Assessment where loss of tax discovered.
1
If an officer of the Board or the Board discover, as regards any person (the taxpayer) and a chargeable period—
a
that any profits which ought to have been assessed to tax have not been assessed, or
b
that an assessment to tax is or has become insufficient, or
c
that any relief which has been given is or has become excessive,
the officer or, as the case may be, the Board may, subject to subsections (2) and (3) below, make an assessment in the amount, or the further amount, which ought in his or their opinion to be charged in order to make good to the Crown the loss of tax.
2
Where—
a
the taxpayer has made and delivered a return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period, and
b
the situation mentioned in subsection (1) above is attributable to an error or mistake in the return as to the basis on which his liability ought to have been computed,
the taxpayer shall not be assessed under that subsection in respect of the chargeable period there mentioned if the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made.
3
Where the taxpayer has made and delivered a return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period, he shall not be assessed under subsection (1) above—
a
in respect of the chargeable period mentioned in that subsection; and
b
in the case of a return under section 8 or 8A, in the same capacity as that in which he made and delivered the return,
unless one of the two conditions mentioned below is fulfilled.
4
The first condition is that the situation mentioned in subsection (1) above is attributable to fraudulent or negligent conduct on the part of the taxpayer or a person acting on his behalf.
5
The second condition is that at the time when an officer of the Board—
a
ceased to be entitled to give notice of his intention to enquire into the taxpayer’s return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period; or
b
informed the taxpayer that he had completed his enquiries into that return,
the officer could not have been reasonably expected, on the basis of the information made available to him before that time, to be aware of the situation mentioned in subsection (1) above.
6
For the purposes of subsection (5) above, information is made available to an officer of the Board if—
a
it is contained in the taxpayer’s return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period (the return), or in any accounts, statements or documents accompanying the return;
b
it is contained in any claim made as regards the relevant chargeable period by the taxpayer acting in the same capacity as that in which he made the return, or in any accounts, statements or documents accompanying any such claim;
c
it is contained in any documents, accounts or particulars which, for the purposes of any enquiries into the return or any such claim by an officer of the Board, are produced or furnished by the taxpayer to the officer, whether in pursuance of a notice under section 19A of this Act or otherwise; or
d
it is information the existence of which, and the relevance of which as regards the situation mentioned in subsection (1) above—
i
could reasonably be expected to be inferred by an officer of the Board from information falling within paragraphs (a) to (c) above; or
ii
are notified in writing by the taxpayer to an officer of the Board.
7
In subsection (6) above—
a
any reference to the taxpayer’s return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period includes—
i
a reference to any return of his under that section for either of the two immediately preceding chargeable periods; and
ii
where the return is under section 8 and the taxpayer carries on a trade, profession or business in partnership, a reference to any return with respect to the partnership under section 12AA of this Act for the relevant chargeable period or either of those periods; and
b
any reference in paragraphs (b) to (d) to the taxpayer includes a reference to a person acting on his behalf.
8
An objection to the making of an assessment under this section on the ground that neither of the two conditions mentioned above is fulfilled shall not be made otherwise than on an appeal against the assessment.
9
Any reference in this section to the relevant chargeable period is a reference to—
a
in the case of the situation mentioned in paragraph (a) or (b) of subsection (1) above, the chargeable period mentioned in that subsection; and
b
in the case of the situation mentioned in paragraph (c) of that subsection, the chargeable period in respect of which the claim was made.
10
In this section “profits”—
a
in relation to income tax, means income,
b
in relation to capital gains tax, means chargeable gains, and
c
in relation to corporation tax, means profits as computed for the purposes of that tax.

2

This section, so far as it relates to partnerships whose trades, professions or businesses are set up and commenced before 6th April 1994, has effect as respects the year 1997-98 and subsequent years of assessment.

Payment of tax

192 Payments on account of income tax.

After Part V of the Management Act there shall be inserted the following section—

Part VA Payment of Tax
59A Payments on account of income tax.
1
This section applies to any person (the taxpayer) as regards a year of assessment if as regards the immediately preceding year—
a
he has been assessed to income tax under section 9 of this Act in any amount, and
b
that amount (the assessed amount) exceeds the amount of any income tax which has been deducted at source, and
c
the amount of the excess (the relevant amount) is not less than such amount as may be prescribed by regulations made by the Board, and
d
the proportion which the relevant amount bears to the assessed amount is not less than such proportion as may be so prescribed.
2
Subject to subsection (3) below, the taxpayer shall make two payments on account of his liability to income tax for the year of assessment—
a
the first on or before the 31st January in that year, and
b
the second on or before the next following 31st July;
and, subject to subsection (4) below, each of those payments on account shall be of an amount equal to 50 per cent. of the relevant amount.
3
If, at any time before the 31st January next following the year of assessment, the taxpayer makes a claim under this subsection stating—
a
his belief that he will not be assessed to income tax for that year, or that the amount in which he will be so assessed will not exceed the amount of income tax deducted at source, and
b
his grounds for that belief,
each of the payments on account shall not be, and shall be deemed never to have been, required to be made.
4
If, at any time before the 31st January next following the year of assessment, the taxpayer makes a claim under this subsection stating—
a
his belief that the amount in which he will be assessed to income tax for that year will exceed the amount of income tax deducted at source by a stated amount which is less than the relevant amount, and
b
his grounds for that belief,
the amount of each of the payments on account required to be made shall be, and shall be deemed always to have been, equal to 50 per cent. of the stated amount.
5
Where the taxpayer makes a claim under subsection (3) or (4) above, there shall be made all such adjustments, whether by the repayment of amounts paid on account or otherwise, as may be required to give effect to the provisions of that subsection.
6
Where the taxpayer fraudulently or negligently makes any incorrect statement in connection with a claim under subsection (3) or (4) above, he shall be liable to a penalty not exceeding the difference between—
a
the amount which would have been payable on account if he had made a correct statement, and
b
the amount of the payment on account (if any) made by him.
7
The provisions of the Income Tax Acts as to the recovery of income tax shall apply to an amount falling to be paid on account of tax in the same manner as they apply to an amount of tax.
8
In this section any reference to income tax deducted at source is a reference to—
a
income tax deducted or treated as deducted from any income or treated as paid on any income, or
b
any amount which, in respect of the year of assessment, is to be deducted at source under section 203 of the principal Act in a subsequent year, or is a tax credit to which section 231 of that Act applies.

193 Payment of income tax and capital gains tax.

After section 59A of the Management Act there shall be inserted the following section—

59B Payment of income tax and capital gains tax.
1
Subject to subsection (2) below, the difference between—
a
the amount of income tax and capital gains tax contained in a person’s self-assessment under section 9 of this Act for any year of assessment, and
b
the aggregate of any payments on account made by him in respect of that year (whether under section 59A of this Act or otherwise) and any income tax which in respect of that year has been deducted at source,
shall be payable by him or (as the case may be) repayable to him as mentioned in subsection (3) or (4) below.
2
The following, namely—
a
any amount which, in the year of assessment, is deducted at source under section 203 of the principal Act in respect of a previous year, and
b
any amount which, in respect of the year of assessment, is to be deducted at source under that section in a subsequent year, or is a tax credit to which section 231 of that Act applies,
shall be respectively deducted from and added to the aggregate mentioned in subsection (1)(b) above.
3
In a case where the person—
a
gave the notice required by section 7 of this Act within six months from the end of the year of assessment, but
b
was not given notice under section 8 or 8A of this Act until after the 31st October next following that year,
the difference shall be payable or repayable at the end of the period of three months beginning with the day on which the notice under section 8 or 8A was given.
4
In any other case, the difference shall be payable or repayable on or before the 31st January next following the year of assessment.
5
Where a person’s self-assessment under section 9 of this Act is amended under section 9(4), section 28A(2), (3) or (4) or section 30B(2) of this Act, any amount of tax which is payable or repayable by virtue of the amendment shall, subject to section 55(6) and (9) of this Act, be payable or (as the case may be) repayable—
a
in a case where notice of the amendment is given after, or less than 30 days before, the day given by subsection (3) or (4) above, on or before the day following the end of the period of 30 days beginning with the day on which notice is given; and
b
in any other case, on or before the day given by subsection (3) or (4) above.
6
Any amount of income tax or capital gains tax which is payable by virtue of an assessment made under section 29 of this Act shall be payable on the day following the end of the period of 30 days beginning with the day on which the notice of assessment is given.
7
In this section any reference to income tax deducted at source is a reference to income tax deducted or treated as deducted from any income or treated as paid on any income.

194 Surcharges on unpaid income tax and capital gains tax.

After section 59B of the Management Act there shall be inserted the following section—

59C Surcharges on unpaid income tax and capital gains tax.
1
This section applies in relation to any income tax or capital gains tax which has become payable by a person (the taxpayer) in accordance with section 55 or 59B of this Act.
2
Where any of the tax remains unpaid on the day following the expiry of 28 days from the due date, the taxpayer shall be liable to a surcharge equal to 5 per cent. of the unpaid tax.
3
Where any of the tax remains unpaid on the day following the expiry of 6 months from the due date, the taxpayer shall be liable to a further surcharge equal to 5 per cent. of the unpaid tax.
4
Where the taxpayer has incurred a penalty under section 7, 93(5) or 95 of this Act, no part of the tax by reference to which that penalty was determined shall be regarded as unpaid for the purposes of subsection (2) or (3) above.
5
An officer of the Board may impose a surcharge under subsection (2) or (3) above; and notice of the imposition of such a surcharge—
a
shall be served on the taxpayer, and
b
shall state the day on which it is issued and the time within which an appeal against the imposition of the surcharge may be brought.
6
A surcharge imposed under subsection (2) or (3) above shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the end of the period of 30 days beginning with the day on which the surcharge is imposed until payment.
7
An appeal may be brought against the imposition of a surcharge under subsection (2) or (3) above within the period of 30 days beginning with the date on which the surcharge is imposed.
8
Subject to subsection (9) below, the provisions of this Act relating to appeals shall have effect in relation to an appeal under subsection (7) above as they have effect in relation to an appeal against an assessment to tax.
9
On an appeal under subsection (7) above section 50(6) to (8) of this Act shall not apply but the Commissioners may—
a
if it appears to them that, throughout the period of default, the taxpayer had a reasonable excuse for not paying the tax, set aside the imposition of the surcharge; or
b
if it does not so appear to them, confirm the imposition of the surcharge.
10
Inability to pay the tax shall not be regarded as a reasonable excuse for the purposes of subsection (9) above.
11
The Board may in their discretion—
a
mitigate any surcharge under subsection (2) or (3) above, or
b
stay or compound any proceedings for the recovery of any such surcharge,
and may also, after judgment, further mitigate or entirely remit the surcharge.
12
In this section—
“the due date”, in relation to any tax, means the date on which the tax becomes due and payable;
“the period of default”, in relation to any tax which remained unpaid after the due date, means the period beginning with that date and ending with the day before that on which the tax was paid.

F205195. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous and supplemental

196 Management: other amendments.

Schedule 19 to this Act (which makes other amendments relating to the management of tax) shall have effect.

F206197. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F207198. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

199 Interpretation and commencement of Chapter III.

1

In this Chapter “the Management Act” means the M56Taxes Management Act 1970.

2

Unless the contrary intention appears, this Chapter—

a

so far as it relates to income tax and capital gains tax, has effect as respects the year 1996-97 and subsequent years of assessment, and

b

so far as it relates to corporation tax, has effect as respects accounting periods ending on or after the appointed day.

P43

For the purposes of this Chapter the appointed day is such day, not earlier than 1st April 1996, as the Treasury may by order appoint.

Chapter IV Changes for Facilitating Self-Assessment

Assessment under Cases I and II of Schedule D

200 Assessment on current year basis.

For section 60 of the Taxes Act 1988 there shall be substituted the following section—

60 Assessment on current year basis.
1
Subject to subsection (2) below and section 63A, income tax shall be charged under Cases I and II of Schedule D on the full amount of the profits or gains of the year of assessment.
2
Where, in the case of a trade, profession or vocation, a basis period for the year of assessment is given by subsection (3) below or sections 61 to 63, the profits or gains of that period shall be taken to be the profits or gains of the year.
3
Subject to sections 61 to 63, the basis period for a year of assessment is as follows—
a
if the year is the first year of assessment in which there is an accounting date which falls not less than 12 months after the commencement date, the period of 12 months ending with that accounting date; and
b
if there is a basis period for the immediately preceding year and that basis period is not given by section 61, the period of 12 months beginning immediately after the end of that basis period.
4
In the case of a person who, if he had not died, would under the provisions of this section and sections 61 to 63A have become chargeable to income tax for any year, the tax which would have been so chargeable—
a
shall be assessed and charged on his personal representatives, and
b
shall be a debt due from and payable out of his estate.
5
In this section and sections 61 to 63—
“accounting date”, in relation to a year of assessment, means a date in the year to which accounts are made up or, where there are two or more such dates, the latest of those dates;
“the commencement date” and “the commencement year” mean respectively the date on which and the year of assessment in which the trade, profession or vocation is set up and commenced.

201 Basis of assessment at commencement.

For section 61 of the Taxes Act 1988 there shall be substituted the following section—

61 Basis of assessment at commencement.
1
Notwithstanding anything in section 60, where the year of assessment is the commencement year, the computation of the profits or gains chargeable to income tax under Case I or II of Schedule D shall be made on the profits or gains arising in the year.
2
Subject to section 63, where the year of assessment is the year next following the commencement year and—
a
there is an accounting date in the year and the period beginning with the commencement date and ending with the accounting date is a period of less than 12 months; or
b
the basis period for the year would, apart from this subsection, be given by section 62(2) and the period beginning with the commencement date and ending with the new date in the year is a period of less than 12 months,
the basis period for the year is the period of 12 months beginning with the commencement date.
3
In this section “the new date” has the same meaning as in section 62.

202 Change of basis period.

For section 62 of the Taxes Act 1988 there shall be substituted the following section—

62 Change of basis period.
1
Subsection (2) below applies where, in the case of a trade, profession or vocation—
a
an accounting change, that is, a change from one accounting date (“the old date”) to another (“the new date”), is made or treated as made in a year of assessment; and
b
either section 62A applies or the year of assessment is the year next following or next but one following the commencement year.
2
The basis period for the year of assessment is as follows—
a
if the year is the year next following the commencement year or the relevant period is a period of less than 12 months, the period of 12 months ending with the new date in the year; and
b
if the relevant period is a period of more than 12 months, that period;
and in this subsection “the relevant period” means the period beginning immediately after the end of the basis period for the preceding year and ending with the new date in the year.
3
Where subsection (2) above does not apply as respects an accounting change made or treated as made in a year of assessment (“the first year”), this section and section 62A shall have effect in relation to the next following year (“the second year”) as if the change had not been made or treated as made.
4
As a consequence of subsection (3) above—
a
an accounting change shall be treated as made in the second year if the date or, as the case may be, the latest date in that year to which accounts are made up is a date other than the date of the end of the basis period for the first year; and
b
no such change shall be treated as made in the second year if that date is the date of the end of that period.
5
For the purposes of this section an accounting change is made in the first year of assessment in which accounts are not made up to the old date, or accounts are made up to the new date, or both.

203 Conditions for such a change.

After section 62 of the Taxes Act 1988 there shall be inserted the following section—

62A Conditions for such a change.
1
This section applies in relation to an accounting change if the following are fulfilled, namely—
a
the first and second conditions mentioned below, and
b
either the third or the fourth condition so mentioned.
2
The first condition is that the first accounting period ending with the new date does not exceed 18 months.
3
The second condition is that notice of the accounting change is given to an officer of the Board on or before the 31st January next following the year of assessment.
4
The third condition is that no accounting change as respects which section 62(2) has applied has been made or treated as made in any of the five years immediately preceding the year of assessment.
5
The fourth condition is that—
a
the notice required by the second condition sets out the reasons for which the change is made; and
b
either the officer is satisfied that the change is made for bona fide commercial reasons or he does not, within 60 days of receiving the notice, give notice to the person carrying on the trade, profession or vocation that he is not so satisfied.
6
An appeal may be brought against the giving of a notice under subsection (5)(b) above within the period of 30 days beginning with the date on which the notice is given.
7
Subject to subsection (8) below, the provisions of the Management Act relating to appeals shall have effect in relation to an appeal under subsection (6) above as they have effect in relation to an appeal against an assessment to tax.
8
On an appeal under subsection (6) above section 50(6) to (8) of the Management Act shall not apply but the Commissioners may—
a
if they are satisfied that the change is made for bona fide commercial reasons, set the notice under subsection (5)(b) above aside; or
b
if they are not so satisfied, confirm that notice.
9
Obtaining a tax advantage shall not be regarded as a bona fide commercial reason for the purposes of subsections (5) and (8) above.
10
In this section—
a
“accounting period” means a period for which accounts are made up, and
b
expressions which are also used in section 62 have the same meanings as in that section.

204 Basis of assessment on discontinuance.

For section 63 of the Taxes Act 1988 there shall be substituted the following section—

63 Basis of assessment on discontinuance.
Where a trade, profession or vocation is permanently discontinued in a year of assessment other than the commencement year, the basis period for the year shall be the period beginning—
a
where the year is the year next following the commencement year, immediately after the end of the commencement year, and
b
in any other case, immediately after the end of the basis period for the preceding year of assessment,
and (in either case) ending with the date on which the trade, profession or vocation is permanently discontinued.

205 Overlap profits and overlap losses.

After section 63 of the Taxes Act 1988 there shall be inserted the following section—

63A Overlap profits and overlap losses.
1
Where, in the case of any trade, profession or vocation, the basis period for a year of assessment is given by section 62(2)(b), a deduction shall be made in computing the profits or gains of that year of an amount equal to that. given by the formula in subsection (2) below.
2
The formula referred to in subsection (1) above is—
$A x \frac{B - C}{D}$
where—
A = the aggregate of any overlap profits less the aggregate of any amounts previously deducted under subsection (1) above;
B = the number of days in the basis period;
C = the number of days in the year of assessment;
D = the aggregate of the overlap periods of any overlap profits less the aggregate number of days given by the variable “B — C” in any previous applications of this subsection.
3
Where, in the case of any trade, profession or vocation, the basis period for a year of assessment is given by section 63, a deduction shall be made in computing the profits or gains of that year of an amount equal to—
a
the aggregate of any overlap profits, less
b
the aggregate of any amounts deducted under subsection (1) above.
4
Where, in the case of any trade, profession or vocation, an amount of a loss would, apart from this subsection, fall to be included in the computations for two successive years of assessment, that amount shall not be included in the computation for the second of those years.
5
In this section—
“overlap profit” means an amount of profits or gains which, by virtue of sections 60 to 62, is included in the computations for two successive years of assessment; and
“overlap period”, in relation to an overlap profit, means the number of days in the period in which the overlap profit arose.

Assessment under Cases III to VI of Schedule D

206 Basis of assessment under Case III.

For section 64 of the Taxes Act 1988 there shall be substituted the following section—

64 Case III assessments.
Income tax under Case III of Schedule D shall be computed on the full amount of the income arising within the year of assessment, and shall be paid on the actual amount of that income, without any deduction.

207 Basis of assessment under Cases IV and V.

1

In subsection (1) of section 65 of that Act (Case IV and V assessments: general), the words “and sections 66 and 67” and the words “the year preceding” shall cease to have effect.

2

In subsection (3) of that section—

a

after the words “Cases I and II of Schedule D” there shall be inserted the words “ (including sections 60 to 63A and 113) ”; and

b

the words from “Nothing in this subsection” to the end shall cease to have effect.

3

In subsection (5) of that section, the words “subject to sections 66 and 67” and the words “the year preceding”, in each place where they occur, shall cease to have effect.

4

Sections 66 and 67 of that Act (special rules for fresh income and special rules where source of income disposed of or yield ceases) shall cease to have effect.

5

In subsection (1) of section 68 of that Act (special rules where property etc. situated in Republic of Ireland), for the words “sections 65 or 66” there shall be substituted the words “ section 65 ”.

6

In its application to trades, professions or vocations set up and commenced before 6th April 1994, subsection (2) above has effect as respects the year 1997-98 and subsequent years of assessment.

208 Basis of assessment under Case VI.

For section 69 of the Taxes Act 1988 there shall be substituted the following section—

69 Case VI assessments.
Income tax under Case VI of Schedule D shall be computed on the full amount of the profits or gains arising in the year of assessment.

Loss relief

C23209 Loss relief: general.

1

For subsections (1) and (2) of section 380 of the Taxes Act 1988 (set-off against general income) there shall be substituted the following subsections—

1
Where in any year of assessment any person sustains a loss in any trade, profession, vocation or employment carried on by him either solely or in partnership, he may, by notice given within twelve months from the 31st January next following that year, make a claim for relief from income tax on—
a
so much of his income for that year as is equal to the amount of the loss or, where it is less than that amount, the whole of that income; or
b
so much of his income for the last preceding year as is equal to that amount or, where it is less than that amount, the whole of that income;
but relief shall not be given for the loss or the same part of the loss both under paragraph (a) and under paragraph (b) above.
2
Any relief claimed under paragraph (a) of subsection (1) above in respect of any income shall be given in priority to any relief claimed in respect of that income under paragraph (b) of that subsection.

2

In subsection (2) of section 381 of that Act (further relief for individuals for losses in early years of trade), for the words “an amount of the claimant’s income equal to the amount of the loss” there shall be substituted the words “ so much of the claimant’s income as is equal to the amount of the loss or, where it is less than that amount, the whole of that income ”.

3

For subsections (3) and (4) of section 382 of that Act (provisions supplementary to sections 380 and 381) there shall be substituted the following subsections—

3
Subject to subsection (4) below, for the purposes of sections 380 and 381, the amount of a loss sustained in a trade, profession or vocation shall be computed in like manner and in respect of the same period as the profits or gains arising or accruing from the trade, profession or vocation are computed under the provisions of the Income Tax Acts applicable to Case I or II of Schedule D.
4
An amount of a loss which, apart from this subsection, would fall to be included in the computations for two successive years of assessment shall not be included in the computation for the second of those years.

4

For subsection (1) of section 385 of that Act (carry-forward against subsequent profits) there shall be substituted the following subsection—

1
Where a person has, in any trade, profession or vocation carried on by him either alone or in partnership, sustained a loss (to be computed as mentioned in subsections (3) and (4) of section 382) in respect of which relief has not been wholly given either under section 380 or any provision of the Income Tax Acts—
a
he may make a claim requiring that any part of the loss for which relief has not been so given shall be set off for the purposes of income tax against the income of the trade, profession or vocation for subsequent years of assessment; and
b
where he makes such a claim, the income from the trade, profession or vocation in any subsequent year of assessment shall be treated as reduced by that part of the loss, or by so much of that part as cannot, on that claim, be relieved against such income of an earlier year of assessment.

5

Subsections (3) and (8) of that section shall cease to have effect.

6

In subsection (1) of section 388 of that Act (carry-back of terminal losses) for the words “the three years of assessment last preceding that in which the discontinuance occurs” there shall be substituted the words “ the year of assessment in which the discontinuance occurs and the three years last preceding it ”.

7

In their application to trades, professions or vocations set up and commenced before 6th April 1994, subsections (3) to (5) above have effect as respects the year 1997-98 and subsequent years of assessment.

C24210 Relief for losses on unquoted shares.

1

For subsections (1) and (2) of section 574 of the Taxes Act 1988 (relief for individuals for losses on unquoted shares) there shall be substituted the following subsections—

1
Where an individual who has subscribed for shares in a qualifying trading company incurs an allowable loss (for capital gains tax purposes) on the disposal of the shares in any year of assessment, he may, by notice given within twelve months from the 31st January next following that year, make a claim for relief from income tax on—
a
so much of his income for that year as is equal to the amount of the loss or, where it is less than that amount, the whole of that income; or
b
so much of his income for the last preceding year as is equal to that amount or, where it is less than that amount, the whole of that income;
but relief shall not be given for the loss or the same part of the loss both under paragraph (a) and under paragraph (b) above.
Where such relief is given in respect of the loss or any part of it, no deduction shall be made in respect of the loss or (as the case may be) that part under the 1992 Act.
2
Any relief claimed under paragraph (a) of subsection (1) above in respect of any income shall be given in priority to any relief claimed in respect of that income under paragraph (b) of that subsection; and any relief claimed under either paragraph in respect of any income shall be given in priority to any relief claimed in respect of that income under section 380 or 381.

2

This section has effect as respects the year 1994-95 and subsequent years of assessment.

Capital allowances

211 Income tax allowances and charges in taxing a trade etc.

F2081

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

2

Subject to section 214(7) below, this section and sections 212 to 214 below, in their application to trades, professions or vocations set up and commenced before 6th April 1994 or employments or offices entered into before that date, have effect as respects the year 1997-98 and subsequent years of assessment.

F209212. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F210213. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

214 Amendments of other enactments.

111 Treatment of partnerships.
1
Where a trade or profession is carried on by two or more persons in partnership, the partnership shall not, unless the contrary intention appears, be treated for the purposes of the Tax Acts as an entity which is separate and distinct from those persons.
2
So long as a trade or profession (“the actual trade or profession”) is carried on by persons in partnership, and each of those persons is chargeable to income tax, the profits or gains or losses arising from the trade or profession shall be computed for the purposes of income tax in like manner as if the partnership were an individual.
3
A person’s share in the profits or gains or losses of the partnership which for any period are computed in accordance with subsection (2) above shall be determined according to the interests of the partners during that period; and income tax shall be chargeable or, as the case may require, loss relief may be claimed as if—
a
that share derived from a trade or profession (“the deemed trade or profession”) carried on by the person alone;
b
the deemed trade or profession was set up and commenced by him at the time when he became a partner or, where the actual trade or profession was previously carried on by him alone, the time when the actual trade was set up and commenced; and
c
the deemed trade or profession is permanently discontinued by him at the time when he ceases to be a partner or, where the actual trade or profession is subsequently carried on by him alone, the time when the actual trade or profession is permanently discontinued.
4
Where—
a
subsections (2) and (3) above apply in relation to the profits or gains or losses of a trade or profession carried on by persons in partnership, and
b
other income accrues to those persons by virtue of their being partners,
that other income shall be chargeable to tax by reference to the same periods as if it were profits or gains arising from the trade or profession.
5
Subsections (1) to (3) above apply, with the necessary modifications, in relation to a business as they apply in relation to a trade.

2

In section 114 of that Act (special rules for computing profits or losses), after the word “trade”—

a

in subsection (1), in each place where it occurs;

b

in subsection (2); and

c

in subsection (3), in the first place where it occurs,

there shall be inserted the words “ profession or business ”.

3

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

a

in section 114, in subsection (3), the words from “except that” to the end, and subsection (4);

b

in section 115 (provisions supplementary to section 114), subsections (1) to (3) and (6); and

c

in section 277 (personal reliefs: partnerships), in subsection (1), the words “Subject to subsection (2) below”, paragraph (c) and the word “and” immediately preceding that paragraph, and subsection (2).

4

This section and section 216 below—

a

except in their application to partnerships mentioned in subsection (5) below, have effect as respects the year 1997-98 and subsequent years of assessment, and

b

in its application to partnerships so mentioned, have effect as respects the year 1994-95 and subsequent years of assessment.

5

The partnerships referred to in subsection (4) above are partnerships—

a

whose trades, professions or businesses are set up and commenced on or after 6th April 1994; F212. . .

F212b

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

216 Effect of change in ownership of trade, profession or vocation.

1

For subsection (2) of section 113 of the Taxes Act 1988 (effect of change in ownership of trade, profession or vocation) there shall be substituted the following subsection—

2
Where—
a
there is such a change as is mentioned in subsection (1) above, and
b
a person engaged in carrying on the trade, profession or vocation immediately before the change continues to be so engaged immediately after it,
subsection (1) above shall not apply to treat the trade, profession or vocation as discontinued or a new one as set up and commenced.

2

Subsections (3) to (5) of that section and, in subsection (6) of that section, the words from “and where” to the end shall cease to have effect.

3

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

a

in section 96 (farming and market gardening: relief for fluctuating profits), in subsection (6) the words from “except that” to the end;

b

in section 380 (set-off against general income), subsection (3);

c

in section 381 (further relief in early years of trade), subsection (6);

d

in section 384 (restrictions on right of set-off), subsection (5);

e

in section 385 (carry-forward against subsequent profits), subsections (2) and (5);

f

in section 386 (carry-forward where business transferred to a company), subsection (4); and

g

in section 389 (supplementary provisions relating to carry-back of terminal losses), subsection (3).

4

For subsection (4) of section 389 of that Act, there shall be substituted the following subsection—

4
For the purposes of this section and section 388 a trade, profession or vocation shall be treated as discontinued, and a new one as set up and commenced, when it is so treated for the purposes of section 111 or 113.

5

Subsection (3)(a) above—

a

b

in its application to a trade so set up and commenced, has effect where the first of those two years of assessment is the year 1995-96 or any subsequent year.

217 Double taxation relief in respect of overlap profits.

1

In subsection (1) of section 804 of the Taxes Act 1988 (relief against income tax in respect of income arising in years of commencement), for the words “any income arising in the years of commencement” there shall be substituted the words “ any income which is an overlap profit ”.

2

For subsection (5) of that section there shall be substituted the following subsections—

5
Subsections (5A) and (5B) below apply where—
a
credit against income tax for any year of assessment is allowed by virtue of subsection (1) above in respect of any income which is an overlap profit (“the original income”), and
b
the original income or any part of it contributes to an amount which, by virtue of section 63A(1) or (3), is deducted in computing the profits or gains of a subsequent year of assessment (“the subsequent year”).
5A
The following shall be set off one against the other, namely—
a
the difference between—
i
the amount of the credit which, under this Part (including this section), has been allowed against income tax in respect of so much of the original income as contributes as mentioned in subsection (5) above, and
ii
the amount of the credit which, apart from this section, would have been so allowed; and
b
the amount of credit which, on the assumption that no amount were deducted by virtue of section 63A(1) or (3), would be allowable under this Part against income tax in respect of income arising in the subsequent year from the same source as the original income.
5B
The person chargeable in respect of the income (if any) arising in the subsequent year from the same source as the original income shall—
a
if the amount given by paragraph (a) of subsection (5A) above exceeds that given by paragraph (b) of that subsection, be treated as having received in that year a payment chargeable under Case VI of Schedule D of an amount such that income tax on it at the basic rate is equal to the excess; and
b
if the amount given by paragraph (b) of subsection (5A) above exceeds that given by paragraph (a) of that subsection, be allowed for that year under this Part an amount of credit equal to the excess.
5C
For the purposes of subsections (5) to (5B) above, it shall be assumed that, where an amount is deducted by virtue of section 63A(1), each of the overlap profits included in the aggregate of such profits contributes to that amount in the proportion which that overlap profit bears to that aggregate.

3

In subsection (8) of that section—

a

immediately before the definition of “overseas tax” there shall be inserted the following definition—

“ “overlap profit” means an amount of profits or gains which, by virtue of sections 60 to 62, is included in the computations for two successive years of assessment;”; and
b
the definitions of “non-basis period” and “years of commencement” and the words “references to the enactments relating to cessation are references to sections 63, 67 and 113” shall cease to have effect.

218 Commencement, transitional provisions and savings.

1

Unless the contrary intention appears, this Chapter—

a

except in its application to a trade set up and commenced on or after 6th April 1994 or income from a source arising to a person on or after that date, has effect as respects the year 1996-97 and subsequent years of assessment, and

b

in its application to a trade so set up and commenced or income from a source so arising, has effect as respects the year 1994-95 and subsequent years of assessment.

F2131A

In a case where—

a

a trade is set up and commenced by a company, and

b

it is not set up and commenced before 6th April 1994,

sections 213(4) and (8) and 214(4) and (6) have effect only if it is set up and commenced on or after 6th April 1995.

2

Any reference in subsection (1) above to a trade includes a reference to a profession, vocation, employment or office.

3

Where the first underwriting year of the underwriting business of a member of Lloyd’s is the year 1994, subsection (1) above shall have effect in relation to that business as if it had been set up and commenced on 6th April 1994.

4

Where, as respects income from any source, income tax is to be charged under Case IV or V of Schedule D by reference to the amounts of income received in the United Kingdom, the source shall be treated for the purposes of subsection (1) above as arising on the date on which the first amount of income is so received.

5

This Chapter shall have effect subject to the transitional provisions and savings contained in Schedule 20 to this Act.

C29 C30Chapter V Lloyd’s Underwriters: Corporations etc.

Annotations:

Modifications etc. (not altering text)

C29

Pt. IV Chapter V (ss. 219-230) modified (1.12.1997) by S.I. 1997/2681, reg. 3(2)(a)

C30

Pt. IV Chapter V (ss. 219-230) applied (1.5.1995) by 1995 c. 4, s. 129(4)(6)

Pt. IV Chapter V (ss. 219-230) applied (1.5.1995) by 1995 c. 4, s. 127(16)(a)(19)

Main provisions

219Taxation of profits.

1

Corporation tax for any accounting period on the profits arising from a corporate member’s underwriting business shall be computed on the profits of that accounting period.

2

As respects the profits arising to a corporate member for any accounting period directly from its membership of one or more syndicates, or from assets forming part of a F214premium trust fund—

a

the aggregate of those profits shall be computed for tax purposes under Case I of Schedule D; and

b

accordingly, no part of those profits shall be computed for those purposes under any other Schedule or any other Case of Schedule D.

3

F215Subject to subsection (4A) below, the profits arising to a corporate member for any accounting period—

a

from assets forming part of an ancillary trust fund; or

b

from assets employed by it in, or in connection with, its underwriting business,

shall be computed for tax purposes under Case I of Schedule D if, and to the extent that, they do not fall to be computed for those purposes under any other Schedule or any other Case of Schedule D.

4

Where the profits arising for any accounting period from the assets of a corporate member’s F214premium trust fund include F216UK distributions, subsection (2) above shall apply in relation to those distributions F217. . . notwithstanding anything in section 11(2)(a) or 208 of the Taxes Act 1988.

F2184A

Notwithstanding anything in section 11(2)(a) or 208 of the Taxes Act 1988, UK distributions in respect of any assets of a corporate member which are mentioned in paragraph (a) or (b) of subsection (3) above—

a

shall be taken into account in computing profits of the corporate member for tax purposes; and

b

shall be so taken into account under Case I of Schedule D (and not under any other Schedule or any other Case of Schedule D).

4B

Section 231(1) of the Taxes Act 1988 (entitlement to tax credit) shall not apply where the distribution there mentioned is a distribution in respect of any asset of a corporate member’s F214premium trust fund.

4C

In this section “UK distributions” means dividends or other distributions of a company resident in the United Kingdom.

5

In section 20(2) of the Taxes Act 1988 (Schedule F), after the words “section 171 of the Finance Act 1993” there shall be inserted the words “ or section 219 of the Finance Act 1994 ”.

220 Accounting period in which certain profits or losses arise.

1

For the purposes of section 219 above and all other purposes of the Corporation Tax Acts, the profits or losses arising to a corporate member in any accounting period directly from its membership of one or more syndicates, or from assets forming part of a F219premium trust fund, shall be taken to be—

a

if two underwriting years each fall partly within that period, the aggregate of the apportioned parts of those profits or losses in those years; and

b

if a single underwriting year falls wholly or partly within that period, those profits or losses or (as the case may be) the apportioned part of those profits or losses in that year.

2

Subject to the provisions of this Chapter, for the purposes of subsection (1) above and all other purposes of the Corporation Tax Acts—

a

the profits or losses arising to a corporate member in any underwriting year directly from its membership of one or more syndicates shall be taken to be those of any previous year or years which are declared in that year; and

b

the profits or losses arising to a corporate member in any underwriting year from assets forming part of a F219premium trust fund shall be taken to be those allocated under the rules or practice of Lloyd’s to any previous year or years the profits or losses of which are declared in that year.

3

In this section “apportioned part”, in relation to the profits or losses of an underwriting year, means a part apportioned under section 72 of the Taxes Act 1988.

221 Assessment and collection of tax.

C26223 Ancillary trust funds.

A corporate member shall be treated for the purposes of the Corporation Tax Acts as absolutely entitled as against the trustees to the assets forming part of an ancillary trust fund belonging to it.

Other special cases

that subsection shall have effect in relation to the apportioned part of that insurance money or (as the case may be) that insurance money as if, instead of that accounting period, it referred to the accounting period in which the payment is made.

F2273A

Where the amount payable by a corporate member under a quota share contract is less than the declared amount—

a

if the underwriting year in which the contract takes effect falls within a single accounting period, the difference between the two amounts (“the surplus”) shall be treated as a trading receipt in computing the profits arising from the member’s underwriting business for that period, and

b

if that underwriting year falls within two or more accounting periods, the apportioned part of the surplus shall be treated as a trading receipt in computing the profits arising from the member’s underwriting business for each of those periods.

3B

Where a corporate member has entered a quota share contract, any amount paid by it to cover a cash call in respect of transferred losses that are not declared at the time the contract takes effect shall be treated, for the purposes of subsections (1)(b)(i) and (3A) above, as an amount payable under the contract at that time.

F2284

In this section—

“apportioned part”, in relation to any insurance money or other amount, means a part apportioned under section 72 of the Taxes Act 1988;
“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 corporate member by the agent of a syndicate of which it is a member;
“quota share contract” means any contract between a corporate 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 it 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 183 of the 1993 Act, subsection (3) (amendments of sections 627(5) and 641(2) of the Taxes Act 1988).

3

Subject to any provision to the contrary, the provisions of Schedule 21 to this Act have effect for the year 1994-95 and subsequent years of assessment.

4

Subsection (2) above has effect for the year 1997-98 and subsequent years of assessment.

Supplemental

229 Regulations.

The Board may by regulations provide—

a

for the assessment and collection of tax charged in accordance with section 219 above (so far as not provided for by Schedule 19 to the 1993 Act as applied by section 221 above);

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 corporate member becomes insolvent or otherwise ceases to carry on its underwriting business;

F232ca

for modifying the application of this Chapter in relation to cases where assets forming part of a F233premium trust fund are the subject of—

F234i

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

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.

C28230 Interpretation and commencement.

1

In this Chapter, unless the context otherwise requires—

“the 1993 Act” means the M58Finance Act 1993;
“ancillary trust fund”, in relation to a corporate member, does not include a F235premium trust fund but, subject to that, means any trust fund required or authorised by the rules of Lloyd’s, or required by a members’ agent or regulating trustee of the corporate member;
“closing year”—
1. a
  in relation to an underwriting year, means the underwriting year next but one following that year; and
2. b
  in relation to a syndicate, means the closing year of the underwriting year for which it was formed;
“corporate member” means a body corporate which is a member of Lloyd’s and is or has been an underwriting member;
“inspector” includes any officer of the Board;
“the Management Act” means the M59Taxes Management Act 1970;
“managing agent”, in relation to a syndicate and an underwriting year, 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 that year, or
2. b
  such other person as may be determined in accordance with regulations made by the Board;
“member” means a member of Lloyd’s who is or has been an underwriting member;
“members’ agent”, in relation to a corporate member, means a person registered as a members’ agent at Lloyd’s who has been appointed by the corporate member to act as its members’ agent in respect of all or any part of its underwriting business;

F236“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;

“prescribed” means prescribed by regulations made by the Board;
“profits” includes gains;
“regulating trustee”, in relation to a corporate member, means a person designated as such by the terms of any trust deed by which a premiums trust fund of the corporate member is constituted;
“stop-loss insurance” means any insurance taken out by a corporate member against losses in its underwriting business F237, except insurance taken out by entering a quota share contract (within the meaning of section 225 above);
“syndicate” means a syndicate of underwriting members of Lloyd’s formed for an underwriting year;
“underwriting business”, in relation to a corporate member, means its underwriting business as a member of Lloyd’s;
“underwriting year” means the calendar year.

2

For the purposes of this Chapter, unless the contrary intention appears—

a

the profits or losses of a corporate member’s underwriting business include profits or losses arising to it—

i

from assets forming part of a F238premium trust fund or an ancillary trust fund; or

ii

from assets employed by it in, or in connection with, its underwriting business; and

b

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

3

Subject to any provision to the contrary, the provisions of this Chapter have effect for accounting periods ending on or after 1st January 1994 or, as the case may require, for the underwriting year 1994 and subsequent underwriting years.

Part V Oil Taxation

Chapter I Election by Reference to Pipe-Line Usage

231 Election by reference to pipe-line with excess capacity.

1

The provisions of this Chapter apply where, on or before 1st January 1996, a participator in a taxable field makes, in accordance with Part I of Schedule 22 to this Act, an election with respect to that field by reference to a pipe-line—

a

which is a qualifying asset;

b

which is used or intended to be used for transporting oil in circumstances which give rise or are expected to give rise to tariff receipts;

c

which, at the date of the election, is at least 25 kilometres in length; and

d

for which the initial usage fraction does not exceed one-half.

2

A participator may not make an election—

a

unless the field to which the election applies is (or, as the case may be, is intended to be) the chargeable field in relation to the tariff receipts referred to in subsection (1)(b) above; or

b

if the first chargeable period of that field ended on or before 30th June 1982; or

c

8

For the purposes of this Chapter, unless it is just and reasonable to determine some other capacity, the design capacity of a pipe-line is that which is specified for the pipe-line as a whole in what was, on 16th March 1993, the most recent development plan applicable to the field to which the election applies or, as the case may be, the pipe-line itself.

232 Restriction on electing participator’s allowable expenditure on elected assets.

1

This section has effect in relation to expenditure which is incurred on an asset to which an election applies; and in this section “allowable or allowed”, in relation to any expenditure, means allowable or allowed under any of the expenditure relief provisions.

2

Subject to the following provisions of this section, in the case of expenditure incurred before the date of the election, the amount which, apart from this section, would be allowable or allowed in the case of the electing participator shall be reduced by multiplying it by the initial usage fraction.

if no such maximum capacity was so specified in relation to an asset, its actual maximum capacity on that date or, if there was no such capacity on that date, nil.

7

Where a claim under Schedule 5 or Schedule 6 to the principal Act relates to the allowance of any expenditure to which subsection (2) above applies, the amount claimed shall take account of the operation of that subsection; and where subsection (3) above applies to any expenditure, no such claim shall be made with respect to it.

8

Where a claim has been made under Schedule 5 or Schedule 6 to the principal Act with respect to any expenditure and, subsequently, an election is made which has the effect of altering the amount of expenditure which is allowable or allowed,—

is so received or receivable in respect of the disposal of an asset to which the election applies or of an interest in such an asset, and

c

constitutes a disposal receipt of the electing participator attributable to the field to which to the election applies,

that sum shall, for the purposes of the Oil Taxation Acts, be taken to be reduced in accordance with subsection (4) below.

3

Any reference in subsection (1) or subsection (2) above to a sum received or receivable includes a reference to an amount which (apart from this section) would be treated as a tariff receipt or disposal receipt by virtue of paragraph 5 of Schedule 2 to the 1983 Act (acquisition and disposal of qualifying assets otherwise than at arm’s length).

4

Unless it is just and reasonable to make a different reduction, the reduction referred to in subsection (2) above shall be determined by reference to that applicable under subsection (2) or subsection (3) of section 232 above to the expenditure incurred on the asset concerned so that if, for the purposes of determining under those subsections the amount of that expenditure which was allowed or allowable,—

a

the whole or any part of that expenditure was reduced by multiplying it by the initial usage fraction, or

b

the whole or any part of that expenditure was reduced to nil,

a similar reduction shall apply to the whole or, as the case may require, to each correspondingly proportionate part of any sum falling within subsection (2) above.

5

In this section “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.

is incurred (for any of the purposes mentioned in section 3(1) of the principal Act) by reference to the use of the asset in connection with a taxable field,

after sub-paragraph (2) there shall be inserted—

2A
Where the proposed transaction has a transaction base date later than 31st December 1993, sub-paragraph (1) above has effect with the substitution for the reference to the second business day of a reference to the first business day.

4

In paragraph 11 of that Schedule (a participator’s aggregate nominated proceeds for a month), in sub-paragraph (2) for the words “sub-paragraph (2A)” there shall be substituted “ sub-paragraphs (2A) and (2B) ” and after sub-paragraph (2A) there shall be inserted the following sub-paragraph—

2B
In the case of a nominated transaction which is a disposal to which subsection (5A) of section 2 of the principal Act applies, for the amount which, apart from this sub-paragraph, would be the nominated price for the purposes of sub-paragraph (2) above there shall be substituted the amount which, under that subsection, is deemed to be the price received or receivable for the oil in question.

236 Valuation of certain light gases.

1

Subject to subsection (2) below, the principal Act shall have effect subject to the amendments in Schedule 23 to this Act, being—

a

amendments altering the rules for determining the market value of certain light gases for the purposes of petroleum revenue tax; and

b

amendments consequential upon, or incidental to, those amendments.

2

The amendments in Schedule 23 to this Act do not have effect in relation to any light gases if, before 1st January 1994, an election was made under section 134 of the M65Finance Act 1982 (alternative valuation of certain ethane) or section 109 of the M66Finance Act 1986 (alternative valuation of certain light gases) and the election applies to those gases.

3

No election may be made after 31st December 1993 under section 134 of the Finance Act 1982 or section 109 of the Finance Act 1986; and, accordingly—

a

in subsection (2) of the said section 134, after the word “section” there shall be inserted “ must be made before 1st January 1994 and ”; and

b

in subsection (1) of the said section 109, after the word “section” there shall be inserted “ before 1st January 1994 ”.

4

In section 12 of the principal Act (interpretation), in subsection (1) after the definition of “licensee” there shall be inserted—

“light gases”, except in relation to an election under section 134 of the Finance Act 1982 or section 109 of the Finance Act 1986, means oil consisting of gas of which the largest component by volume over any chargeable period, measured at a temperature of 15 degrees centigrade and a pressure of one atmosphere, is methane or ethane or a combination of those gases

237 Abortive exploration expenditure.

1

In section 5 of the principal Act (allowance of abortive exploration expenditure incurred before 16th March 1983), after subsection (2) there shall be inserted the following subsection—

2A
For the purpose only of determining under paragraph (c) of subsection (1) above whether expenditure is or is likely to become allowable for any oil field, it shall be assumed that any oil field which, apart from this subsection, would be a non-taxable field is or, as the case may be, will be a taxable field and, accordingly, that section 185(4)(e) of the Finance Act 1993 (no expenditure allowable for non-taxable fields) does not apply.

2

Subsection (1) above shall be deemed to have come into force at the same time as Part III of the M67Finance Act 1993 (27th July 1993).

3

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

238 Disposals of assets producing tariff receipts.

1

With respect to disposals made after 30th November 1993, paragraph 5 of Schedule 2 to the M68Oil Taxation Act 1983 (acquisition and disposal of qualifying assets otherwise than at arm’s length: limit on tariff and disposal receipts) shall be amended in accordance with subsections (2) and (3) below; and in this subsection “disposal” has the same meaning as in that paragraph.

2

In sub-paragraph (1) of paragraph 5, at the end of paragraph (c), and in place of the amendment made by section 190(5)(b) of the M69Finance Act 1993, there shall be inserted

and
d
the use of the asset will be wholly by that person in connection with a taxable field in which he is a participator (and accordingly, and in particular, there will be no use giving rise to tariff receipts)

3

In sub-paragraph (3) of paragraph 5, for paragraph (b) there shall be substituted the following paragraph—

b
the disposal does not fall within sub-paragraph (1) above, and

4

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

Part VI Stamp Duty

239 Execution of deeds.

1

In section 122 of the M70Stamp Act 1891 (definitions)—

a

after subsection (1) there shall be inserted—

1A
For the purposes of this Act a deed (or, in Scotland, a deed for which delivery is required) shall be treated as executed when it is delivered or, if it is delivered subject to conditions, when the conditions are fulfilled

where the lease was executed outside the United Kingdom, as if it had been first received in the United Kingdom at the same time as the lease.

4

For the purposes of this section a lease gives effect to an agreement if the lease is granted subsequent to the agreement and either is in conformity with the agreement or relates to substantially the same property and term as the agreement.

5

References in this section to an agreement for a lease include missives of let in Scotland.

F241240A Requirements before lease treated as duly stamped.

1

A lease shall not be treated as duly stamped unless—

a

it contains a certificate that there is no agreement to which it gives effect, or

b

it is stamped with a stamp denoting—

i

that there is an agreement to which it gives effect which is not chargeable with duty, or

ii

the duty paid on the agreement to which it gives effect.

2

3

References in this section to a lease do not include, and references in this section to an agreement do include, missives of let in Scotland.

241 Exchange, partition, etc.

1

Where—

a

the consideration for the transfer or vesting of any estate or interest in land or the grant of any F242lease consists of or includes any property, and

b

for the purposes of stamp duty chargeable under or by reference to F243Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) no amount or value is, apart from this section, attributed to that property on that transfer, vesting or grant,

then, for those purposes, the consideration or, as the case may be, the consideration so far as relating to that property shall be taken to be the market value of the property immediately before the instrument in question is executed and accordingly the instrument shall be charged with ad valorem duty under that heading.

2

For the purposes of this section the market value of property at any time is the price which that property might reasonably be expected to fetch on a sale at that time in the open market.

F2443

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

F2444

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

F2445

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

6

This section shall apply to instruments executed after 7th December 1993, not being instruments executed in pursuance of a contract made before 30th November 1993.

242 Where consideration not ascertainable from conveyance or lease.

1

Where, for the purposes of stamp duty chargeable under or by reference to F245Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale), the consideration, or any part of the consideration, for—

a

the transfer or vesting of any estate or interest in land, or

b

the grant of any F246lease,

cannot, apart from this subsection, be ascertained at the time the instrument in question is executed, the consideration for the transfer, vesting or grant shall for those purposes be taken to be the market value immediately before the instrument is executed of the estate or interest transferred or vested or, as the case may be, the F246lease granted.

2

Where, for the purposes of stamp duty chargeable under F247paragraph 12 of Schedule 13 to the Finance Act 1999, the rent, or any part of the rent, payable under any F246lease cannot, apart from this subsection, be ascertained at the time it is executed, the rent shall for those purposes be taken to be the market rent at that time.

3

For the purposes of this section—

a

the cases where consideration or rent cannot be ascertained at any time do not include cases where the consideration or rent could be ascertained on the assumption that any future event mentioned in the instrument in question were or were not to occur, and

b

the market rent of a F246lease at any time is the rent which the F246lease might reasonably be expected to fetch at that time in the open market,

and in this section “market value” has the same meaning as in section 241 above.

4

This section shall apply to instruments executed after 7th December 1993.

243 Agreements to surrender leases.

1

Where, in pursuance of any agreement, any lease is surrendered (or, in Scotland, renounced) at any time otherwise than by deed, the agreement shall be treated for the purposes of F248stamp duty as if it were a deed executed at that time effecting the surrender (or, as the case may be, renunciation).

2

This section shall apply to any agreement made after 7th December 1993.

I17244 Production of documents on transfer of land in Northern Ireland.

2

The information contained in any document produced to the Commissioners under section 244(2) above shall be available for use by the Commissioner of Valuation for Northern Ireland.

3

Any person who fails to comply with any requirement imposed by virtue of subsection (1) above shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

4

Section 244 above shall also not apply to any instrument which relates solely to—

a

incorporeal hereditaments or to a grave or right of burial, or

b

land subject to land purchase annuities which are registered in the Land Registry in Northern Ireland.

5

In this section and section 244 above—

“lease”—
1. a
  includes an underlease or other tenancy and an agreement for a lease, underlease or tenancy, but
2. b
  does not include a mortgage, charge or lien on any property for securing money or money’s worth,
and “lessee” and “grant” shall be construed accordingly,
“prescribed” means prescribed by regulations, and
“regulations” means regulations made by the Commissioners under this section.

6

The power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

7

Regulations under this section may make different provision for different cases.

P58

This section and section 244 above shall come into force on such day as the Treasury may by order made by statutory instrument appoint.

Part VII Inheritance Tax

246 Rate bands: no indexation in 1994.

The Table substituted by section 72(1) of the M74Finance (No. 2) Act 1992 shall apply to chargeable transfers made in the year beginning 6th April 1994, and accordingly section 8(1) of the M75Inheritance Tax Act 1984 (indexation of rate bands) shall not apply to such transfers.

247 Business and agricultural relief.

1

In section 113B of the Inheritance Tax Act 1984 (replacement business property)—

a

in subsections (2)(a) and (5)(b), for “twelve months” substitute, in each case, “ the allowed period ”; and

b

in subsection (8), at the end add “ and “allowed period” means the period of three years or such longer period as the Board may allow ”.

2

In section 124B of the Act of 1984 (replacement agricultural property)—

a

in subsections (2)(a) and (5)(b), for “twelve months” substitute, in each case, “ the allowed period ”; and

b

in subsection (8), at the end add “ and “allowed period” means the period of three years or such longer period as the Board may allow ”.

3

This section applies in relation to transfers of value made, and other events occurring, on or after 30th November 1993.

248 Corporate Lloyd’s underwriters.

1

No property forming part of a premiums trust fund or ancillary trust fund of a corporate member shall be relevant property for the purposes of Chapter III of Part III of the Inheritance Tax Act 1984 (settlements without interests in possession).

2

In this section “ancillary trust fund”, “corporate member” and “premiums trust fund” have the same meanings as in Chapter V of Part IV of this Act (Lloyd’s underwriters: corporations etc.).

Part VIII Miscellaneous and General

Companies treated as non-resident

249 Certain companies treated as non-resident.

1

A company which—

a

would (apart from this section) be regarded as resident in the United Kingdom for the purposes of the Taxes Acts, and

b

is regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom and not resident in the United Kingdom,

shall be treated for the purposes of the Taxes Acts as resident outside the United Kingdom and not resident in the United Kingdom.

2

For the purpose of deciding whether the company is regarded as mentioned in subsection (1)(b) above it shall be assumed that—

a

the company has made a claim for relief under the arrangements, and

b

in consequence of the claim it falls to be decided whether the company is to be regarded as mentioned in subsection (1)(b) above.

3

This section shall apply whether the company would otherwise be regarded as resident in the United Kingdom for the purposes of the Taxes Acts by virtue of section 66(1) of the M76Finance Act 1988 (company incorporated in UK to be regarded as resident there) or by virtue of some other rule of law.

4

In this section—

a

“double taxation relief arrangements” means arrangements having effect by virtue of section 788 of the Taxes Act 1988;

b

“the Taxes Acts” has the same meaning as in the M77Taxes Management Act 1970.

5

This section shall be deemed to have come into force on 30th November 1993.

250 Companies treated as non-resident: supplementary.

1

Sections 130(1) to (6) and 131(1) to (5) of the Finance Act 1988 (securing payment of outstanding tax) shall not apply where the company concerned ceases to be resident in the United Kingdom on 30th November 1993 solely by virtue of the coming into force of section 249 above.

2

References in section 179 of the M78Taxation of Chargeable Gains Act 1992 to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group by virtue of that company, or another company, ceasing to be resident in the United Kingdom on 30th November 1993 solely by virtue of the coming into force of section 249 above.

3

Subsection (4) below applies where—

a

a company ceases to be resident in the United Kingdom on 30th November 1993 solely by virtue of the coming into force of section 249 above, and

b

by virtue of section 185(2) of the M79Taxation of Chargeable Gains Act 1992 it is deemed to have disposed of assets immediately before the time it so ceases.

Section 139(3) of the 1992 Act shall be omitted; and this subsection shall have effect in relation to acquisitions on or after the relevant date.

6

Section 160 of the 1992 Act shall be omitted; and this subsection shall have effect where the disposal of the old assets (or of the interest in them) is made on or after the relevant date or the acquisition of the new assets is made (or the acquisition of the interest in them is made or the unconditional contract for their acquisition is entered into) on or after the relevant date.

7

The following provisions shall be omitted—

a

in section 166(2) of the 1992 Act the words “or a company” and the words “or company”;

b

in section 171(2) of that Act, paragraph (e) and the word “or” immediately preceding it;

c

section 172(3)(a) of that Act;

and this subsection shall have effect in relation to disposals on or after the relevant date.

8

In section 175(2) of the 1992 Act the words from “or a company which” to the end of paragraph (b) shall be omitted; and this subsection shall have effect where the disposal of the old assets (or of the interest in them) or the acquisition of the new assets (or of the interest in them) is made on or after the relevant date.

9

Section 186 of the 1992 Act shall be omitted together with the following in section 187—

a

in subsection (1)(a) the words “or 186”;

b

in subsection (6) the words “or, as the case may be, section 186(2),” and the words “or, as the case may be, section 186(1)”;

and this subsection shall have effect where the company concerned becomes on or after the relevant date a company which falls to be regarded as mentioned in section 186(1) .

10

Section 188 of the 1992 Act shall be omitted; and this subsection shall be deemed to have come into force on the relevant date.

11

In section 211(3) of the 1992 Act the words “(and would not be a gain on which, under any double taxation relief arrangements, it would not be liable to tax)” shall be omitted; and this subsection shall have effect where the transfer is made on or after the relevant date.

F24912

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

Privatisations

I20252 Railways.

1

Schedule 24 to this Act (which makes provision in connection with transfers and other disposals under or by virtue of the M82Railways Act 1993) shall have effect.

2

Paragraphs 4(1) and 17 of that Schedule, and this section so far as relating to those provisions, shall be taken to have come into force on 5th November 1993 (the date on which the M83Railways Act 1993 was passed).

3

Subject to subsection (2) above, this section and that Schedule shall be taken to have come into force on 11th January 1994.

253 Northern Ireland Airports Limited.

Schedule 25 to this Act (which makes provision in connection with the transfer of the undertaking of Northern Ireland Airports Limited) shall have effect.

Management

254 Practice and procedure in connection with appeals.

1

Section 56B of the M84Taxes Management Act 1970 (regulations about practice and procedure in connection with appeals) shall be amended as follows.

2

In subsection (2)(b) (documents to be made available for inspection by Commissioners or by officers of the Board) for “the Commissioners or by officers of the Board” there shall be substituted “ specified persons ”.

3

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

2A
In subsection (2)(b) above “specified persons” means such of the following as may be specified in the regulations—
a
the Commissioners;
b
any party to the appeal;
c
officers of the Board.

255 Calling for documents of taxpayers and others.

1

Section 20 of the M85Taxes Management Act 1970 (power to call for documents) shall be amended as follows.

2

The following subsections shall be inserted after subsection (7A)—

7AB
A Commissioner who has given his consent under subsection (7) above shall neither take part in, nor be present at, any proceedings on, or related to, any appeal brought—
a
in the case of a notice under subsection (1) above, by the person to whom the notice applies, or
b
in the case of a notice under subsection (3) above, by the taxpayer concerned,
if the Commissioner has reason to believe that any of the required information is likely to be adduced in evidence in those proceedings.
7AC
In subsection (7AB) above “required information” means any document or particulars which were the subject of the proposed notice with respect to which the Commissioner gave his consent.

3

The following subsections shall be inserted after subsection (8D)—

8E
An inspector who gives a notice under subsection (1) or (3) above shall also give to—
a
the person to whom the notice applies (in the case of a notice under subsection (1) above), or
b
the taxpayer concerned (in the case of a notice under subsection (3) above),
a written summary of his reasons for applying for consent to the giving of the notice.
8F
Subsection (8E) above does not apply, in the case of a notice under subsection (3) above, if by virtue of section 20B(1B) a copy of that notice need not be given to the taxpayer.
8G
Subsection (8E) above does not require the disclosure of any information—
a
which would, or might, identify any person who has provided the inspector with any information which he took into account in deciding whether to apply for consent; or
b
if the Commissioner giving the required consent has given a direction that that information is not to be subject to the obligation imposed by that subsection.
8H
A General or Special Commissioner shall not give a direction under subsection (8G) above unless he is satisfied that the inspector has reasonable grounds for believing that disclosure of the information in question would prejudice the assessment or collection of tax.

Assigned matters

256 Minor corrections.

1

The provisions mentioned in subsection (2) below (which enable revenue traders and taxable persons to be required to keep records) shall be amended in accordance with subsections (3) and (4) below (which correct minor errors in those provisions so far as they relate to the admissibility in evidence of the recorded information).

2

The provisions are—

a

in the M86Customs and Excise Management Act 1979, section 118A; and

b

in Schedule 7 to the M87Value Added Tax Act 1983, paragraph 7.

3

In subsection (6) and sub-paragraph (5) of those provisions—

a

in paragraph (c) for the words “sections 13 and 14 of the M88Law Reform (Miscellaneous Provisions) (Scotland) Act 1968” there shall be substituted “ sections 5 and 6 of the Civil Evidence (Scotland) Act 1988 ”; and

b

in paragraph (d), for the words “except in accordance with the said sections 13 and 14” to the end there shall be substituted “ except in accordance with Schedule 3 to the Prisoners and Criminal Proceedings (Scotland) Act 1993 ”.

4

Subsection (7) and sub-paragraph (6) of those provisions shall be omitted.

General

257 Interpretation and construction.

1

In this Act “the Taxes Act 1988” means the M89Income and Corporation Taxes Act 1988.

2

Part V of this Act shall be construed as one with Part I of the M90Oil Taxation Act 1975, and in Part V that Act is referred to as “the principal Act”.

3

Part VI of this Act shall be construed as one with the M91Stamp Act 1891.

258 Repeals.

The enactments specified in Schedule 26 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.

259 Short title.

This Act may be cited as the Finance Act 1994.

SCHEDULES

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

Section 1.

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.
13.48
Wine or made-wine of a strength exceeding 2 per cent. but not exceeding 3 per cent.
22.46
Wine or made-wine of a strength exceeding 3 per cent. but not exceeding 4 per cent.
31.45
Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5 per cent.
40.44
Wine or made-wine of a strength exceeding 5 per cent. but not exceeding 5.5 per cent.
49.42
Wine or made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent. and not being sparkling
134.77
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent.
222.55
Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.
207.33
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.	13.48
Wine or made-wine of a strength exceeding 2 per cent. but not exceeding 3 per cent.	22.46
Wine or made-wine of a strength exceeding 3 per cent. but not exceeding 4 per cent.	31.45
Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5 per cent.	40.44
Wine or made-wine of a strength exceeding 5 per cent. but not exceeding 5.5 per cent.	49.42
Wine or made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent. and not being sparkling	134.77
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent.	222.55
Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.	207.33

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

SCHEDULE 2 Vehicles excise duty: miscellaneous provisions

Section 5.

F2501

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

F2512

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F2523

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F2534

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F2545

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F2556

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F2567

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F2578

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F2589

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F25910

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F26011

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F26112

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

F26213

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

F26314

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

F26415

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F26516

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F26617

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F26718

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F26819

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F26920

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F27021

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

F27122

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

F27223

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

24

In Article 34 of the M92Road Traffic (Northern Ireland) Order 1981 (obligatory vehicle test certificates), the following paragraph shall be substituted for paragraph (3)—

3
For the purposes of paragraph (2)(b) there shall be disregarded—
a
the use of a vehicle before it is sold or supplied by retail; and
b
the use of a vehicle to which a motor dealer has assigned a mark under section 20 of the Vehicles (Excise) Act 1971 before it is registered by the Secretary of State under section 19(1)(b) of that Act.

25

In section 47 of the M93Road Traffic Act 1988 (obligatory test certificates), the following subsection shall be substituted for subsection (4)—

4
For the purposes of subsection (2)(b) above there shall be disregarded—
a
the use of a vehicle before it is sold or supplied by retail, and
b
the use of a vehicle to which a motor dealer has assigned a mark under section 20 of the Vehicles (Excise) Act 1971 before it is registered by the Secretary of State under section 19(1)(b) of that Act.

F27326

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

F27427

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

F27528

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

29

Paragraphs F276. . ., 24 and 25 shall come into force on 1st June 1994.

SCHEDULE 3 Amendments about gaming machine licence duty

Section 6.

Licences for periods beginning on or after 1st May 1994

1

The M94Betting and Gaming Duties Act 1981 shall be amended as follows.

2

For section 21(3) (period of gaming machine licences) there is substituted—

3
A gaming machine licence may be granted for a period of a month, or of any number of months not exceeding twelve, beginning on any day of any month

3

Section 22(5) (rates of duty) is omitted.

4

For section 23 (amount of duty) there is substituted—

23 Amount of duty.
1
The amount of duty payable on a gaming machine licence shall be—
a
the appropriate amount for the machine which it authorises, or
b
if it authorises two or more machines, the aggregate of the appropriate amounts for each of those machines.
2
The appropriate amount for each machine shall be determined in accordance with the following Table by reference to—
a
the period for which the licence is granted, and
b
whether the machine falls within column 2 or column 3 of the Table,
and references in this Part to a rate of gaming machine licence duty are references to the rate in column 2 or the rate in column 3.
TABLE
(1) Period (in months) for which licence granted
(2) Small prize or five-penny machines
(3) Other machines
1
50
125
2
90
230
3
130
335
4
170
435
5
210
540
6
245
630
7
290
735
8
330
840
9
365
930
10
405
1,035
11
425
1,090
12
450
1,150

(1) Period (in months) for which licence granted	(2) Small prize or five-penny machines	(3) Other machines
1	50	125
2	90	230
3	130	335
4	170	435
5	210	540
6	245	630
7	290	735
8	330	840
9	365	930
10	405	1,035
11	425	1,090
12	450	1,150

5

In section 24 (restrictions on number of licences)—

a

subsection (2),

b

in subsections (3) and (4), “such”, and

c

in subsection (6)(a), the words from “or” at the end of sub-paragraph (i) to “greater”,

are omitted.

6

In section 26 (supplementary provisions), in subsection (4)—

a

“section 22(5) or” is omitted, and

b

for “those provisions” there is substituted “ that provision ”.

7

In Part II of Schedule 4 (supplementary provisions) for paragraphs 6 and 7 (applications and duration of licences) there is substituted—

6
An application for a gaming machine licence shall be made to the Commissioners in such form and manner as they may require.
7
The period for which a gaming machine licence is granted shall begin with the day on which application for the licence is received by the Commissioners or, if a later day is specified for that purpose in the application, with that day; and the licence shall expire at the end of that period.

8

Paragraphs 9 to 11A of that Schedule (amendment, etc.) shall not apply at any time before 1st May 1994 to any licence in relation to which this paragraph has effect.

9

This paragraph shall have effect in relation to gaming machine licences granted for any period beginning on or after 1st May 1994.

Special licences

2

No special licence (as defined in section 21(2) of the M95Betting and Gaming Duties Act 1981) may be granted for any period beginning on or after 1st May 1994.

3

1

Accordingly, that Act shall be amended as follows.

2

In section 21, for the words following “force” in subsection (1) to the end of subsection (2) there is substituted—

a licence granted under this Part of this Act with respect to the premises.
2
Such a licence shall be known as a gaming machine licence

3

Section 21A (special licences) is omitted.

4

In section 24—

a

in subsection (3), the words from “but” to the end are omitted, and

b

in subsection (4), the words “or there are special licences in force with respect to those machines” are omitted.

5

In paragraph 8 of Schedule 4 (transfer of licences), in sub-paragraph (1), for paragraphs (a) and (b) there is substituted “ transfer a gaming machine licence in respect of any premises to a successor in title to the interest in those premises of the person to whom the licence was granted ”.

6

Paragraph 11(2) of that Schedule is omitted.

7

In paragraph 12 of that Schedule (display of licence), for “an ordinary licence” there is substituted “ a gaming machine licence ”.

F2778

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

9

In paragraph 18 of that Schedule (forfeiture), for paragraphs (a) and (b) there is substituted “ those machines which are authorised by the gaming machine licence or licences produced to him ”.

10

Paragraph 4(2) below shall cease to have effect.

11

This paragraph shall come into force on 1st May 1995.

Seasonal licences

4

1

In Part I of Schedule 4 to that Act (exemptions), for paragraph 4 (and the cross-heading preceding it) there shall be substituted—

Seasonal licences
4
1
If at any time during March of any year there has previously been granted a seasonal licence for that year authorising the provision of any number of small-prize machines on any premises and that licence has not been surrendered, it shall be treated for the purposes of this Act as authorising the provision at that time of that number of small-prize machines on the premises.
2
Where a seasonal licence is granted for any year authorising the provision of any number of small-prize machines on any premises, and the licence is not surrendered, it shall be treated for the purposes of this Act as authorising during October of that year the provision of that number of small-prize machines on the premises.
3
Subject to sub-paragraph (4) below, in this Schedule “seasonal licence”, in relation to any year, means a gaming machine licence expressed to authorise only the provision of small-prize machines on any premises for the period of six months beginning with 1st April in that year.
4
A licence in respect of any premises is not a seasonal licence in relation to any year if any gaming machine licence has been granted in respect of those premises for any period which includes the whole or any part of the preceding winter period.
5
If in relation to any year—
a
a seasonal licence is granted in respect of any premises, and
b
another gaming machine licence is granted (whether before or after the grant of the seasonal licence or after the surrender of the seasonal licence) in respect of those premises for any period which includes the whole or any part of the following winter period (and does not include the whole or any part of the preceding winter period),
there shall (unless an amount has already become payable under this sub-paragraph in respect of the seasonal licence) be payable on the seasonal licence on the relevant date an additional amount of duty.
6
The additional amount is the difference between the duty payable (apart from this paragraph) on that licence at the time it was granted and the amount that would have been so payable if the licence had been granted for a period of eight months or, in a case where the seasonal licence has been surrendered before the beginning of September, seven months.
7
In sub-paragraph (5) above, the “relevant date” means—
a
the date on which the seasonal licence is granted, or
b
the date on which the other licence is granted,
whichever is the later.
8
In this paragraph “winter period” means November to February.

F2782

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

3

Sections 21(3) and 23 of that Act (as inserted by this Schedule) shall have effect for the purposes of paragraph 4(6) of that Schedule (as so inserted) in relation to gaming machine licences granted for the period of six months beginning with 1st April 1994.

4

This paragraph shall have effect in relation to gaming machine licences granted for any period beginning on or after 1st April 1994.

Amendment and surrender of licences

5

1

Part II of Schedule 4 to that Act shall be amended as follows.

2

Paragraphs 9 and 10 (amendment of licences) are omitted.

3

In paragraph 11 (surrender of licence), for sub-paragraph (1) there is substituted—

1
The holder of a gaming machine licence may surrender it to the proper officer at any time.
1A
On the surrender of the licence the holder shall be entitled to repayment of duty of the following amount.
1B
That amount is the difference between—
a
the amount of duty actually paid on the licence, and
b
the amount (if less) that would have been paid if the period for which the licence was granted had been reduced by the number of complete months in that period which have not expired,
and for the purposes of this paragraph a seasonal licence is to be treated as granted for the period of eight months beginning with 1st March

4

Paragraph 11A (reduction of duty in certain cases) is omitted.

5

Sub-paragraph (3) above shall not apply to special licences; and sections 21(3) and 23 of that Act (as inserted by this Schedule) shall have effect for the purposes of paragraph 11(1B)(b) of that Schedule (as so inserted) in relation to gaming machine licences granted for any period beginning before 1st May 1994.

6

This paragraph shall come into force on 1st May 1994.

SCHEDULE 4 Penalties for statutory contraventions

Section 9.

Part I Contraventions under the Management Act

1

The Management Act shall be amended in accordance with the following provisions of this Part of this Schedule.

2

1

In subsection (6) of section 92 (offence of making alteration in or addition to approved warehouse), for the words from “he shall be liable” onwards there shall be substituted “ the making of the alteration or addition shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

2

For subsection (8) of that section (offence of contravening condition or direction given in connection with the approval of a warehouse) there shall be substituted the following subsection—

8
Where any person contravenes or fails to comply with any condition imposed or direction given by the Commissioners under this section, his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).

3

In section 93(6) (offence of failing to comply with any warehousing regulations or with any condition, restriction or requirement imposed under any warehousing regulations), for the words from “he shall be liable” onwards there shall be substituted “ his failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

4

In section 100J (offence and forfeiture in the case of a contravention of REDS regulations), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any goods in respect of which any person contravenes any provision of any such regulations, or fails to comply with any such condition or restriction, shall be liable to forfeiture. ”

5

In section 101(4) (offence of failing to produce licence after being requested to do so)—

a

for “a reasonable time” there shall be substituted “ one month ”; and

b

for the words from “he shall be liable” onwards there shall be substituted “ his failure shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

6

1

In subsection (2) of section 107 (offence of failing to display notice or comply with directions as to the form and manner of a notice), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

2

In subsection (3) of that section (offence of affixing misleading notice), for the words from “he shall be liable” onwards there shall be substituted “ his doing so shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

7

In section 108(4) (offence of contravening directions in relation to premises etc. entered under the revenue trade provisions), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

8

1

In subsection (1) of section 111 (using premises or article without having entered them), for the words from “he shall be liable” to the words “and any”, in the first place where they occur, there shall be substituted “ his use of the premises or article shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any ”.

2

Subsection (2) of that section (fraudulent use of entered premises or article) shall cease to have effect.

9

In section 114(2) (offence of using prohibited substance or liquor), for the words from “he shall be liable” onwards there shall be substituted “ his use of that substance or liquor in that manner shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties); but section 10 of that Act (exception for cases of reasonable excuse) shall not apply in relation to conduct attracting a penalty by virtue of this subsection. ”

10

1

In subsection (4) of section 115 (offence of tampering etc. with specimen)—

a

for “any person other than an officer” there shall be substituted “ the revenue trader ”; and

b

for the words from “he shall be liable” onwards there shall be substituted “ his doing so shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

2

After that subsection there shall be inserted the following subsection—

5
For the purposes of subsection (4) above and without prejudice to section 10(1) of the Finance Act 1994 (exception for cases of reasonable excuse), conduct by an employee of the revenue trader or by any other person entitled to act on the trader’s behalf in connection with his trade shall be deemed to be conduct by that trader except in so far as he took all reasonable steps to prevent it.

11

In section 116(3) (offence of failing to pay duty on demand), for the words from “the trader shall” onwards there shall be substituted “ the trader’s failure to pay the duty on demand shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount of the duty demanded and shall also attract daily penalties. ”

12

In section 118G (offences in connection with record keeping etc. by revenue traders), for the words from “he shall be liable” onwards there shall be substituted “ his failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) and, in the case of any failure to keep records, shall also attract daily penalties. ”

13

1

In subsection (1) of section 170A (offence of handling goods subject to unpaid duty)—

a

in paragraph (b), for the words from “the duty” to “its payment” there shall be substituted “ a payment of duty on the goods is outstanding and ”; and

b

for the words after that paragraph there shall be substituted— “ the conduct of that person falling within paragraph (a) above shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount of the unpaid duty. ”

2

In subsection (2) of that subsection (defences), for the words before paragraph (a) there shall be substituted—

2
Section 10 of the Finance Act 1994 (exception to civil penalty in cases of reasonable excuse) shall not apply in relation to conduct attracting a penalty by virtue of subsection (1) above; but such conduct shall not give rise to any liability to a penalty under section 9 of that Act if the person whose conduct it is satisfies the Commissioners or, on appeal, a VAT and duties tribunal, that he—

Part II Contraventions under the Alcoholic Liquor Duties Act 1979

14

The M96Alcoholic Liquor Duties Act 1979 shall be amended in accordance with the following provisions of this Part of this Schedule.

15

In section 8(2) (offence of contravening condition of remission of duty on spirits used for medical or scientific purposes), for the words from “then” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

16

In section 10(2) (offence of contravening condition of remission of duty on spirits used in art or manufacture), for the words from “then” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

17

1

In subsection (3) of section 13 (offence and forfeiture in the case of a contravention of regulations etc. applying to the manufacture of spirits)—

a

for the words from “he shall” to “continues” there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) ”; and

b

for the words from “in respect of which” onwards there shall be substituted “ in respect of which any person contravenes any such regulation, or fails to comply with any such regulation, condition, restriction or requirement, shall be liable to forfeiture. ”

2

Subsection (4) of that section (power to vary penalty under subsection (3)) shall cease to have effect.

3

In subsection (5) of that section (offence and forfeiture in the case of a contravention of any condition imposed with respect to any process of manufacture involving spirits), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any spirits in respect of which any person contravenes or fails to comply with any such condition shall be liable to forfeiture. ”

18

1

In subsection (4) of section 15 (offence of failing to provide accommodation for officer in charge of a distiller’s warehouse), for the words from “he shall” to “but nothing” there shall be substituted “ his failure shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties); but nothing ”.

2

For subsection (5) of that section there shall be substituted the following subsection—

5
Where, after the approval of a distiller’s warehouse, the distiller by whom it is provided makes, without the previous consent of the Commissioners, an alteration in or addition to that warehouse, the making of the alteration or addition shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).

2

For subsection (4) of that section (disqualification from holding a licence) there shall be substituted the following subsection—

4
Where—
a
a rectifier becomes liable and is assessed to a penalty by virtue of subsection (3) above, and
b
the assessment is not more than three years after the making of a previous assessment to a previous penalty to which he became liable by virtue of that subsection,
then his licence shall become void and he shall be disqualified from holding a licence as a rectifier for a period of three years from the date on which the assessment to the penalty mentioned in paragraph (a) above is made.

3

Where a person has been convicted of an offence under subsection (3) of that section within the period of three years before the coming into force of sub-paragraph (2) above—

a

that sub-paragraph shall be without prejudice to the continuation to the end of the appropriate three year period of any disqualification under subsection (4) of that section which is in force when that sub-paragraph comes into force; and

b

subsection (4) of that section, as amended by that sub-paragraph, shall have effect as if the conviction were an assessment to a penalty to which that person was liable by virtue of subsection (3) of that section.

24

In section 22(9) (offence and forfeiture in the case of a contravention of regulations relating to drawback on compounds), for the words from “then” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any article in respect of which any person contravenes or fails to comply with any such regulation shall be liable to forfeiture. ”

25

In section 24(4) (offence of contravening provisions restricting the carrying on of other trades by a distiller or rectifier), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

26

1

In subsection (1) of section 33 (offence and forfeiture in the case of the use of spirits relieved from spirits duty), in the words after paragraph (c), for the words from “he shall” to “greater” there shall be substituted “ his doing so shall, unless he has complied with the requirements specified in subsection (2) below, attract a penalty under section 9 of the Finance Act 1994 (civil penalties) ”.

2

In subsection (5) of that section (contravention of enforcement regulations), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

27

For subsection (2) of section 34 (offence of contravening prohibition on grogging) there shall be substituted the following subsection—

2
A contravention of this section shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).

28

In section 35(3) (contravention of regulations as to returns etc. relating to importation, manufacture, sale or use of alcohols), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

29

In section 41A(8) (offence and forfeiture in the case of a contravention of a condition of registration), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any beer in respect of which any person contravenes or fails to comply with any such condition shall be liable to forfeiture. ”

30

In section 44(2) (offence of contravening condition imposed in connection with remission of duty on beer used for the purposes of research or experiment), for the words from “then” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

31

In section 46(2) (offence of contravening regulations relating to the remission of duty on spoilt beer), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

32

1

In subsection (4) of section 47 (offence of failing to apply for registration as a brewer), for the words from “he shall be liable” to “scale;” there shall be substituted “ his failure shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) ”.

2

In subsection (5) of that section (offence and forfeiture in the case of the production of beer by an unregistered person), for the words from “he shall be liable” onwards there shall be substituted “ his doing so shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount of duty charged on the beer produced, and the beer produced and any worts found on those premises shall be liable to forfeiture. ”

33

For subsection (3) of section 49 (offence and forfeiture in the case of a contravention of beer regulations) there shall be substituted the following subsection—

3
Where any person contravenes or fails to comply with any regulation made under this section, his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any article or substance in respect of which any person contravenes or fails to comply with any such regulation shall be liable to forfeiture.

34

In section 54(5) (offence of producing wine on unlicensed premises), for the words from “he shall” to “and the wine” there shall be substituted “ his doing so shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount of duty charged on the wine produced, and the wine ”.

35

In section 55(6) (offence of producing made-wine on unlicensed premises), for the words from “he shall” to “and the made-wine” there shall be substituted “ his doing so shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount of duty charged on the made-wine produced, and the made-wine ”.

36

In section 55A(3) (offence of contravening regulations relating to wine or made-wine of a certain strength)—

a

for “Any person who” there shall be substituted “ Where any person ”; and

b

for the words from “shall be liable” to “scale” there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) ”.

37

In section 56(2) (offence and forfeiture in the case of a contravention of regulations relating to wine and made-wine), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any article in respect of which any person contravenes or fails to comply with any such regulation shall be liable to forfeiture. ”

38

For subsection (2) of section 59 (offence of rendering wine or made-wine sparkling) there shall be substituted the following subsection—

2
Where any person contravenes subsection (1) above or is concerned in such a contravention, his contravention or, as the case may be, his being so concerned shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).

39

In section 61(2) (offence of contravening regulations relating to the remission of duty on spoilt wine or made-wine), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

40

1

In subsection (4) of section 62 (offence of producing cider on unlicensed premises), for the words from “he shall” to “and the cider” there shall be substituted “ his doing so shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount of duty charged on the cider made, and the cider ”.

2

In subsection (6) of that section (offence and forfeiture in the case of a contravention of regulations made for the purposes of managing the duty on cider), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any article in respect of which any person contravenes or fails to comply with any such regulation shall be liable to forfeiture. ”

41

In section 64(2) (offence of contravening regulations relating to the remission of duty on spoilt cider), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

42

In section 67(2) (offence and forfeiture in the case of any contravention of regulations regulating the keeping of dutiable liquors by wholesalers and retailers), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any liquor, container or utensil in respect of which any person contravenes or fails to comply with any such regulation shall be liable to forfeiture. ”

43

2

In subsection (4) of that section (offence of unlicensed dealing in methylated spirits), for the words from “he shall be liable” onwards there shall be substituted “ his doing so shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

3

In subsection (5) of that section (forfeiture), for “an offence under subsection (3) or (4) above is committed” there shall be substituted “ there is such a contravention or failure to comply as is mentioned in subsection (3) above or any such dealing as is mentioned in subsection (4) above ”.

47

In section 78(4) (offence and forfeiture in the case of a person having unlicensed methylated spirits in his possession), for the words from “he shall be liable” to “and the” there shall be substituted “ his having them in his possession shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and the ”.

48

In section 82(2) (offence and forfeiture in the case of a contravention of regulations relating to stills), for the words from “he shall be liable” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any still or part thereof in respect of which any person contravenes or fails to comply with any such regulation shall be liable to forfeiture. ”

Part III Contraventions under the Hydrocarbon Oil Duties Act 1979

49

The M97Hydrocarbon Oil Duties Act 1979 shall be amended in accordance with the following provisions of this Part of this Schedule.

50

1

In subsection (3) of section 10 (offences in connection with use etc. of oil that has been relieved of duty for a purpose which does not qualify for relief)—

a

for “A person who” there shall be substituted “ Where any person ”; and

b

for the words from “shall be liable” to “greater” there shall be substituted “ his use or acquisition of the oil or, as the case may be, his becoming so liable shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) ”.

2

In subsection (4) of that section (offence of supplying for a use that does not qualify for relief)—

a

for “A person who” there shall be substituted “ Where any person ”;

b

for the words from “shall be liable” to “greater, if” there shall be substituted “ and ”; and

c

at the end there shall be inserted “ his supplying the oil shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) ”.

51

1

In subsection (1) of section 13 (offences in connection with use etc. of heavy oil)—

a

for “A person who” there shall be substituted “ Where any person ”; and

b

for the words from “shall be liable” to “greater” there shall be substituted “ his use of the oil or, as the case may be, his becoming so liable shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) ”.

2

In subsection (2) of that section (offence of supplying heavy oil for a use in contravention of section 12(2))—

a

for “A person who” there shall be substituted “ Where any person ”;

b

for the words from “shall be liable” to “greater, where” there shall be substituted “ and ”; and

c

at the end there shall be inserted “ his supplying the oil shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

52

1

In subsection (4) of section 14 (offences in connection with use etc. of oil in the case of which rebate has been allowed)—

a

for “A person who” there shall be substituted “ Where any person ”; and

b

2

In subsection (5) of that section (offence of supplying for a use for which no rebate is allowed)—

a

for “A person who” there shall be substituted “ Where any person ”;

b

for the words from “shall be liable” to “greater, if” there shall be substituted “ and ”; and

c

at the end there shall be inserted “ his supplying the oil shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

F27953

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

54

In section 20AA(4) (offence and forfeiture in the case of a contravention of the regulations relating to reliefs), for paragraph (a) there shall be substituted the following paragraph—

a
his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties); and

55

In section 21(3) (offence and forfeiture in the case of a contravention of regulations relating to administration or enforcement)—

a

for “A person who” there shall be substituted “ Where any person ”; and

b

for the words from “shall be liable on” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any goods in respect of which any person contravenes or fails to comply with any such regulation shall be liable to forfeiture. ”

56

1

In subsection (1) of section 22 (offence and forfeiture in the case of the use of fuel substitute for a chargeable purpose without duty having been paid)—

a

for “A person who” there shall be substituted “ Where any person ”; and

b

for the words from “shall be liable on” onwards there shall be substituted “ his putting the liquid to that use shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any goods in respect of which any person contravenes this subsection shall be liable to forfeiture. ”

2

After that subsection there shall be inserted the following subsection—

1A
Section 10 of the Finance Act 1994 (exception for cases of reasonable excuse) shall not apply in relation to conduct attracting a penalty by virtue of subsection (1) above.

57

1

In subsection (1) of section 23 (offence and forfeiture in the case of the use etc. of road fuel gas without duty having been paid)—

a

for “A person who” there shall be substituted “ Where any person ”; and

b

for the words from “shall be liable on” onwards there shall be substituted “ his use of the road fuel gas or, as the case may be, his taking it as fuel into that vehicle shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any goods in respect of which a person contravenes this subsection shall be liable to forfeiture. ”

2

After that subsection there shall be inserted the following subsection—

1A
Section 10 of the Finance Act 1994 (exception for cases of reasonable excuse) shall not apply in relation to conduct attracting a penalty by virtue of subsection (1) above.

58

In section 24(4) (offence and forfeiture in the case of a contravention of regulations relating to incidental matters)—

a

for “A person who” there shall be substituted “ Where any person ”; and

b

Part IV Contraventions under the Tobacco Products Duty Act 1979

59

In section 7(2) of the M98Tobacco Products Duty Act 1979 (offence and forfeiture in the case of a contravention of regulations for the management of the duty etc.), for the words from “he shall be liable” onwards there shall be substituted “ his failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties), and any article in respect of which any person fails to comply with any such regulation, or which is found on premises in respect of which any person has failed to comply with any such regulation, shall be liable to forfeiture. ”

Part V Contraventions under the Betting and Gaming Duties Act 1981

60

The M99Betting and Gaming Duties Act 1981 shall be amended in accordance with the following provisions of this Part of this Schedule.

61

In section 24(5) (offence where gaming machine provided without there being a licence in force)—

a

for “any person who at the time when it is so provided” there shall be substituted “ the provision of the machine shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) and, for the purposes of the application of that section to the conduct attracting the penalty, the provision of the machine shall be treated as the conduct of each of the persons who, at the time when the gaming machine is provided ”; and

b

the words after paragraph (f) shall be omitted.

62

1

In paragraph 13 of Schedule 1 (enforcement), for sub-paragraphs (1) and (2) there shall be substituted—

1
Where any person—
a
fails to pay any general betting duty or pool betting duty payable by him, or
b
contravenes or fails to comply with any of the provisions of, or of any regulations made under, any of paragraphs 2, 4 and 6 to 10 above,
his failure to pay, contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which, in the case of a failure to pay, shall be calculated by reference to the amount of duty payable.
2
Any such failure to pay as is mentioned in sub-paragraph (1)(a) above shall also attract daily penalties.
2A
Any person who obstructs any officer in the exercise of his functions in relation to general betting duty or pool betting duty shall be guilty of an offence and liable on summary conviction to a penalty of level 4 on the standard scale.

2

In paragraph 14(3) of that Schedule (offence of failing to produce permit within period reasonably required)—

a

the word “reasonably” shall be omitted; and

b

for the words from “he shall be guilty” onwards there shall be substituted “ his failure shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

3

In paragraph 15 of that Schedule (forfeiture and cancellation of licence on second or subsequent conviction),—

a

in sub-paragraph (1), for “paragraph 13(1) or (3) above” there shall be substituted “ paragraph 13(3) above ” and the words from “(not being” to “9 above)” shall be omitted; and

b

in paragraph (a) of that sub-paragraph, for the words from “the conviction” to “other person)” there shall be substituted

there has been at least one previous occasion on which that or another person has been either—
i
convicted of an offence under paragraph 13(3) above; or
ii
assessed to a penalty to which he was liable under section 8 of the Finance Act 1994 (penalty for evasion),
in respect of conduct taking place

F28063

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

64

1

In sub-paragraph (3) of paragraph 16 of Schedule 3 (offence of contravening provision made by or under that Schedule)—

a

for “Any person who” there shall be substituted “ Where any person ”; and

b

for the words after paragraph (b) there shall be substituted—

“ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

2

Sub-paragraph (4) of that paragraph (continuing offences) shall cease to have effect.

65

1

In sub-paragraph (1) of paragraph 16 of Schedule 4 (offence of contravening provision made by or under that Schedule), for the words from “he shall be guilty” onwards there shall be substituted “ his contravention, failure to comply or refusal shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

2

Sub-paragraph (2) of that paragraph (continuing offences) shall cease to have effect.

Part VI Contraventions relating to lottery duty

66

Chapter II of Part I of the M100Finance Act 1993 shall be amended in accordance with the following provisions of this Part of this Schedule.

67

In section 27(4) (offence of failing to pay duty)—

a

for “A person who” there shall be substituted “ Where a person ”; and

b

for the words from “is guilty” onwards there shall be substituted “ his 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. ”

68

In each of sections 28(3) and 29(8) (offences of contravening regulations made for the purposes of lottery duty)—

a

for “A person who” there shall be substituted “ Where a person ”; and

b

for the words from “is guilty” onwards there shall be substituted “ his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). ”

C31SCHEDULE 5 Decisions subject to review and appeal

Section 14.

Annotations:

Modifications etc. (not altering text)

C31

Sch. 5 applied (1.6.1995) by S.I. 1995/1046, reg. 7(3)

The Community Customs Code etc.

1

The following decisions, so far as they are made for the purposes of the Community Customs Code and are decisions the authority for which is not contained in provisions outside that Code and any directly applicable Community legislation made for the purpose of implementing that Code, that is to say—

a

any decision in relation to any goods as to whether or not the entry, unloading or transhipment of the goods, or their release by or to any person or for any purpose, is to be allowed or otherwise permitted;

b

any decision as to whether or not permission for the examination of, or the taking of samples from, any goods presented to the Commissioners is to be granted;

c

any decision as to the route to be used for the movement of any goods;

d

any other decision as to whether or not the requirements of any procedure for goods which are to be or have been presented to the Commissioners, or any other formalities in relation to any such goods, have been satisfied or complied with or are to be waived, or as to the measures to be taken, including any requirements to be imposed, in consequence of the inability or other failure of any person to comply with the required procedure;

e

any decision in relation to any place or area as to whether or not it is to be, or to continue to be, designated or approved for any purpose;

f

any decision, in any particular case, as to whether or not the carrying out of any processing or other operations or the use of any procedure is to be, or to continue to be, authorised or approved;

g

any decision in relation to—

i

the establishment or operation of any warehouse or other facility, or

ii

the construction of any building,

as to whether or not its establishment, operation or construction or the person by whom it is to be established, operated or constructed, is to be, or to continue to be, authorised or approved for any purpose;

h

any decision consisting in the imposition of a requirement to supply information or assistance, or to furnish any document or other evidence, to the Commissioners or any officer or of a requirement to be present or represented when anything is done in relation to any goods;

i

any decision to take or retain samples of any goods or as to the examination or analysis to which any goods or samples are to be subjected;

j

any decision as to whether or not any person is to bear any of the expenses of the supply of any information by or on behalf of the Commissioners or as to the amount of any such expenses to be borne by any person;

F281k

any decision as to whether or not collection of interest on arrears of customs duty or agricultural levy is to be waived;

l

any decision, in relation to a decision mentioned in any of the preceding sub-paragraphs, as to the conditions subject to which the decision so mentioned is made or, as the case may be, the matters to which that decision relates have effect;

m

any decision as to whether or not any person is to be required to give any security for the fulfilment, in whole or in part, of—

i

any obligation to pay any customs duty or any agricultural levy of the European Community; or

ii

any obligation to comply with a condition of any permission, designation, approval, authorisation or requirement mentioned in any of the preceding sub-paragraphs or with any provision for the purposes of which any decision falling within any of those sub-paragraphs is made,

or as to the form or amount of, or the conditions of, any such security;

n

any decision as to the time at which or the period within which any obligation to pay any customs duty or agricultural levy of the European Community or to do any other thing required by virtue of the Community Customs Code is to be complied with;

o

any decision as to whether or not a decision falling within this paragraph is to be varied or revoked, including a decision as to whether or not the time at which any such decision is to take effect is to be deferred.

The Management Act

2

1

The following decisions under or for the purposes of the Management Act, that is to say—

a

any decision for the purposes of section 20, 22 or 25 as to whether or not an approval of a place as an approved wharf, as an examination station or as a transit shed is to be given or withdrawn or as to the conditions subject to which any such approval is given;

b

any decision as to whether or not any permission for any of the purposes of section 21 (control of movement of aircraft) is to be given or withdrawn or as to the conditions subject to which any such permission is given;

c

any decision as to whether or not approval of a pipe-line for the purposes of section 24 (control of movement of goods by pipe-line) is to be given or withdrawn or as to the conditions subject to which any such approval is given;

d

any decision as to whether or not expenses incurred by the Commissioners are to be borne by any person by virtue of section 29(3) (expenses of detention etc. of ships, aircraft and vehicles) or as to the amount of the expenses to be so borne;

e

any decision consisting in the giving of a direction under section 30(1) (control of uncleared goods);

f

any decision by virtue of subsection (2A) of section 31 (control of movement of goods) as to whether or not the requirements of any regulations under subsection (1) of that section are to be relaxed, as to whether or not substituted requirements are to be imposed or as to the terms of any such substituted requirements;

g

any decision consisting in the imposition of a requirement by virtue of subsection (3) of section 33 (requirements as to record keeping) on a person in control of an aerodrome who is not licensed under any enactment relating to air navigation or as to what is or is not to be approved (whether or not in relation to such a requirement) for the purposes of paragraph (a) of that subsection;

h

any decision as to whether or not permission is to be given to any person for the purposes of section 39 (entry of surplus stores);

i

any decision for the purposes of section 40 that any goods are to be deposited in a Queen’s warehouse;

j

any decision for the purposes of section 47 as to whether or not goods are allowed to be removed for transit or transhipment or as to the conditions subject to which they are removed;

k

any decision as to the conditions subject to which any permission is given for the purposes of section 48 (temporary importation);

l

any decision for the purposes of section 63 (entry outwards) as to whether or not entry outwards is to be made of any ship or goods or as to the conditions subject to which any such entry outwards is to be made;

m

any decision consisting in the imposition of a requirement under section 77, 79 or 80 to produce or furnish any document or other evidence or information;

n

any decision for the purposes of section 92 (approval of warehouses)—

i

as to whether or not any approval is to be given to any place as a warehouse or any consent is to be given to any alteration in or addition to any warehouse;

ii

as to the conditions subject to which any approval or consent is given for the purposes of that section; or

iii

for the withdrawal of any such approval or consent;

o

any decision as to whether or not any amount is payable to the Commissioners in pursuance of section 99 (provision as to deposit in Queen’s warehouse) or as to the amount to be so paid by any person;

p

any decision for the purposes of section 100G (registered excise dealers and shippers) as to whether or not, and in which respects, any person is to be, or to continue to be, approved and registered or as to the conditions subject to which any person is approved and registered;

q

any decision as to the conditions subject to which any drawback is allowed or payable under section 132 or 134;

r

any decision under section 152(b) as to whether or not anything forfeited or seized under the customs and excise Acts is to be restored to any person or as to the conditions subject to which any such thing is so restored;

s

any decision under section 157 as to whether or not any person is to be required to give any security for the observance of any condition, as to the form or amount of, or the conditions of, any such security or as to the cancellation of any bond;

t

any decision consisting in the giving or imposition of a direction or requirement for the purposes of section 158 (power to require the provision of facilities) or any decision as to whether or not an approval is to be given for the purposes of any such direction.

2

Any decision which is made under or for the purposes of any regulations under any of sections 3, 31 or 93 of the Management Act (application to pipe-lines, control of movement of goods and warehousing regulations) and is-

a

a decision in relation to any goods as to whether or not they may be moved, deposited, kept, secured, treated in any manner, removed or made available to any person or as to the conditions subject to which they are moved, deposited, kept, secured, treated in any manner, removed or made available to any person;

b

a decision as to whether or not any person or place is to be, or to continue to be, authorised or approved in any respect for any purpose or as to the conditions subject to which any person or place is so authorised or approved; or

c

a decision as to whether or not any person is to be required to give any security for the fulfilment of any obligation or as to the form or amount of, or the conditions of, any such security.

3

Any decision which is made under or for the purposes of any regulations under section 35(4), 42 or 66 of the Management Act (report inwards, procedure in relation to goods on arrival etc. or in relation to goods for exportation) and is—

a

a decision as to whether or not any permission is to be given for the purpose of dispensing with any of the requirements of any such regulations;

b

a decision consisting in the imposition or variation of any requirement in exercise of any power conferred by any such regulations; or

c

a decision as to whether or not any approval, authority or permission is to be given or granted for the purpose of determining the manner in which any requirement imposed by or under any such regulations is to be performed.

4

Any decision which is made under or for the purposes of any regulations under section 127A of the Management Act (deferment of duty) and is—

a

a decision as to whether or not any person or place is to be, or to continue to be, approved for any purpose connected with the deferment of duty or as to the conditions subject to which any person or place is so approved;

b

a decision as to the amount of duty that may be deferred in any case; or

c

a decision as to whether or not any person is to be required to give any security for the fulfilment of any obligation or as to the form or amount of, or the conditions of, any such security.

The Alcoholic Liquor Duties Act 1979

3

1

The following decisions under or for the purposes of the M101Alcoholic Liquor Duties Act 1979, that is to say—

a

any decision for the purposes of section 6 (power to exempt angostura bitters) as to whether or not to give a direction that any bitters are to be treated as not being spirits or as to the conditions subject to which any such direction is given;

b

any decision for the purposes of section 7 (exemption of spirits used for medical purposes) as to whether or not to recognise any article as used for medical purposes;

c

any decision for the purposes of section 8 (remission of duty on spirits used for medical purposes etc.)—

i

as to the use to which any article is or is to be put or as to the purposes for which it is or is to be used; or

ii

as to the conditions subject to which the receipt and delivery of any spirits is permitted as mentioned in that section;

d

any decision for the purposes of section 9 or 10 (remission of duty on spirits for methylation or for use in art or manufacture) as to whether or not permission or authorisation for any person to receive, or for the delivery of, any spirits without payment of duty is to be granted or withdrawn or as to the conditions subject to which any such permission or authorisation is granted;

e

any decision as to whether or not any goods are to be directed under section 11 (goods not for human consumption) to be treated as not containing spirits or as to the conditions subject to which any goods are directed to be so treated;

f

any decision for the purposes of section 12 (licences to manufacture spirits) as to whether or not a licence under that section is to be granted or as to the suspension or revocation of such a licence or as to the conditions subject to which such a licence is granted;

g

any decision for the purposes of section 15 (distillers’ warehouses)—

i

as to whether or not any approval is to be given to any place as a warehouse or any consent is to be given to any alteration in or addition to any warehouse;

ii

as to the conditions subject to which any approval or consent is given for the purposes of that section; or

iii

for the withdrawal of any such approval or consent;

h

any decision for the purposes of section 18 (licences for rectifiers and compounders)—

i

as to whether or not any person is to be granted a licence as a rectifier or compounder or permission to compound spirits without a licence;

ii

as to the conditions subject to which any such licence or permission is granted; or

iii

as to the revocation or withdrawal of any such licence or permission;

i

any decision for the purposes of section 32 (transfer of spirits in a distiller’s warehouse) as to whether or not any person is to be required to give any security for the payment of any duty or as to the form or amount of, or the conditions of, any such security;

j

any decision as to whether or not drawback is to be allowed in any case under section 42 (drawback on exportation etc.) or as to the conditions subject to which drawback is so allowed;

k

any decision as to whether or not any duty is to be remitted or repaid under section 44 (remission or repayment of duty on beer used for the purposes of research or experiment) or as to the conditions subject to which any duty is so remitted or repaid;

l

any decision for the purposes of section 49A as to whether or not any drawback is to be set against an amount chargeable in respect of excise duty on beer or as to the conditions subject to which any drawback is set against any such amount;

m

any decision as to whether or not any permission for the purposes of section 57 or 58 (mixing of made-wine or wine with spirits) is to be given or withdrawn or as to the conditions subject to which any such permission is given;

n

any decision as to whether or not any permission for the purposes of subsection (1) or (2) of section 69 (restrictions applying to wholesalers and retailers of spirits) is to be given or withdrawn or as to the conditions subject to which any such permission is given;

o

any decision as to whether or not an authorisation or licence for the purposes of section 75 (methylated spirits and denatured alcohol) is to be granted to any person or as to the revocation or suspension of any such authorisation or licence.

2

Any decision which is made under or for the purposes of any regulations under section 13 or 77 of the M102Alcoholic Liquor Duties Act 1979 (regulation of the manufacture of spirits, methylated spirits and denatured alcohol) and is a decision as to whether or not any premises, plant or process is to be, or to continue to be, approved for any purpose or as to the conditions subject to which any premises, plant or process is so approved.

3

Any decision which is made under or for the purposes of section 55, or any regulations under section 56, of the M103Alcoholic Liquor Duties Act 1979 (regulation of the making of wine and made-wine) and is a decision as to whether or not a licence under that section is to be granted or cancelled.

F2824

Any decision which—

a

b

paragraph 10(2) of Schedule 3 to that Act,

and is a decision as to whether or not any person is to be required to give any security for any duty which is or may become due, or as to the form or amount of, or the conditions of, any such security.

F2873

Any decision consisting in the giving of a direction under section 8A(3) of the Betting and Gaming Duties Act 1981 (pool betting duty: direction that bet is not made for community benefit).

The Finance Act 1993

7

Any decision as to whether or not any person is to be or to continue to be registered under section 29 of the M110Finance Act 1993 (registration for the purposes of lottery duty) and any decision which is made under or for the purposes of any regulations under that section and is a decision as to whether or not any person is to be required to give any security for the payment of any lottery duty that may become due, or as to the form or amount of, or the conditions of, any such security.

Chapter III of Part I of this Act

8

1

Any decision made under or for the purposes of any regulations under section 21 of this Act or for the purposes of subsection (2) of that section which is—

a

a decision consisting in the imposition or variation of any requirement as to the records which are to be kept by any person;

b

a decision as to the manner in which any record or information is to be preserved or is to be made available to the Commissioners; or

c

a decision as to the period for which any record or information is to be preserved.

2

Any decision for the purposes of section 23 of this Act which is—

a

a decision consisting in the imposition or variation of any requirement as to the information or documents which are to be furnished or produced by any person, including any decision as to the time or place at which, period within which or form in which anything is to be furnished or produced in pursuance of that section; or

b

a decision as to the removal of any document produced under that section or as to the period for which such a document may be removed.

Chapter IV of Part I of this Act

I219

The following decisions under or for the purposes of Chapter IV of Part I of this Act, that is to say—

a

any decision under regulations made by virtue of section 33 to register, or not to register, any person as an aircraft operator in the register kept under that section or to remove a person so registered from the register;

b

any decision under such regulations to show, or not to show, the name of any person as a fiscal representative in that register or to remove a name from the register;

c

any decision under section 36 to require a person to provide security, including any decision as to the form or amount of the security; F288. . .

d

any decision to give a person a notice under section 37.

F289e

any decision with respect to the amount of any interest specified in an assessment under paragraph 11A of Schedule 6;

F2909AThe Finance Act 2001

Any decision under or for the purposes of Part 2 of Schedule 3 to the Finance Act 2001 (interest).

Interpretation of Schedule

I2210

1

In this Schedule references to any decision as to the conditions subject to which any other decision (whether or not specified in this Schedule) is made include references to—

a

any decision as to whether the other decision should be made subject to or to the imposition of any conditions, limitations, restrictions, prohibitions or other requirements, either from the time when the other decision takes effect or in exercise of any power to impose them subsequently;

b

any decision as to the terms of any conditions, limitations, restrictions, prohibitions or other requirements imposed or applied in relation to that other decision;

c

any decision as to the period for which any licence, approval, permission or other authorisation to which the other decision relates is to have effect or as to any variation of that period; and

d

any decision as to whether any conditions, limitations, restrictions, prohibitions or other requirements so imposed or applied are to be revoked, suspended or cancelled or as to whether or in what respect their terms are at any time to be varied;

but those references do not include references to any decision as to the enforcement of any condition, restriction or prohibition in criminal proceedings, by the seizure or forfeiture of goods or, for purposes connected with any duty of excise, by any other means.

2

References in this Schedule to decisions as to the exercise of any power to require security for the fulfilment of any obligation, the observance of any conditions or the payment of any duty shall be without prejudice to any reference to decisions as to the exercise of any general power in the case in question to impose conditions in connection with the making of any other decision and shall include references to the exercise of any power to require further security for the fulfilment of that obligation, the observance of those conditions or, as the case may be, the payment of that duty.

SCHEDULE 6 Air passenger duty: administration and enforcement

Section 40.

Application of excise enactments

1

The M111Customs and Excise Management Act 1979 shall have effect for the purposes of Chapter IV of Part I of this Act in relation to—

a

any person who is or is liable to be registered,

b

any fiscal representative, and

c

any handling agent where a notice given to him under section 37 of this Act is effective,

as it has effect in relation to revenue traders, but with the modifications mentioned in sub-paragraph (2), and paragraphs 3 and 4, below.

2

That Act shall have effect, in relation to any person to whom sub-paragraph (1) above applies, as if—

a

the reference in section 112(1) (power of entry) to vehicles included aircraft,

b

section 116 (payment of duty) were omitted,

c

in section 117 (execution and distress)—

i

the references to goods liable to any excise duty included tickets, and

ii

the references to the trade in respect of which duty is imposed were to the trade or business by virtue of which sub-paragraph (1) above applies to him, and

d

any power under section 118B(1)(b) to require any person who is or is liable to be registered to produce or cause to be produced any such documents as are referred to in that subsection included power to require his fiscal representative to produce them.

2

Section 118B of that Act shall have effect for the purposes of Chapter IV of Part I of this Act in relation to any person who, in the course of a trade or business carried on by him, issues or arranges for the issue of tickets as if—

a

he were a revenue trader, and

b

the references to services supplied by or to him in the course or furtherance of a business were to services supplied by or to him in the course of issuing or arranging for the issue of tickets.

3

1

A notice may require any person to whom paragraph 1 above applies to furnish, at specified times and in the specified form, any such information to the Commissioners as he could be required by the Commissioners to furnish under subsection (1) of section 118B; and any such requirement shall have effect as a requirement under that subsection.

2

A notice may require any person to whom paragraph 1 or 2 above applies to produce or cause to be produced for inspection by an officer, at specified places and times, any such documents as he could be required by the officer to produce under that subsection; and any such requirement shall have effect as a requirement under that subsection.

3

In this paragraph—

“notice” means a notice published, and not withdrawn, by the Commissioners, and
“specified” means specified in such a notice.

8

Any reference in this paragraph to the production of a document, in the case of information recorded otherwise than in legible form, is to producing a copy of the information in legible form.

9

Any failure by a person having the management of an airport to comply with a requirement imposed under this paragraph shall attract a penalty under section 9 of this Act.

Application of Chapter II

6

An appeal which relates to duty shall not be entertained under section 16 of this Act at any time if any return which the appellant is required by regulations made by virtue of section 38 of this Act to make has not at that time been made.

Interest payable to Commissioners

C327

1

Where an assessment of duty due from any person (“the person assessed”) is made under section 12 of this Act and any of the conditions in sub-paragraph (2) below is fulfilled, the whole of the amount assessed shall, subject to paragraph 8 below, carry interest at F291the rate applicable under section section 197 of the Finance Act 1996 from the reckonable date until payment.

2

The conditions are—

a

that the assessment relates to an accounting period in respect of which either a return has previously been made or an earlier assessment has already been notified to the person assessed, or

2

In sub-paragraph (1) above, “cash security” means such adequate security as enables the Commissioners to place the amount in question on deposit.

3

Interest under this paragraph shall be paid without any deduction of income tax.

Interest payable by the Commissioners

F2929

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

F29310

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

Interest: specified rate

F29411

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

F296 Assessment of interest

Annotations:

Amendments (Textual)

F296

Sch. 6: Cross-heading and para. 11A inserted (1.5.1995 with application as mentioned in s. 16(4) of the amending Act) by 1995 c. 4, s. 16(1)

F29511A

1

Where by virtue of paragraph 7 above duty due from any person for an accounting period carries interest, the Commissioners may assess that person to an amount of interest in accordance with this paragraph.

2

Notice of the assessment shall be given to the person liable for the interest or a representative of his.

3

The amount of the interest shall be calculated by reference to a period ending on a date (“the due date”) no later than the date of the notice.

4

The notice shall specify—

a

the amount of the duty which carries the interest assessed (“the specified duty”);

b

the amount of the interest assessed (“the specified interest”);

c

the due date; and

d

a date by which that amount is required to be paid (“the payment date”).

5

Sub-paragraphs (6) and (7) below apply where the specified duty or any part of it is unpaid on the date of the notice.

6

If the unpaid amount or any part of it is paid by the payment date, the payment shall be treated for the purposes of paragraph 7 above as made on the due date.

7

To the extent that the unpaid amount is not paid by the payment date, an assessment may be made under this paragraph in respect of any interest on the unpaid amount which accrues after the due date.

8

For the purposes of sub-paragraphs (6) and (7) above, a payment—

a

which purports to be a payment of the unpaid amount or any part of it, but

b

which is insufficient to discharge both the liability to pay the unpaid amount and the liability to pay the specified interest,

shall be treated as made in discharge (or partial discharge) of the liability to pay the specified interest before it is treated as discharging to any extent the liability to pay the unpaid amount.

9

A notice of interest assessed under this paragraph may be combined in one document with notification of an assessment under section 12 of this Act which relates to the specified duty.

10

A notice which is so combined must comply with the requirements of this paragraph which relate to a notice which is not so combined.

11

The specified interest shall be recoverable as if it were duty due from the person assessed to that interest.

12

For the purposes of this paragraph a person is a representative of another if—

a

he is that other’s personal representative;

b

he is that other’s trustee in bankruptcy or is a receiver or liquidator appointed in relation to that other or in relation to any of his property; or

c

he is a person acting in some other representative capacity in relation to that other.

Evidence by certificate

12

1

A certificate of the Commissioners—

a

that a person was or was not, on any date specified in the certificate, registered or liable to be registered under section 33 of this Act,

b

that the name of any person was or was not, on any date so specified, shown as the fiscal representative of any person in the register kept under that section,

c

that any aircraft was or was not, on any date so specified, a chargeable aircraft,

d

that any return required to be made under regulations made by virtue of section 38 of this Act had not, on any date so specified, been made, or

e

that any duty shown as due in such a return, or in an assessment under section 12 of this Act, had not, on any date so specified, been paid,

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

2

A photograph of any document furnished to the Commissioners for the purposes of Chapter IV of Part I of this Act and certified by them to be such a photograph shall be 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 sub-paragraph (1) or (2) above shall be taken to be such a certificate until the contrary is proved.

Preferential debt

13

1

In Schedule 6 to the M113Insolvency Act 1986 (categories of preferential debts) in Category 2 (debts due to Customs and Excise) after paragraph 5B there shall be inserted—

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

2

In Schedule 3 to the M114Bankruptcy (Scotland) Act 1985 (list of preferred debts) at the end of paragraph 2 (debts due to Customs and Excise) there shall be added—

6
Any amount which is due by way of air passenger duty from the debtor at the relevant date and which became due within the period of six months next before that date.

3

In Schedule 4 to the M115Insolvency (Northern Ireland) Order 1989 (categories of preferential debts) in Category 2 (debts due to Customs and Excise) after paragraph 5B there shall be inserted—

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

F299SCHEDULE 6A Premiums liable to tax at the higher rate

Section 51A.

Annotations:

Amendments (Textual)

F299

Sch. 6A inserted (19.3.1997 with effect as mentioned in s. 24 of the amending Act) by 1997 c. 16, s. 22(3), Sch. 4

Part I Interpretation

1

In this Schedule—

“insurance-related service” means any service which is related to, or connected with, insurance;
“supply” includes all forms of supply; and “supplier” shall be construed accordingly.

2

For the purposes of this Schedule, any question whether a person is connected with another shall be determined in accordance with section 839 of the Taxes Act 1988.

Part IIDescriptions of premium

Insurance relating to motor cars or motor cycles

2

1

A premium under a taxable insurance contract relating to a motor car or motor cycle falls within this paragraph if—

a

the contract is arranged through a person falling within sub-paragraph (2) below, or

b

the insurer under the contract is a person falling within that sub-paragraph,

unless the insurance is provided to the insured free of charge.

2

A person falls within this sub-paragraph if—

a

he is a supplier of motor cars or motor cycles;

b

he is connected with a supplier of motor cars or motor cycles; or

c

he pays—

i

the whole or any part of the premium received under the taxable insurance contract, or

ii

a fee connected with the arranging of that contract,

to a supplier of motor cars or motor cycles or to a person who is connected with a supplier of motor cars or motor cycles.

3

Where a taxable insurance contract relating to a motor car or motor cycle is arranged through a person who is connected with a supplier of motor cars or motor cycles, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to a motor car or motor cycle supplied by a supplier of motor cars or motor cycles with whom that person is connected.

4

Where the insurer under a taxable insurance contract relating to a motor car or motor cycle is connected with a supplier of motor cars or motor cycles, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to a motor car or motor cycle supplied by a supplier of motor cars or motor cycles with whom the insurer is connected.

5

For the purposes of this paragraph, the cases where insurance is provided to the insured free of charge are those cases where no charge (whether by way of premium or otherwise) is made—

a

in respect of the taxable insurance contract, or

b

at or about the time when the taxable insurance contract is made and in connection with that contract, in respect of any insurance-related service,

by any person falling within sub-paragraph (2) above to any person who is or becomes the insured (or one of the insured) under the contract or to any person who acts, otherwise than in the course of a business, for or on behalf of such a person.

6

In this paragraph—

“motor car” and “motor cycle” have the meaning given—
1. a
  by section 185(1) of the M116Road Traffic Act 1988; or
2. b
  in Northern Ireland, by Article 3(1) of the M117Road Traffic (Northern Ireland) Order 1995;
“supplier” does not include an insurer who supplies a car or motor cycle as a means of discharging liabilities arising by reason of a claim under an insurance contract.

Insurance relating to domestic appliances etc.

3

1

A premium under a taxable insurance contract relating to relevant goods falls within this paragraph if—

a

the contract is arranged through a person falling within sub-paragraph (2) below, or

b

the insurer under the contract is a person falling within that sub-paragraph,

unless the insurance is provided to the insured free of charge.

2

A person falls within this sub-paragraph if—

a

he is a supplier of relevant goods;

b

he is connected with a supplier of relevant goods; or

c

he pays—

i

the whole or any part of the premium received under the taxable insurance contract, or

ii

a fee connected with the arranging of that contract,

to a supplier of relevant goods or to a person who is connected with a supplier of relevant goods.

3

Where a taxable insurance contract relating to relevant goods is arranged through a person who is connected with a supplier of relevant goods, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to relevant goods supplied by a supplier of relevant goods with whom that person is connected.

4

Where the insurer under a taxable insurance contract relating to relevant goods is connected with a supplier of relevant goods, the premium does not fall within this paragraph by virtue only of sub-paragraph (2)(b) above except to the extent that the premium is attributable to cover for a risk which relates to relevant goods supplied by a supplier of relevant goods with whom the insurer is connected.

5

For the purposes of this paragraph, the cases where insurance is provided to the insured free of charge are those cases where no charge (whether by way of premium or otherwise) is made—

a

in respect of the taxable insurance contract, or

b

at or about the time when the taxable insurance contract is made and in connection with that contract, in respect of any insurance-related service,

6

In this paragraph—

“relevant goods” means any electrical or mechanical appliance of a kind—
1. a
  which is ordinarily used in or about the home; or
2. b
  which is ordinarily owned by private individuals and used by them for the purposes of leisure, amusement or entertainment;
“supplier” does not include an insurer who supplies relevant goods as a means of discharging liabilities arising by reason of a claim under an insurance contract.

7

In sub-paragraph (6) above—

“appliance” includes any device, equipment or apparatus;
“the home” includes any private garden and any private garage or private workshop appurtenant to a dwelling.

F298 Travel insurance

Annotations:

Amendments (Textual)

F298

Sch. 6A para. 4 and the preceding cross-heading substituted (31.7.1998 with effect as mentioned in s. 146(3)(4) of the amending Act) by 1998 c. 36, s. 146(2) (with Sch. 18 para. 6(3))

F2974

1

A premium under a taxable insurance contract falls within this paragraph if it is in respect of the provision of cover against travel risks for a person travelling.

2

Where—

a

a contract of insurance provides cover against both travel risks and risks other than travel risks,

b

the premium attributable to the cover against travel risks does not exceed 10 per cent. of the total premium payable under the contract, and

c

the contract does not provide cover for a person travelling against travel risks falling within two or more of the paragraphs of sub-paragraph (3) below,

the premium, so far as attributable to the cover against travel risks, does not fall within this paragraph by virtue of sub-paragraph (1) above.

3

The travel risks mentioned in sub-paragraph (2)(c) above are—

a

liability in respect of cancellation of travel or of accommodation arranged in connection with travel;

b

delayed or missed departure;

c

curtailment of travel or of the use of accommodation arranged in connection with travel;

d

loss or delayed arrival of baggage;

e

personal injury or illness or expenses of repatriation.

4

A premium does not fall within this paragraph by virtue of sub-paragraph (1) above if it is payable under a taxable insurance contract relating to a motor vehicle and is attributable to cover of the kind generally known as—

a

fully comprehensive,

b

third party, fire and theft,

c

third party, or

d

roadside assistance,

or if it is payable under a taxable insurance contract relating to a caravan, boat or aircraft and is attributable to cover of a description broadly corresponding to any of those set out in paragraphs (a) to (d) above (so far as applicable) provided in respect of the caravan, boat or aircraft for a period of at least one month for the person travelling.

5

In this paragraph—

“person travelling” includes a person intending to travel;
“travel risks” means risks associated with, or related to, travel or intended travel—
1. a
  outside the United Kingdom,
2. b
  by air within the United Kingdom,
3. c
  within the United Kingdom in connection with travel falling within paragraph (a) or (b) above, or
4. d
  which involves absence from home for at least one night,
or risks to which a person travelling may be exposed during, or at any place at which he may be in the course of, any such travel.

C39SCHEDULE 7 Insurance premium tax

Section 64.

Annotations:

Modifications etc. (not altering text)

C39

Sch. 7 extended (19.3.1997) by 1997 c. 16, s. 50, Sch. 5 Pt. I paras. 1, 4(2)

Part I Information

Records

Every person who—

a

is concerned in a business that is not F304an insurance business, and

b

has been involved in the entry into any F304contract of insurance providing cover for any matter associated with the business,

shall upon demand made by an authorised person produce or cause to be produced for inspection by that person any documents relating to that contract.

4

Where, by virtue of any of sub-paragraphs (1) to (3) above, an authorised person has power to require the production of any documents from any person, he shall have the like power to require production of the documents concerned from any other person who appears to the authorised person to be in possession of them; but where any such other person claims a lien on any document produced by him, the production shall be without prejudice to the lien.

5

The documents mentioned in sub-paragraphs (1) to (4) above shall be produced—

a

at the principal place of business of the person on whom the demand is made or at such other place as the authorised person may reasonably require, and

b

at such time as the authorised person may reasonably require.

6

An authorised person may take copies of, or make extracts from, any document produced under any of sub-paragraphs (1) to (4) above.

7

If it appears to him to be necessary to do so, an authorised person may, at a reasonable time and for a reasonable period, remove any document produced under any of sub-paragraphs (1) to (4) above and shall, on request, provide a receipt for any document so removed; and where a lien is claimed on a document produced under sub-paragraph (4) above the removal of the document under this sub-paragraph shall not be regarded as breaking the lien.

8

Where a document removed by an authorised person under sub-paragraph (7) above is reasonably required for the proper conduct of a business he shall, as soon as practicable, provide a copy of the document, free of charge, to the person by whom it was produced or caused to be produced.

9

Where any documents removed under the powers conferred by this paragraph are lost or damaged the Commissioners shall be liable to compensate their owner for any expenses reasonably incurred by him in replacing or repairing the documents.

Part II Powers

Entry, arrest, etc.

4

1

For the purpose of exercising any powers under this Part of this Act an authorised person may at any reasonable time enter premises used in connection with the carrying on of a business.

2

In a case where—

a

a justice of the peace is satisfied on information on oath that there is reasonable ground for suspecting that a fraud offence which appears to be of a serious nature is being, has been or is about to be committed on any premises or that evidence of the commission of such an offence is to be found there, or

b

in Scotland a justice, within the meaning of F305section 308 of the Criminal Procedure (Scotland) Act 1995, is satisfied by evidence on oath as mentioned in paragraph (a) above,

he may issue a warrant in writing authorising any authorised person to enter those premises, if necessary by force, at any time within one month from the time of the issue of the warrant and search them.

C333

A person who enters the premises under the authority of the warrant may—

a

take with him such other persons as appear to him to be necessary;

b

seize and remove any documents or other things whatsoever found on the premises which he has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of a fraud offence which appears to him to be of a serious nature;

c

search or cause to be searched any person found on the premises whom he has reasonable cause to believe to be in possession of any such documents or other things;

but no woman or girl shall be searched except by a woman.

4

The powers conferred by a warrant under this paragraph shall not be exercisable—

a

by more than such number of authorised persons as may be specified in the warrant,

b

outside such times of day as may be so specified, or

c

if the warrant so provides, otherwise than in the presence of a constable in uniform.

5

An authorised person seeking to exercise the powers conferred by a warrant under this paragraph or, if there is more than one such authorised person, that one of them who is in charge of the search shall provide a copy of the warrant endorsed with his name as follows—

a

if the occupier of the premises concerned is present at the time the search is to begin, the copy shall be supplied to the occupier;

b

if at that time the occupier is not present but a person who appears to the authorised person to be in charge of the premises is present, the copy shall be supplied to that person;

c

if neither paragraph (a) nor paragraph (b) above applies, the copy shall be left in a prominent place on the premises.

6

Where an authorised person has reasonable grounds for suspecting that a fraud offence has been committed he may arrest anyone whom he has reasonable grounds for suspecting to be guilty of the offence.

7

In this paragraph “a fraud offence” means an offence under any provision of paragraph 9(1) to (5) below.

F307 Order for access to recorded information etc.

Annotations:

Amendments (Textual)

F307

Sch. 7 para. 4A and the preceding cross-heading inserted (1.5.1995) by 1995 c. 4, s. 34, Sch. 5 para. 8(1)

F3064A

1

Where, on an application by an authorised person, a justice of the peace or, in Scotland, a justice (within the meaning of section 462 of the M123Criminal Procedure (Scotland) Act 1975) is satisfied that there are reasonable grounds for believing—

a

that an offence in connection with tax is being, has been or is about to be committed, and

b

that any recorded information (including any document of any nature whatsoever) which may be required as evidence for the purpose of any proceedings in respect of such an offence is in the possession of any person,

he may make an order under this paragraph.

2

An order under this paragraph is an order that the person who appears to the justice to be in possession of the recorded information to which the application relates shall—

a

give an authorised person access to it, and

b

permit an authorised person to remove and take away any of it which he reasonably considers necessary,

not later than the end of the period of 7 days beginning on the date of the order or the end of such longer period as the order may specify.

3

The reference in sub-paragraph (2)(a) above to giving an authorised person access to the recorded information to which the application relates includes a reference to permitting the authorised person to take copies of it or to make extracts from it.

4

Where the recorded information consists of information contained in a computer, an order under this paragraph shall have effect as an order to produce the information in a form in which it is visible and legible and, if the authorised person wishes to remove it, in a form in which it can be removed.

5

This paragraph is without prejudice to paragraphs 3 and 4 above.

Removal of documents etc.

b

photograph or copy it, or cause it to be photographed or copied.

5

Subject to sub-paragraph (7) below, where anything is photographed or copied under sub-paragraph (4)(b) above the officer shall supply the photograph or copy, or cause it to be supplied, to the person who made the request.

6

The photograph or copy shall be supplied within a reasonable time from the making of the request.

7

There is no duty under this paragraph to allow access to, or to supply a photograph or copy of, anything if the officer in overall charge of the investigation for the purposes of which it was removed has reasonable grounds for believing that to do so would prejudice—

a

that investigation,

b

the investigation of an offence other than the offence for the purposes of the investigation of which the thing was removed, or

c

any criminal proceedings which may be brought as a result of the investigation of which he is in charge or any such investigation as is mentioned in paragraph (b) above.

8

Any reference in this paragraph to the officer in overall charge of the investigation is a reference to the person whose name and address are endorsed on the warrant concerned as being the officer so in charge.

6

1

Where, on an application made as mentioned in sub-paragraph (2) below, the appropriate judicial authority is satisfied that a person has failed to comply with a requirement imposed by paragraph 5 above, the authority may order that person to comply with the requirement within such time and in such manner as may be specified in the order.

2

An application under sub-paragraph (1) above shall be made—

a

in the case of a failure to comply with any of the requirements imposed by sub-paragraphs (1) and (2) of paragraph 5 above, by the occupier of the premises from which the thing in question was removed or by the person who had custody or control of it immediately before it was so removed, and

b

in any other case, by the person who had such custody or control.

3

In this paragraph “the appropriate judicial authority” means—

a

in England and Wales, a magistrates’ court;

b

in Scotland, the sheriff;

c

in Northern Ireland, a court of summary jurisdiction, as defined in Article 2(2)(a) of the M124Magistrates’ Court (Northern Ireland) Order 1981.

4

In England and Wales and Northern Ireland, an application for an order under this paragraph shall be made by way of complaint; and sections 21 and 42(2) of the M125Interpretation Act (Northern Ireland) 1954 shall apply as if any reference in those provisions to any enactment included a reference to this paragraph.

Part III Recovery

Recovery of tax etc.

7

1

Tax due from any person shall be recoverable as a debt due to the Crown.

2

In the M126Insolvency Act 1986, in section 386(1) (preferential debts) the words “ insurance premium tax, ” shall be inserted after “VAT,” and in Schedule 6 (categories of preferential debts) the following paragraph shall be inserted after paragraph 3—

3A
Any insurance premium tax which is referable to the period of 6 months next before the relevant date (which period is referred to below as “the 6-month period”).
For the purposes of this paragraph—
a
where the whole of the accounting period to which any insurance premium tax is attributable falls within the 6-month period, the whole amount of that tax is referable to that period; and
b
in any other case the amount of any insurance premium tax which is referable to the 6-month period is the proportion of the tax which is equal to such proportion (if any) of the accounting period in question as falls within the 6-month period;
and references here to accounting periods shall be construed in accordance with Part III of the Finance Act 1994.

3

In the M127Bankruptcy (Scotland) Act 1985, Schedule 3 (preferred debts) shall be amended as mentioned in sub-paragraphs (4) and (5) below.

4

In paragraph 2 the following sub-paragraph shall be inserted after sub-paragraph (1)—

1A
Any insurance premium tax which is referable to the period of six months next before the relevant date.

5

The following shall be inserted after paragraph 8—

Periods to which insurance premium tax referable
8A
1
For the purpose of paragraph 2(1A) of Part I of this Schedule—
a
where the whole of the accounting period to which any insurance premium tax is attributable falls within the period of six months next before the relevant date (“the relevant period”), the whole amount of that tax shall be referable to the relevant period; and
b
in any other case the amount of any insurance premium tax which shall be referable to the relevant period shall be the proportion of the tax which is equal to such proportion (if any) of the accounting period in question as falls within the relevant period.
2
In sub-paragraph (1) above “accounting period” shall be construed in accordance with Part III of the Finance Act 1994.

6

In the M128Insolvency (Northern Ireland) Order 1989, in Article 346(1) (preferential debts) the words “ insurance premium tax ” shall be inserted after “VAT” and in Schedule 4 (categories of preferential debts) the following paragraph shall be inserted after paragraph 3—

3A
Any insurance premium tax which is referable to the period of 6 months next before the relevant date (which period is referred to below as “the 6-month period”).
For the purposes of this paragraph—
a
where the whole of the accounting period to which any insurance premium tax is attributable falls within the 6-month period, the whole amount of that tax is referable to that period; and
b
in any other case the amount of any insurance premium tax which is referable to the 6-month period is the proportion of the tax which is equal to such proportion (if any) of the accounting period in question as falls within the 6-month period;
and references here to accounting periods shall be construed in accordance with Part III of the Finance Act 1994.

F3097

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

F3098

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

F3099

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

F30910

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

F30911

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

F30912

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

Recovery of overpaid tax

8

1

Where a person has paid an amount to the Commissioners by way of tax which was not tax due to them, they shall be liable to repay the amount to him.

2

The Commissioners shall only be liable to repay an amount under this paragraph on a claim being made for the purpose.

C34 C353

It shall be a defence, in relation to a claim under this paragraph, that repayment of an amount would unjustly enrich the claimant.

F3104

The Commissioners shall not be liable, on a claim made under this paragraph, to repay any amount paid to them more than three years before the making of the claim.

6

A claim under this paragraph shall be made in such form and manner and shall be supported by such documentary evidence as may be prescribed by regulations.

7

Except as provided by this paragraph, the Commissioners shall not be liable to repay an amount paid to them by way of tax by virtue of the fact that it was not tax due to them.

Part IV Penalties

Criminal offences

9

1

A person is guilty of an offence if—

a

being a registrable person, he is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of tax by him or another registrable person, or

b

not being a registrable person, he is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of tax by a registrable person.

2

Any reference in sub-paragraph (1) above to the evasion of tax includes a reference to the obtaining of a payment under regulations under section 55(3)(c) or (d) or (f) of this Act.

3

A person is guilty of an offence if with the requisite intent—

a

he produces, furnishes or sends, or causes to be produced, furnished or sent, for the purposes of this Part of this Act any document which is false in a material particular, or

b

he otherwise makes use for those purposes of such a document;

and the requisite intent is intent to deceive or to secure that a machine will respond to the document as if it were a true document.

4

A person is guilty of an offence if in furnishing any information for the purposes of this Part of this Act he makes a statement which he knows to be false in a material particular or recklessly makes a statement which is false in a material particular.

5

A person is guilty of an offence by virtue of this sub-paragraph if his conduct during any specified period must have involved the commission by him of one or more offences under the preceding provisions of this paragraph; and the preceding provisions of this sub-paragraph apply whether or not the particulars of that offence or those offences are known.

6

A person is guilty of an offence if—

a

he enters into a taxable insurance contract, or

b

he makes arrangements for other persons to enter into a taxable insurance contract,

In this paragraph—

a

“credit” means credit for which provision is made by regulations under section 55 of this Act;

b

“the gross amount of tax” means the total amount of tax due before taking into account any deduction for which provision is made by regulations under section 55(3) of this Act.

Criminal proceedings etc.

11

Sections 145 to 155 of the M129Customs and Excise Management Act 1979 (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to offences under paragraph 9 above and penalties imposed under paragraph 10 above as they apply in relation to offences and penalties under the customs and excise Acts as defined in that Act.

Civil penalties

12

1

In a case where—

a

for the purpose of evading tax, a registrable person does any act or omits to take any action, and

b

his conduct involves dishonesty (whether or not it is such as to give rise to criminal liability),

he shall be liable to a penalty equal to the amount of tax evaded, or (as the case may be) sought to be evaded, by his conduct; but this is subject to sub-paragraph (7) below.

2

The reference in sub-paragraph (1)(a) above to evading tax includes a reference to obtaining a payment under regulations under section 55(3)(c) or (d) or (f) of this Act in circumstances where the person concerned is not entitled to the sum.

3

The reference in sub-paragraph (1) above to the amount of tax evaded or sought to be evaded is a reference to the aggregate of—

a

the amount (if any) falsely claimed by way of credit, and

b

the amount (if any) by which the gross amount of tax was falsely understated.

4

In this paragraph—

a

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.

14

1

A person who fails to comply with section 53(2) F311or 53AA(3) of this Act shall be liable to a penalty equal to 5 per cent. of the relevant tax or, if it is greater or the circumstances are such that there is no relevant tax, to a penalty of £250; but this is subject to sub-paragraphs (3) and (4) below.

2

In sub-paragraph (1) above “relevant tax” means the tax (if any) for which the person concerned is liable for the period which—

a

begins on the date with effect from which he is, in accordance with section 53 F312or, as the case may be, section 53AA of this Act, required to be registered, and

b

ends on the date on which the Commissioners received notification of his liability to be registered.

shall, in any other case, be taken to be such tax as has been assessed for that period and notified to him under section 56(1) of this Act.

5

A failure falling within sub-paragraph (1) or (3) above shall not give rise to liability to a penalty under this paragraph if the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the failure.

6

Where, by reason of a failure falling within sub-paragraph (1) or (3) above—

a

a person is convicted of an offence (whether under this Part of this Act or otherwise), or

b

a person is assessed to a penalty under paragraph 12 above,

that failure shall not also give rise to liability to a penalty under this paragraph.

7

If it appears to the Treasury that there has been a change in the value of money since the passing of this Act or, as the case may be, the last occasion when the power conferred by this sub-paragraph was exercised, they may by order substitute for the sums for the time being specified in sub-paragraphs (2) and (3) above such other sums as appear to them to be justified by the change.

8

An order under sub-paragraph (7) above shall not apply in relation to a failure which began before the date on which the order comes into force.

16

1

This paragraph applies where—

a

by virtue of regulations made under section 65 of this Act a liability notice (within the meaning of that section) is served on an insured person,

b

by virtue of such regulations that person is liable to pay an amount of tax which has been assessed in accordance with the regulations, and

c

that tax is not paid within the time required by the regulations;

and sub-paragraphs (2) and (3) below shall have effect subject to sub-paragraphs (4) and (5) below and paragraph 25(7) below.

2

The person shall be liable to a penalty equal to 5 per cent. of the tax assessed as mentioned in sub-paragraph (1) above or, if it is greater, to a penalty of £250.

3

The person—

a

shall be liable, in addition to an initial penalty under sub-paragraph (2) above, to a penalty of £20 for every relevant day when the tax is unpaid, but

b

shall not in respect of the continuation of the non-payment of the tax be liable to further penalties under sub-paragraph (2) above;

and a relevant day is any day falling after the time within which the tax is required to be paid.

4

A person shall not be liable to a penalty by virtue of this paragraph if he satisfies the Commissioners or, on appeal, an appeal tribunal that he took all reasonable steps to ensure that the tax mentioned in sub-paragraph (1)(b) above was paid within the time required by the regulations.

5

Where, by reason of a failure to pay tax, a person is convicted of an offence (whether under this Part of this Act or otherwise), that failure shall not also give rise to liability to a penalty under this paragraph.

6

If it appears to the Treasury that there has been a change in the value of money since the passing of this Act or, as the case may be, the last occasion when the power conferred by this sub-paragraph was exercised, they may by order substitute for the sums for the time being specified in sub-paragraphs (2) and (3) above such other sums as appear to them to be justified by the change.

7

An order under sub-paragraph (6) above shall not apply in relation to any failure to pay tax that was required to be paid before the date on which the order comes into force.

17

1

If a person fails to comply with—

a

section 53(3) of this Act,

b

any provision of paragraph 2 or 3 above, or

c

a requirement imposed by any regulations made under this Part of this Act, other than a requirement falling within sub-paragraph (2) below,

he shall be liable to a penalty of £250; but this is subject to sub-paragraphs (3) and (4) below.

2

A requirement falls within this sub-paragraph if it is—

a

a requirement imposed by regulations made under section 54 of this Act to pay the tax due in respect of any period within the time required by the regulations,

b

a requirement imposed by regulations made under that section to furnish a return in respect of any period within the time required by the regulations,

c

a requirement imposed by regulations made under section 65 of this Act to pay tax within the time required by the regulations, or

d

a requirement specified for the purposes of this sub-paragraph by regulations.

3

A failure falling within sub-paragraph (1) above shall not give rise to liability to a penalty under this paragraph if the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the failure.

4

Where by reason of a failure falling within sub-paragraph (1) above—

a

a person is convicted of an offence (whether under this Part of this Act or otherwise), or

b

a person is assessed to a penalty under paragraph 12 above,

that failure shall not also give rise to liability to a penalty under this paragraph.

5

If it appears to the Treasury that there has been a change in the value of money since the passing of this Act or, as the case may be, the last occasion when the power conferred by this sub-paragraph was exercised, they may by order substitute for the sum for the time being specified in sub-paragraph (1) above such other sum as appears to them to be justified by the change.

6

An order under sub-paragraph (5) above shall not apply in relation to a failure which began before the date on which the order comes into force.

18

1

A person who—

a

by virtue of subsection (3), (7) or (9) of section 57 of this Act becomes subject to a duty to take action as mentioned in subsection (4) of that section, and

b

fails to take action as so mentioned,

shall be liable to a penalty of £10,000; but this is subject to sub-paragraph (2) below.

2

3

If it appears to the Treasury that there has been a change in the value of money since the passing of this Act or, as the case may be, the last occasion when the power conferred by this sub-paragraph was exercised, they may by order substitute for the sum for the time being specified in sub-paragraph (1) above such other sum as appears to them to be justified by the change.

4

An order under sub-paragraph (3) above shall not apply in relation to a case where the duty mentioned in sub-paragraph (1) above was imposed before the date on which the order comes into force.

C3722

1

Where, due to an error on the part of the Commissioners, a person—

a

has paid to them by way of tax an amount which was not tax due and which they are in consequence liable to repay to him,

b

has failed to claim payment of an amount to the payment of which he was entitled in pursuance of provision made under section 55(3)(c), (d) or (f) of this Act, or

c

i

at or before the time of the making of a claim, or

ii

subsequently in response to a request for information by the Commissioners,

with all the information required by them to enable the existence and amount of the claimant’s entitlement to a payment or repayment, and to interest on that payment or repayment, to be determined; and

c

the making, as part of or in association with either—

i

the claim for interest, or

ii

any claim for the payment or repayment of the amount on which interest is claimed,

of a claim to anything to which the claimant was not entitled.

6

In determining for the purposes of sub-paragraph (5A) above whether any period of delay is referable to a failure by any person to provide information in response to a request by the Commissioners, there shall be taken to be so referable, except so far as may be provided for by regulations, any period which—

a

begins with the date on which the Commissioners require that person to provide information which they reasonably consider relevant to the matter to be determined; and

b

ends with the earliest date on which it would be reasonable for the Commissioners to conclude—

i

that they have received a complete answer to their request for information;

ii

that they have received all that they need in answer to that request; or

iii

that it is unnecessary for them to be provided with any information in answer to that request.

8

The Commissioners shall only be liable to pay interest under this paragraph on a claim made in writing for that purpose.

F3199

A claim under this paragraph shall not be made more than three years after the end of the applicable period to which it relates.

F32010

References in this paragraph to the authorisation by the Commissioners of the payment of any amount include references to the discharge by way of set-off of the Commissioners’ liability to pay that amount.

23

1

In a case where—

a

any interest is payable by the Commissioners to a person on a sum due to him under this Part of this Act, and

b

he is a person to whom regulations under section 55 of this Act apply,

the interest shall be treated as an amount to which he is entitled by way of credit in pursuance of the regulations.

2

Sub-paragraph (1) above shall be disregarded for the purpose of determining a person’s entitlement to interest or the amount of interest to which he is entitled.

Part VI Miscellaneous

Security for tax

24

Where it appears to the Commissioners requisite to do so for the protection of the revenue they may require a registrable person, as a condition of his entering into taxable insurance contracts, to give security (or further security) of such amount and in such manner as they may determine for the payment of any tax which is or may become due from him.

Assessments to penalties etc.

25

1

Where a person is liable—

a

to a penalty under any of paragraphs 12 to 19 above, or

b

c

the amount referred to in paragraph 21(1) above is paid,

it shall be treated for the purposes of paragraph 15, 16 or 21 above (as the case may be) as remedied or paid on the date specified as mentioned in sub-paragraph (6)(a) above.

8

Where an amount has been assessed and notified to any person under this paragraph it shall be recoverable as if it were tax due from him unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.

9

Subsection (8) of section 56 of this Act shall apply for the purposes of this paragraph as it applies for the purposes of that section.

Assessments: time limits

b

in circumstances giving rise to liability to a penalty under paragraph 14 above,

an assessment may be made as if, in sub-paragraph (1) above, each reference to F321three years were a reference to twenty years.

Supplementary assessments

27

If, otherwise than in circumstances falling within subsection (5)(b) of section 56 of this Act, it appears to the Commissioners that the amount which ought to have been assessed in an assessment under any provision of that section or under paragraph 25 above exceeds the amount which was so assessed, then—

a

under the like provision as that assessment was made, and

b

on or before the last day on which that assessment could have been made,

the Commissioners may make a supplementary assessment of the amount of the excess and shall notify the person concerned accordingly.

Disclosure of information

4

References in the preceding provisions of this paragraph to an authorised officer of the Secretary of State are to any person who has been designated by the Secretary of State as a person to and by whom information may be disclosed under this paragraph.

5

The Secretary of State shall notify the Commissioners in writing of the name of any person designated under sub-paragraph (4) above.

F32228A

1

Notwithstanding any obligation not to disclose information that would otherwise apply, the Commissioners may disclose information—

a

to the Treasury, or

b

to an authorised officer of the Treasury,

for the purpose of assisting the Treasury in the performance of their duties.

2

Notwithstanding any such obligation as is mentioned in sub-paragraph (1) above—

a

the Treasury, or

b

an authorised officer of the Treasury,

may disclose information to the Commissioners or to an authorised officer of the Commissioners for the purpose of assisting the Commissioners in the performance of duties in relation to tax.

3

Information that has been disclosed to a person by virtue of this paragraph shall not be disclosed by him except—

a

to another person to whom (instead of him) disclosure could by virtue of this paragraph have been made, or

b

for the purpose of any proceedings connected with the operation of any provision of, or made under, any enactment in relation to insurance or to tax.

4

References in the preceding provisions of this paragraph to an authorised officer of the Treasury are to any person who has been designated by the Treasury as a person to and by whom information may be disclosed under this paragraph.

5

The Treasury shall notify the Commissioners in writing of the name of any person designated under sub-paragraph (4) above.

Evidence by certificate

29

1

A certificate of the Commissioners—

a

that a person was or was not at any time registered under section 53 of this Act,

b

that any return required by regulations under section 54 of this Act has not been made or had not been made at any time, or

c

that any tax shown as due in a return made in pursuance of regulations made under section 54 of this Act, or in an assessment made under section 56 of this Act, has not been paid,

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

2

Any document purporting to be a certificate under sub-paragraph (1) above shall be taken to be such a certificate until the contrary is proved.

Service of notices etc.

30

Any notice, notification or requirement to be served on, given to or made of any person for the purposes of this Part of this Act may be served, given or made by sending it by post in a letter addressed to that person or his tax representative at the last or usual residence or place of business of that person or representative.

No deduction of penalties or interest

31

In section 827 of the Taxes Act 1988 (no deduction for penalties etc.) the following subsection shall be inserted after subsection (1A)—

1B
Where a person is liable to make a payment by way of—
a
penalty under any of paragraphs 12 to 19 of Schedule 7 to the Finance Act 1994 (insurance premium tax), or
b
interest under paragraph 21 of that Schedule,
the payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

Destination of receipts

32

All money and securities for money collected or received for or on account of the tax shall—

a

if collected or received in Great Britain, be placed to the general account of the Commissioners kept at the Bank of England under section 17 of the M131Customs and Excise Management Act 1979;

b

if collected or received in Northern Ireland, be paid into the Consolidated Fund of the United Kingdom in such manner as the Treasury may direct.

Provisional collection of tax

33

In section 1(1) of the M132Provisional Collection of Taxes Act 1968 after “value added tax,” there shall be inserted “ insurance premium tax, ”.

34

1

In a case where—

a

by virtue of a resolution having effect under the Provisional Collection of Taxes Act 1968 tax has been paid at a rate specified in the resolution, and

b

by virtue of section 1(6) or (7) or 5(3) of that Act any of that tax is repayable in consequence of the restoration in relation to the premium concerned of a lower rate,

the amount repayable shall be the difference between the tax paid by reference to the actual chargeable amount at the rate specified in the resolution and the tax that would have been payable by reference to the actual chargeable amount at the lower rate.

2

In sub-paragraph (1) above the “actual chargeable amount” means the chargeable amount by reference to which tax was paid.

3

In a case where—

a

by virtue of a resolution having effect under the M133Provisional Collection of Taxes Act 1968 tax is chargeable at a rate specified in the resolution, but

b

before the tax is paid it ceases to be chargeable at that rate in consequence of the restoration in relation to the premium concerned of a lower rate,

the tax chargeable at the lower rate shall be charged by reference to the same chargeable amount as that by reference to which tax would have been chargeable at the rate specified in the resolution.

Adjustment of contracts

35

1

Where, after the making of a contract of insurance and before a given premium is received by the insurer under the contract, there is a change in the tax chargeable on the receipt of the premium, then, unless the contract otherwise provided, there shall be added to or deducted from the amount payable as the premium an amount equal to the difference between—

a

the tax chargeable had the change not been made, and

b

the tax in fact chargeable.

2

References in sub-paragraph (1) above to a change in the tax chargeable include references to a change to or from no tax being chargeable.

3

Where this paragraph applies, the amount of the premium shall not be treated as altered for the purposes of calculating tax.

F344SCHEDULE 7A INSURANCE PREMIUM TAX: CONTRACTS THAT ARE NOT TAXABLE

Annotations:

Amendments (Textual)

F344

Sch. 7A inserted (1.10.1994) by S.I. 1994/1698, art. 5

PART I DESCRIPTIONS OF CONTRACT

Contracts of reinsurance

1

A contract falls within this paragraph if it is a contract of reinsurance.

Contracts constituting long term business

2

1

F323Subject to sub-paragraph (3) below, a contract falls within this paragraph F324if it is exclusively a contract of long-term insurance.

F3252

In deciding whether a contract is exclusively a contract of long-term insurance, as is mentioned in sub-paragraph (1) above, where—

a

the contract includes cover for risks relating to accident or sickness;

b

the contract contains related and subsidiary provisions such that it might also be regarded as a contract of general insurance, but is treated as a contract of long-term insurance for the purposes of any relevant order made under section 22 of the Financial Services and Markets Act 2000; and

c

the contract was not entered into after 30th November 1993,

the Department of Health and Social Services for Northern Ireland; or

c

the Ministry of Defence,

on behalf of the lessee in respect of the disability living allowance or mobility supplement to which the lessee is entitled.

4

For the purposes of this paragraph—

a

“handicapped” means chronically sick or disabled;

b

“disability living allowance” means a disability living allowance within the meaning of section 71 of the Social Security Contributions and Benefits Act 1992 M134 or section 71 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 M135;

c

“mobility supplement” means a mobility supplement within the meaning of article 26A of the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 1983 M136, article 25A of the Personal Injuries (Civilians) Scheme 1983 M137, article 3 of the Motor Vehicles (Exemption from Vehicles Excise Duty) Order 1985 M138 or article 3 of the Motor Vehicles (Exemption from Vehicles Excise Duty) (Northern Ireland) Order 1985 M139.

Contracts relating to commercial ships

4

1

A contract falls within this paragraph if it relates only to a commercial ship and is F328a contract of general insurance of a relevant class.

F3292

For the purposes of this paragraph, a contract of general insurance is of a relevant class if it insures against risks arising from or in relation to—

a

accidents,

b

ships, or

c

liabilities of ships,

(and no other risks).

3

For the purposes of this paragraph a commercial ship is a ship which is—

a

of a gross tonnage of 15 tons or more; and

b

not designed or adapted for use for recreation or pleasure.

Contracts relating to lifeboats and lifeboat equipment

5

1

A contract falls within this paragraph if it relates only to a lifeboat and is F330a contract of general insurance of a relevant class.

F3312

For the purposes of this paragraph, a contract of general insurance is of a relevant class if it insures against risks arising from or in relation to—

a

accidents,

b

ships, or

c

liabilities of ships,

(and no other risks).

3

For the purposes of this paragraph a lifeboat is a vessel used or to be used solely for rescue or assistance at sea.

6

1

A contract falls within this paragraph if it relates only to a lifeboat and lifeboat equipment and is such that, if it related only to a lifeboat, it would fall within paragraph 5 above.

2

In deciding whether a contract relates to lifeboat equipment the nature of the risks concerned is immaterial, and they may (for example) be risks of dying or sustaining injury or of loss or damage.

3

For the purposes of this paragraph—

a

“lifeboat” has the meaning given by paragraph 5(3) above; and

b

“lifeboat equipment” means anything used or to be used solely in connection with a lifeboat.

Contracts relating to commercial aircraft

7

1

A contract falls within this paragraph if it relates only to a commercial aircraft and is F332a contract of general insurance of a relevant class.

F3332

For the purposes of this paragraph, a contract of general insurance is of a relevant class if it insures against risks arising from or in relation to—

a

accidents,

b

aircraft, or

c

aircraft liability,

(and no other risks).

3

For the purposes of this paragraph a commercial aircraft is an aircraft which is—

a

of a weight of 8,000 kilogrammes or more; and

b

not designed or adapted for use for recreation or pleasure.

Contracts relating to risks outside the United Kingdom

8

1

A contract falls within this paragraph if it relates only to a risk which is situated outside the United Kingdom.

F3342

The question of whether a risk is situated in the United Kingdom shall be determined in accordance with regulations made under section 424(3) of the Financial Services and Markets Act 2000; but in determining that question as respects a contract which relates to a building it shall be irrelevant whether or not the contract also covers the contents of the building.

Contracts relating to foreign or international railway rolling stock

9

1

A contract falls within this paragraph if it relates only to foreign or international railway rolling stock and is F335a contract of general insurance of a relevant class.

F3362

For the purposes of this paragraph, a contract of general insurance is of a relevant class if it insures against risks arising from or in relation to—

a

railway rolling stock, or

b

general liability to third parties,

(and no other risks).

3

For the purposes of this paragraph foreign or international railway rolling stock is railway rolling stock used principally for journeys taking place wholly or partly outside the United Kingdom.

Contracts relating to the Channel tunnel

10

1

c

general liability to third parties,

(and no other risks).

3

For the purposes of this paragraph “the Channel tunnel system” has the meaning given by paragraph 10(3) above.

4

For the purposes of this paragraph “relevant Channel tunnel equipment” means, subject to sub-paragraph (5) below, the fixed or movable equipment needed for the operation of the Channel tunnel system or for the operation of trains through any tunnel forming part of it and in particular includes—

a

any ventilation, cooling or electrical plant used or to be used in connection with any such operation; and

b

any safety, signalling and control equipment which is or is to be so used.

5

Equipment which consists of or forms part of—

a

roads, bridges, platforms, ticket offices and other facilities for the use of passengers or motor vehicles;

b

administrative buildings and maintenance facilities; and

c

railway track or signalling equipment which is not situated in any part of the Channel tunnel system,

is not relevant Channel tunnel equipment for the purposes of this paragraph.

Contracts relating to goods in foreign or international transit

12

1

A contract falls within this paragraph if it relates only to loss of or damage to goods in foreign or international transit and the insured enters into the contract in the course of a business carried on by him.

2

For the purposes of this paragraph goods in foreign or international transit are goods in transit, and any container in which they are carried, where their carriage—

a

begins and ends outside the United Kingdom;

b

begins outside but ends in the United Kingdom; or

c

ends outside but begins in the United Kingdom.

3

For the purposes of sub-paragraph (2) above “container” has the same meaning as in regulation 38(3) of the Value Added Tax (General) Regulations 1985 M140.

Contracts relating to credit

13

1

A contract falls within this paragraph if it relates only to credit granted in relation to goods or services supplied under a relevant contract by a person carrying on business in the United Kingdom.

2

For the purposes of this paragraph a relevant contract is—

a

a contract to make a relevant supply of goods, or a supply of services, or both, to an overseas customer;

b

a contract to supply goods to a person who is to—

i

export those goods; or

ii

incorporate those goods in other goods which he is to export,

where the condition mentioned in sub-paragraph (3) below is satisfied;

c

a contract to supply to a person who is to export goods services consisting of the valuation or testing of, or other work carried out on, those goods where the condition mentioned in sub-paragraph (3) below is satisfied;

d

a contract to supply services to a person in order that he may comply with a legally binding obligation to make a supply of services to an overseas customer.

3

The condition referred to in sub-paragraph (2)(b) and (c) above is that the goods to be exported are to be exported in order that the person exporting them may comply with a legally binding obligation to make a relevant supply of goods to an overseas customer.

4

For the purposes of this paragraph—

a

“export” means export from the United Kingdom and cognate expressions shall be construed accordingly; and

b

any reference to a person who is to export goods shall be taken as including a reference to a person at whose direction the insured is to export them and the reference in sub-paragraph (3) above to the person exporting goods shall be construed accordingly.

5

Where a contract relates to—

a

credit of the description in sub-paragraph (1) above; and

b

loss resulting from the insured or any third party being required to pay the amount of any bond or guarantee against non-performance by the insured of the contract which involves him making the supply,

the contract shall be treated for the purposes of sub-paragraph (1) above as if it did not relate to loss of the description in paragraph (b) above.

Contracts relating to exchange losses

14

1

A contract falls within this paragraph if—

a

it relates only to loss resulting from a change in the rate at which the price for a supply which is or may be made by the insured may be exchanged for another currency; and

b

the conditions mentioned in sub-paragraph (2) below are satisfied.

2

The conditions referred to in sub-paragraph (1) above are that—

a

the insured is a person carrying on business in the United Kingdom;

b

the contract of insurance concerns a contract to make a relevant supply of goods, or a supply of services, or both, to an overseas customer (whether or not the contract to make the supply is one into which the insured has entered, or one for which he has tendered or intends to tender); and

c

the period of cover for the risk expires no later than the date by which the whole of the price for the supply is to be paid or, where the contract has not been entered into, would be required to be paid.

3

Where the contract relates to—

a

loss of the description in sub-paragraph (1)(a) above; and

b

loss relating from a change in the rate at which the price of goods which the insured imports into the United Kingdom for the purpose of enabling him to make the supply concerned may be exchanged for another currency,

the contract shall be treated for the purposes of sub-paragraphs (1) and (2) above as if it did not relate to loss of the description in paragraph (b) above.

Contracts relating to the provision of financial facilities

15

In section 257A(6) of the Taxes Act 1988 (relief confined to one deduction), for “deduction” there shall be substituted “ income tax reduction ”.

has been made before the coming into force of this paragraph, and

b

apart from this paragraph, would have effect in accordance with that section for the year 1994-95 or any subsequent year,

shall so have effect as if it were an election for the purposes of that section as amended by this paragraph.

3

1

In subsection (1) of section 257BB of that Act (transfer of relief where it is not all used), for paragraph (b) and the words after that paragraph there shall be substituted—

b
the amount of the reduction to which he is entitled is determined in accordance with section 256(2)(b) or, by virtue of his having no income tax liability to which that reduction is applicable, is nil,
his wife shall be entitled (in addition to any reduction to which she is entitled by virtue of an election under section 257BA) to an income tax reduction calculated by reference to an amount equal to the unused part of the amount by reference to which her husband’s income tax reduction fell to be calculated in pursuance of section 257A and any election under section 257BA.

2

In subsection (3) of that section, for paragraph (b) and the words after that paragraph there shall be substituted—

b
the amount of the reduction to which she is entitled is determined in accordance with section 256(2)(b) or, by virtue of her having no income tax liability to which that reduction is applicable, is nil,
her husband shall be entitled (in addition to any other reduction to which he is entitled by virtue of section 257A) to an income tax reduction calculated by reference to an amount equal to the unused part of the amount by reference to which his wife’s income tax reduction fell to be calculated in pursuance of that election.

3

After that subsection there shall be inserted the following subsection—

3A
In this section references, in relation to such an amount as is mentioned in subsection (1)(b) or (3)(b), to the unused part of an amount by reference to which any income tax reduction fell to be calculated are references to so much of it (including, where the amount so mentioned is nil, all of it) as has no practical effect on the determination of the amount so mentioned.

4

Subsection (6) of that section (calculation of amount left after deductions of a person’s total income) shall cease to have effect.

F3454

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

F3465

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

F3476

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

F3487

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

F3498

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

F3509

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

10

In section 265(3)(b) of that Act (blind person’s allowance), the words from “section 257A” to “or under” shall be omitted.

11

In section 276 of that Act (effect of relief on charges on income), after subsection (1) there shall be inserted the following subsection—

1A
In subsection (1) above the references to relief under this Chapter do not include references to relief consisting in such an income tax reduction as is mentioned in section 256(2).

12

In section 796(1) of that Act (limits on credit for foreign tax), after the words “foreign tax”, in the second place where they occur, there shall be inserted “ but allowing for the making of any other income tax reduction under the Income Tax Acts ”.

The Taxes Management Act 1970 (c. 9)

13

In section 37A of the Taxes Management Act 1970 (effect of assessment where allowances transferred)—

a

after the word “person’s”, in the first place where it occurs, there shall be inserted “ liability to income tax or ”;

b

for the words from “any deduction made” to “spouse” there shall be substituted “ any income tax reduction or deduction from total income made in the case of that person’s spouse ”; and

c

for the words from “and where” onwards there shall be substituted “ and the entitlement in that case of the first-mentioned person for the year in question to any income tax reduction or deduction from total income shall be treated as correspondingly reduced. ”

SCHEDULE 9 Mortgage interest relief etc.

Section 81.

The Taxes Act 1988

1

For paragraph (o) of section 74 of the Taxes Act 1988 (deduction of relevant loan interest in computing profits and gains) there shall be substituted the following paragraph—

o
any interest in so far as the payment of that interest is or would be, otherwise than by virtue of section 375(2), either—
i
a payment of interest to which section 369 applies, or
ii
a payment of interest to which that section would apply but for section 373(5);

F3512

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

3

Subsections (4) and (5) of section 353 of the Taxes Act 1988 (restriction of relief to basic rate tax) shall cease to have effect.

F3524

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

F3535

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

F3546

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

7 F3551

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

F3562

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

F3563

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

F3564

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

F3578

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

9

In section 368(1) of the Taxes Act 1988 (interest in respect of which relief given not allowable as deduction for any other purpose), for “for any other purpose of the Income Tax Acts” there shall be substituted “ for any purpose of the Income Tax Acts except so far as it is so allowable in accordance with subsection (1B) of that section. ”

10

1

In subsection (2) of section 370 of the Taxes Act 1988 (conditions for interest to be treated as relevant loan interest)—

a

after “section 353(2)” there shall be inserted “ and any other provision applying to interest falling to be treated as relevant loan interest ”; and

b

for “from section 74(o) and, where applicable,” there shall be substituted “ (where applicable) from ”.

F3582

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

11

In section 375(3) of the Taxes Act 1988 (liability of borrower for excess where deduction should not have been made), for the words from “entitles” to “been allowed” there shall be substituted “ shall be taken as regards the borrower as entitling him to any deduction or to retain any amount deducted and, accordingly, where any amount that has been deducted exceeds the amount which ought to have been deducted ”.

The Finance Act 1993 (c. 34)

12

Subsection (7) of section 57 of the Finance Act 1993 (transitional provision for bridging loans made before 6th April 1991) shall cease to have effect.

F359SCHEDULE 10 Medical insurance

Section 83.

Annotations:

Amendments (Textual)

F359

Sch. 10 repealed (31.7.1997 with effect as mentioned in the Note to Sch. 8 Pt. II(2) of the repealing Act) by 1997 c. 58, s. 52, Sch. 8 Pt. II(2) (with s. 3(3))

Introductory

1

In this Schedule “the 1989 Act” means the M190Finance Act 1989.

Reduction of relief

2

1

Section 54 of the 1989 Act (relief on premiums for medical insurance) shall be amended as follows.

2

In subsection (3) (relief by deduction from income) for the words from “it shall be deducted” to the end of the subsection there shall be substituted

the individual shall be entitled to relief under this subsection in respect of the payment; and (except where subsections (4) to (6) below apply) relief under this subsection shall be given—
a
in accordance with subsections (3A) to (3C) below, and
b
only on a claim made for the purpose.

3

The following subsections shall be inserted after subsection (3)—

3A
Where an individual is entitled to relief under subsection (3) above in respect of one or more payments made in a given year of assessment, the amount of his liability for that year of assessment to income tax on his total income shall be the amount to which he would be liable apart from this section less whichever is the smaller of—
a
the amount found under subsection (3B) below, and
b
the amount which reduces his liability to nil.
3B
The amount referred to in subsection (3A)(a) above is an amount found by—
a
taking the amount of the payment referred to in subsection (3A) above or (as the case may be) the aggregate amount of the payments there referred to, and
b
finding an amount equal to tax on the amount taken under paragraph (a) above at the basic rate for the year of assessment concerned.
3C
In determining for the purposes of subsection (3A) above the amount of incomerson would be liable apart from this section, no account shall be taken of—
a
any income tax reduction under Chapter I of Part VII of the Taxes Act 1988 or under section 347B of that Act;
b
any income tax reduction under section 353(1A) of the Taxes Act 1988;
c
any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 of the Taxes Act 1988 or by way of a credit under section 790(1) of that Act;
d
any tax at the basic rate on so much of that person’s income as is income the income tax on which he is entitled to charge against any other person or to deduct, retain or satisfy out of any payment.

4

This paragraph shall apply in relation to payments made on or after 6th April 1994.

3

1

In sections 257D(8) and 265(3) of the Taxes Act 1988 (total income after deductions) paragraph (d) (deduction on account of payments to which section 54(5) of the 1989 Act applies to be disregarded) shall be omitted.

2

This paragraph shall apply in relation to payments made on or after 6th April 1994.

Surviving spouse

4

1

In section 54 of the 1989 Act the following subsection shall be inserted after subsection (2)—

2A
In a case where—
a
a payment is made in respect of a premium under a contract at a time when the contract meets the requirement in subsection (2) above by virtue of paragraph (c) of that subsection, and
b
a payment is made under the same contract at a time after one of the individuals has died and when the contract does not (apart from this subsection) meet the requirement in subsection (2) above by virtue only of the fact that the surviving spouse is not aged 60 or over at the time,
for the purposes of subsection (2) above in its application to the contract the surviving spouse shall be deemed to be aged 60 or over at the time mentioned in paragraph (b) above.

2

This paragraph shall apply where the first or only payment to be made in respect of a premium under the contract after the death occurs is made on or after 6th April 1994.

Small benefits and abolition of certification

5

1

Section 55 of the 1989 Act (eligible contracts) shall be amended as follows.

2

In subsection (2) (conditions for contract’s being eligible) the following paragraphs shall be inserted after paragraph (b)—

ba
at the relevant time the contract satisfies the conditions set out in subsection (2A) below,
bb
the contract is not one in the case of which subsection (2D) below applies,

3

Also in subsection (2)—

a

after paragraph (c) there shall be inserted “ and ”, and

b

paragraph (e) and the word “and” immediately preceding it shall be omitted.

4

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

2A
The conditions referred to in subsection (2)(ba) above are that—
a
the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified,
b
the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,
c
the premium under the contract is reasonable, and
d
the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.
2B
In a case where—
a
at the relevant time the contract confers a material right, or more than one such right, but
b
the total cost to the insurer of providing benefits in pursuance of the material right or (as the case may be) in pursuance of all the material rights would not exceed the prescribed sum,
the contract shall not thereby be regarded as failing to satisfy at the relevant time the condition set out in subsection (2A)(b) above.
2C
For the purposes of subsection (2B) above a material right is a right which—
a
is not a right such as is mentioned in subsection (2A)(a) above or such as is for the time being specified in regulations made under subsection (2A)(b) above, and
b
is not a right to a cash benefit.
2D
This subsection applies in the case of a contract (the main contract) if—
a
at least one other contract is entered into which is a contract (a collateral contract) under which a benefit is provided in consideration of the insured’s entering into the main contract, and
b
the cost to the insurer of fulfilling his obligations under the collateral contract (or, if there is more than one collateral contract, of fulfilling his obligations under all of them) exceeds the prescribed sum.

5

Subsections (3) to (6) shall be omitted.

6

In subsection (9) (approved benefit) for “mentioned in section 56(3)(a) below” there shall be substituted the following paragraphs—

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

7

The following subsections shall be inserted after subsection (9)—

10
For the purposes of this section a benefit is also an approved benefit if it is not a cash benefit and—
a
it is a single benefit provided otherwise than as mentioned in subsection (9) above and the cost to the insurer of providing it does not exceed the prescribed sum, or
b
it is one of a number of benefits provided otherwise than as mentioned in subsection (9) above and the total cost to the insurer of providing the benefits does not exceed the prescribed sum.
11
In this section the reference to a premium, in relation to a contract of insurance, is to any amount payable under the contract to the insurer.
12
For the purposes of this section the prescribed sum is £30.
13
The Treasury may by order substitute for the sum for the time being specified in subsection (12) above such sum as may be specified in the order; and any such substitution shall have effect in relation to cases where the relevant time falls on or after such date as is specified in the order.

8

This paragraph shall apply where the time which is the relevant time for the purposes of section 55 falls on or after 1st July 1994.

6

The Board shall not certify a contract under section 56 of the 1989 Act in such a way that the certification is expressed to take effect on or after 1st July 1994.

SCHEDULE 11 Extension of roll-over relief on re-investment

Section 91.

1

Chapter IA of Part V of the M141Taxation of Chargeable Gains Act 1992 shall be amended as follows.

Disposals on which relief available

2

In section 164A—

a

in subsection (1)(a), for the words following “(“the re-investor”)” there is substituted “ on any disposal by him of any asset (“the asset disposed of”); and ”,

b

in subsection (2), “Subject to section 164C” is omitted and for “initial holding” (in three places) there is substituted “ asset disposed of ”,

c

subsections (3) to (7) are omitted,

d

in subsection (9), for “initial holding” there is substituted “ asset disposed of ”, and

e

for subsection (12) there is substituted—

12
Without prejudice to section 52(4), where consideration is given for the acquisition of any assets some of which are shares to the acquisition 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

3

For section 164B there is substituted—

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 asset comprised in any settled property to which this section applies, 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.
2
This section applies—
a
to any settled property in which the interests of the beneficiaries are not interests in possession, if all the beneficiaries are individuals, and
b
to any settled property in which the interests of the beneficiaries are interests in possession, if any of the beneficiaries are individuals,
and references in this section to individuals include any charity.
3
If, at the time of the disposal of the asset mentioned in subsection (1)(a) above, the settled property comprising that asset is property to which this section applies by virtue of subsection (2)(b) above but not all the beneficiaries are individuals, then—
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.
4
Section 164A shall not apply by virtue of this section in a case where, at the time of the disposal of the asset mentioned in subsection (1)(a) above, the settled property which comprises that asset is property to which this section applies by virtue of subsection (2)(a) above unless, immediately after the acquisition of shares mentioned in subsection (1)(b) above, the settled property comprising the shares is also property to which this section applies by virtue of subsection (2)(a) above.
5
Section 164A shall not apply by virtue of this section in a case where, at the time of the disposal of the asset mentioned in subsection (1)(a) above, the settled property which comprises that asset is property to which this section applies by virtue of subsection (2)(b) above unless, immediately after the acquisition of shares mentioned in subsection (1)(b) above—
a
the settled property comprising the shares is also property to which this section applies by virtue of subsection (2)(b) above, and
b
if not all the beneficiaries are individuals, the relevant proportion is not less than the proportion which was the relevant proportion at the time of the disposal of the asset mentioned in subsection (1)(a) above.
6
If, at any time, in the case of settled property to which this section applies by virtue of subsection (2)(b) above, both individuals and others have interests in possession, the relevant proportion at that time is the proportion which the amount specified in paragraph (a) below bears to the amount specified in paragraph (b) below, that is—
a
the total amount of the income of the settled property, being income the interests in which are held by beneficiaries who are individuals, and
b
the total amount of all the income of the settled property.
7
Where, in the case of any settled property in which any beneficiary holds an interest in possession, one or more beneficiaries (“the relevant beneficiaries”) hold interests not in possession, this section shall apply as if—
a
the interests of the relevant beneficiaries were a single interest in possession, and
b
that interest were held, where all the relevant beneficiaries are individuals, by an individual and, in any other case, by a person who is not an individual.
8
In this section references to interests in possession do not include interests for a fixed term.

4

Sections 164C to 164E are omitted.

5

In section 164H(1), “within the meaning of section 164C” is omitted.

6

In section 164L(10), for the words following “trustees or” there is substituted “ any individual or charity by virtue of whose interest, at the time of the acquisition, section 164B applies to the settled property ”.

Acquisitions on which relief available

7

For section 164A(8) there is substituted—

8
For the purposes of this section, a person who acquires any eligible shares in a qualifying company shall be regarded as acquiring a qualifying investment unless, where the asset disposed of consisted of shares in or other securities of any company (“the initial holding”), the qualifying company—
a
is the company in which the initial holding subsisted, or
b
is a company that was, at the time of the disposal of the initial holding, or is, at the time of the acquisition of the qualifying investment, a member of the same group of companies as the company in which the initial holding subsisted.

Retirement relief

8

Section 164A(11) is omitted and after section 164B there is inserted—

164BA Interaction with retirement relief
1
The provisions of section 164A for making any reduction shall apply before any provisions for calculating the amount of, or giving effect to, any relief under section 163 or 164; and references in that section and this to a chargeable gain (except the second reference in subsection (4)(a) below) shall be construed accordingly.
2
Subsection (3) below applies where—
a
any claim for relief is made under section 164A in respect of any chargeable gain, and
b
apart from this Chapter, the whole or any part of that gain would be relieved under section 163 or 164.
3
For the purpose of giving relief under section 163 or 164, any reduction under section 164A shall be treated as having been made first against the unrelieved part of the chargeable gain; and only the amount (if any) which is equal to the unrelieved part of the chargeable gain after that reduction shall be treated as exceeding the amount available for relief.
4
For the purposes of this section—
a
the unrelieved part of a chargeable gain is so much of that gain as, apart from this Chapter, would constitute a chargeable gain after the application of the appropriate paragraph of Schedule 6,
b
“amount available for relief” has the same meaning as in the appropriate paragraph of that Schedule, and
c
the “appropriate paragraph” means, as the case may be, paragraph 6, 7(1)(b) or 8(1)(b).

Clawback

9

1

In section 164F—

a

for subsection (1) there is substituted—

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 this section, by any amount (“the held-over gain”)

b

in subsection (3), for the words from “either” to the end of paragraph (b) there is substituted “ charged on any disposal or under this section ”,

c

for subsection (4) there is substituted—

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 (4A) 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 this section so far as it falls to be disregarded in accordance with subsection (11) below.
4A
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 the amount taken into account as so mentioned, 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 has not already been charged on 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

d

in subsection (5)—

i

in paragraph (a) “or 164D” is omitted, and

ii

in paragraph (c), for the words from “section 164D(4)” to the end there is substituted “ subsections (4) and (4A) above ”,

e

in subsection (10), “(within the meaning of section 164D)” is omitted, and

f

after that subsection there is inserted—

10A
Where (apart from this subsection) a chargeable gain of any amount would by virtue of subsection (2) above accrue to the person who acquired the acquired holding but, within the period mentioned in subsection (10B) below, that person acquires a qualifying investment (within the meaning of section 164A), that person shall, on making a claim as respects the qualifying investment, be treated—
a
as if the amount of the gain were reduced by whichever is the smallest of the following—
i
the actual amount or value of the consideration for the acquisition of the qualifying investment,
ii
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,
iii
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 paragraph (b) above shall not affect the treatment for the purposes of this Act of the other party to the transaction involving the qualifying investment.
10B
The period referred to in subsection (10A) above is the period (not including any period before the acquisition of the acquired holding) which begins 12 months before and ends 3 years after the time when the chargeable gain accrues or would but for that subsection accrue, together with any such further period after the disposal as the Board may by notice allow.

2

Section 164F as amended by sub-paragraph (1) above shall have effect as follows—

a

the reference in subsection (1) to consideration treated as reduced under section 164A includes consideration treated as reduced under section 164D,

b

the reference in subsection (3) to a gain having been charged on any disposal includes any gain having been carried forward from any disposal of shares, and

c

the amounts referred to in subsection (4A)(a) and (b)(i) shall be treated as reduced by any amounts carried forward from any disposal of shares.

3

References in sub-paragraph (2) above to an amount being carried forward from a disposal of shares are references to the reduction by that amount, in accordance with section 164D(3)(a), of the amount of the consideration for the disposal of those shares.

Anti-avoidance

10

In section 164L—

a

after subsection (10) there is inserted—

10A
For the purposes of this Chapter, where—
a
a person has acquired any eligible shares in a qualifying company (“the acquired holding”) for a consideration which is treated as reduced under this Chapter by any amount (“the held-over gain”), and
b
after that acquisition, he acquires eligible shares in a relevant company,
he shall not be regarded in relation to his acquisition of those shares in the relevant company as acquiring a qualifying investment for the purposes of section 164A.
10B
For the purposes of subsection (10A) above a company is a relevant company if—
a
where that person has disposed of any of the acquired holding, it is 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 any time since the acquisition of the acquired holding,
b
it is 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 have been no held-over gain in relation to the acquired holding, or
c
it is 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

b

in subsection (11), for the definition of “chargeable business assets” there is substituted—

“chargeable business asset”, in relation to any company, means a chargeable asset (including goodwill but not including shares or securities or other 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 acquiring the shares,
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

Miscellaneous

11

In section 164N, after subsection (1) there is inserted—

1A
Every asset of a company is for the purposes of this Chapter a chargeable asset of that company at any time, except one on the disposal of which by the company at that time no gain accruing to the company would be a chargeable gain

SCHEDULE 12 Indexation losses: transitional relief

Section 93.

Introductory

1

This Schedule applies in relation to chargeable gains and allowable losses accruing to—

a

an individual, or

b

the trustees of a settlement made before 30th November 1993;

(referred to in this Schedule as “the taxpayer”).

2

1

This paragraph applies for the purposes of this Schedule, and the determinations required by this paragraph to be made shall be made without regard to paragraphs 4 to 7 below.

paragraphs 6 and 7 below shall apply to determine any increase to be made, for the purposes of that subsection, in the amount of the allowable loss, and

b

paragraphs 4 and 5 below shall apply to so much only of the indexation loss as is not relieved under that section.

5

References in this paragraph and paragraphs 6 and 7 below to an increase in any loss include, in circumstances where paragraph 2(3) above applies, a reference to the creation of the loss.

Capital gains tax

4

1

Where in the case of any taxpayer—

a

there is a relevant gain for the year 1993-94,

b

the relevant gain exceeds the exempt amount for that year, and

c

there are indexation losses in respect of any disposals made in that year,

then, for the purposes of the 1992 Act, the amount by which the total amount of chargeable gains accruing to the taxpayer in that year exceeds the allowable losses accruing in the year shall be reduced by the amount mentioned in sub-paragraph (2) below, and shall be so reduced before the deduction of any allowable losses carried forward from any previous year or carried back under section 62 from any subsequent year.

2

The amount referred to in sub-paragraph (1) above is so much of the total of indexation losses in respect of disposals made in that year as does not exceed—

a

£10,000, or

b

the amount by which the relevant gain exceeds the exempt amount for the year,

any increase made under paragraph 6(2) below for that year,

there are unused indexation losses for that year of an amount equal to the excess.

Income tax

6

1

This paragraph applies where, at any time in the period beginning with 30th November 1993 and ending with 5th April 1994, the taxpayer makes any relevant appropriation or any section 574 disposal; and for the purposes of this paragraph there shall be determined—

a

the amount of any reduction for the year 1993-94 which (disregarding relevant appropriations and section 574 disposals) would be made under paragraph 4(1) above, and

b

the amounts of any indexation losses in respect of relevant appropriations or section 574 disposals made in that period.

2

If the aggregate of the amounts referred to in sub-paragraph (1)(a) and (b) above does not exceed £10,000, the amount of any allowable loss referable to such an appropriation or disposal shall be increased by any indexation loss in respect of it.

3

In any other case, notwithstanding anything in paragraphs 4 and 5 above—

a

the aggregate of—

i

the amount of any reduction for the year 1993-94 to be made under paragraph 4(1) above, and

ii

the amount of any indexation losses in respect of relevant appropriations or section 574 disposals made in the period referred to in sub-paragraph (1) above,

shall be equal to £10,000 and shall be allocated as the taxpayer may determine between that reduction and increases in allowable losses referable to such appropriations or disposals, and

b

no reduction shall be made under paragraph 5 above or 7 below for the year 1994-95.

7

1

This paragraph applies where, at any time in the year 1994-95, the taxpayer makes any relevant appropriation or any section 574 disposal; and for the purposes of this paragraph there shall be determined—

a

the amount of any reduction for that year which (disregarding relevant appropriations and section 574 disposals) would be made under paragraph 5(1) above, and

b

the amounts of any indexation losses in respect of relevant appropriations or section 574 disposals made in that year.

2

If the aggregate of the amounts referred to in sub-paragraph (1)(a) and (b) above does not exceed the limit for 1994-95, that is—

a

£10,000, less

b

the aggregate of the amount of any reduction made under paragraph 4(1) above for the year 1993-94 and of any increases made under paragraph 6(2) above for that year,

the amount of any allowable loss referable to such an appropriation or disposal shall be increased by any indexation loss in respect of it.

3

In any other case, notwithstanding anything in paragraph 5 above, the aggregate of the amount of any reduction for the year 1994-95 to be made under paragraph 5(1) above and of the amount of any indexation losses in respect of relevant appropriations or section 574 disposals made in that year—

a

shall be equal to the limit for 1994-95, and

b

shall be allocated as the taxpayer may determine between that reduction and increases in allowable losses referable to such appropriations or disposals.

Supplementary

8

1

In this Schedule—

“the 1992 Act” means the M142Taxation of Chargeable Gains Act 1992, and
“the old indexation rules” means the 1992 Act as it would have effect if—
1. a
  the amendments made by subsections (1) to (5) of section 93 of this Act, and
2. b
  the repeal of section 103 (collective investment schemes, etc.) and section 111 (building societies) of the 1992 Act by subsection (7) of section 93 of this Act,
had not come into force.

2

Other expressions not defined in this Schedule but used both in it and in the 1992 Act have the same meaning as in that Act.

3

References in this Schedule to the reduction of any amount include its reduction to nil.

SCHEDULE 13 Employee share ownership trusts

Section 102.

Introduction

1

The Finance Act 1989 shall be amended as provided in this Schedule.

Trustees

2

In Schedule 5, in paragraph 3 (trustees) the following sub-paragraph shall be inserted after sub-paragraph (4)—

5
This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed.

3

In Schedule 5, the following paragraphs shall be inserted after paragraph 3—

3A
Where a trust is established after the day on which the Finance Act 1994 was passed, the trust deed must make provision as mentioned in one of paragraphs (a) to (c) below—
a
provision for the establishment of a body of trustees and complying with paragraph 3(2) to (4) above;
b
provision for the establishment of a body of trustees and complying with paragraph 3B(2) to (9) below;
c
provision that at any time while the trust subsists there must be a single trustee.
3B
1
The following are the provisions that must be complied with under paragraph 3A(b) above.
2
The trust deed must—
a
appoint the initial trustees;
b
contain rules for the retirement and removal of trustees;
c
contain rules for the appointment of replacement and additional trustees.
3
The trust deed must be so framed that at any time while the trust subsists the conditions set out in sub-paragraph (4) below are fulfilled as regards the persons who are then trustees; and in that sub-paragraph “the relevant time” means that time.
4
The conditions are that—
a
the number of trustees is not less than three;
b
all the trustees are resident in the United Kingdom;
c
the trustees include at least one person who is a professional trustee and at least two persons who are non-professional trustees;
d
at least half of the non-professional trustees were, before being appointed as trustees, selected in accordance with sub-paragraph (7) or (8) below;
e
all the trustees so selected are persons who are employees of companies which fall within the founding company’s group at the relevant time, and who do not have and have never had a material interest in any such company.
5
For the purposes of this paragraph a trustee is a professional trustee at a particular time if—
a
the trustee is then a trust corporation, a solicitor, or a member of such other professional body as the Board may at that time allow for the purposes of this sub-paragraph,
b
the trustee is not then an employee or director of any company then falling within the founding company’s group, and
c
the trustee meets the requirements of sub-paragraph (6) below;
and for the purposes of this paragraph a trustee is a non-professional trustee at a particular time if the trustee is not then a professional trustee for those purposes.
6
A trustee meets the requirements of this sub-paragraph if—
a
he was appointed as an initial trustee and, before being appointed as trustee, was selected by (and only by) the persons who later became the non-professional initial trustees, or
b
he was appointed as a replacement or additional trustee and, before being appointed as trustee, was selected by (and only by) the persons who were the non-professional trustees at the time of the selection.
7
Trustees are selected in accordance with this sub-paragraph if the process of selection is one under which—
a
all the persons who are employees of the companies which fall within the founding company’s group at the time of the selection, and who do not have and have never had a material interest in any such company, are (so far as is reasonably practicable) given the opportunity to stand for selection,
b
all the employees of the companies falling within the founding company’s group at the time of the selection are (so far as is reasonably practicable) given the opportunity to vote, and
c
persons gaining more votes are preferred to those gaining less.
8
Trustees are selected in accordance with this sub-paragraph if they are selected by persons elected to represent the employees of the companies falling within the founding company’s group at the time of the selection.
9
For the purposes of this paragraph a company falls within the founding company’s group at a particular time if—
a
it is at that time resident in the United Kingdom, and
b
it is the founding company or it is at that time controlled by the founding company.
3C
1
This paragraph applies where the trust deed provides that at any time while the trust subsists there must be a single trustee.
2
The trust deed must—
a
be so framed that at any time while the trust subsists the trustee is a company which at that time is resident in the United Kingdom and controlled by the founding company;
b
appoint the initial trustee;
c
contain rules for the removal of any trustee and for the appointment of a replacement trustee.
3
The trust deed must be so framed that at any time while the trust subsists the company which is then the trustee is a company so constituted that the conditions set out in sub-paragraph (4) below are then fulfilled as regards the persons who are then directors of the company; and in that sub-paragraph “the relevant time” is that time and “the trust company” is that company.
4
The conditions are that—
a
the number of directors is not less than three;
b
all the directors are resident in the United Kingdom;
c
the directors include at least one person who is a professional director and at least two persons who are non-professional directors;
d
at least half of the non-professional directors were, before being appointed as directors, selected in accordance with sub-paragraph (7) or (8) below;
e
all the directors so selected are persons who are employees of companies which fall within the founding company’s group at the relevant time, and who do not have and have never had a material interest in any such company.
5
For the purposes of this paragraph a director is a professional director at a particular time if—
a
the director is then a solicitor or a member of such other professional body as the Board may at that time allow for the purposes of this sub-paragraph,
b
the director is not then an employee of any company then falling within the founding company’s group,
c
the director is not then a director of any such company (other than the trust company), and
d
the director meets the requirements of sub-paragraph (6) below;
and for the purposes of this paragraph a director is a non-professional director at a particular time if the director is not then a professional director for those purposes.
6
A director meets the requirements of this sub-paragraph if—
a
he was appointed as an initial director and, before being appointed as director, was selected by (and only by) the persons who later became the non-professional initial directors, or
b
he was appointed as a replacement or additional director and, before being appointed as director, was selected by (and only by) the persons who were the non-professional directors at the time of the selection.
7
Directors are selected in accordance with this sub-paragraph if the process of selection is one under which—
a
all the persons who are employees of the companies which fall within the founding company’s group at the time of the selection, and who do not have and have never had a material interest in any such company, are (so far as is reasonably practicable) given the opportunity to stand for selection,
b
all the employees of the companies falling within the founding company’s group at the time of the selection are (so far as is reasonably practicable) given the opportunity to vote, and
c
persons gaining more votes are preferred to those gaining less.
8
Directors are selected in accordance with this sub-paragraph if they are selected by persons elected to represent the employees of the companies falling within the founding company’s group at the time of the selection.
9
For the purposes of this paragraph a company falls within the founding company’s group at a particular time if—
a
it is at that time resident in the United Kingdom, and
b
it is the founding company or it is at that time controlled by the founding company.

4

In Schedule 5, the following shall be inserted at the end of paragraph 12 (position after trust’s establishment)— “ This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed. ”

5

In Schedule 5, the following paragraph shall be inserted after paragraph 12—

12A
1
Subject to sub-paragraphs (2) and (3) below, a trust which was at the time it was established a qualifying employee share ownership trust shall continue to be one.
2
If the trust deed makes provision under paragraph 3A(a) above, the trust shall not be a qualifying employee share ownership trust at any time when the requirements mentioned in paragraph 3(3)(a) to (f) above are not satisfied.
3
If the trust deed makes provision under paragraph 3A(b) above, the trust shall not be a qualifying employee share ownership trust at any time when the conditions mentioned in paragraph 3B(4)(a) to (e) above are not satisfied.
4
If the trust deed makes provision under paragraph 3A(c) above, the trust shall not be a qualifying employee share ownership trust at any time when—
a
there is not a single trustee,
b
the trustee is not a company which is resident in the United Kingdom and controlled by the founding company, or
c
the conditions mentioned in paragraph 3C(4)(a) to (e) above are not satisfied as regards the directors of the trustee.
5
This paragraph applies in relation to trusts established after the day on which the Finance Act 1994 was passed.

Securities

6

1

Section 69 (chargeable events) shall be amended as follows.

2

In subsection (1)(c) (retention of securities at expiry of seven years from acquisition) for “period of seven years” there shall be substituted “ qualifying period ”.

3

After subsection (4) there shall be inserted—

4A
For the purposes of subsection (1)(c) above the qualifying period is—
a
seven years, in the case of trusts established on or before the day on which the Finance Act 1994 was passed;
b
twenty years, in the case of other trusts;
and for this purpose a trust is established when the deed under which it is established is executed.

7

1

Paragraph 9 of Schedule 5 (transfer of securities) shall be amended as follows.

2

In sub-paragraph (1)(b) for “period of seven years” there shall be substituted “ qualifying period ”.

3

After sub-paragraph (2) there shall be inserted—

2A
For the purposes of sub-paragraph (1) above the qualifying period is—
a
seven years, in the case of trusts established on or before the day on which the Finance Act 1994 was passed;
b
twenty years, in the case of other trusts.

Interpretation

8

In Schedule 5, the following paragraph shall be inserted after paragraph 16—

17
For the purposes of this Schedule a trust is established when the deed under which it is established is executed.

SCHEDULE 14 Distributions of authorised unit trusts

Section 112.

1

Chapter III of Part XII of the Taxes Act 1988 shall be amended in accordance with paragraphs 2 to 5 of this Schedule.

The new sections

2

The following sections shall be inserted immediately before section 469—

Distributions of authorised unit trusts: general
468H Interpretation.
1
This section has effect for the interpretation of sections 468I to 468R.
2
The making of a distribution by an authorised unit trust to a unit holder includes investing an amount on behalf of the unit holder in respect of his accumulation units.
3
In relation to an authorised unit trust—
a
“distribution period” means a period by reference to which the total amount available for distribution to unit holders is ascertained; and
b
“distribution accounts” means accounts showing how that total amount is computed.
4
The distribution date for a distribution period of an authorised unit trust is—
a
the date specified by or in accordance with the terms of the trust for any distribution for that distribution period; or
b
if no date is so specified, the last day of that distribution period.
5
In this Chapter references to foreign income dividends shall be construed in accordance with Chapter VA of Part VI.
6
Sections 468I to 468R do not apply to an authorised unit trust which is also an approved personal pension scheme (within the meaning of Chapter IV of Part XIV).
468I Distribution accounts.
1
The total amount shown in the distribution accounts as available for distribution to unit holders shall be shown as available for distribution in one of the ways set out below.
2
It may be shown as available for distribution as dividends which are not foreign income dividends.
3
It may be shown as available for distribution as foreign income dividends.
4
It may be shown as available for distribution as yearly interest.
5
It may be divided into—
a
a part shown as available for distribution as dividends which are not foreign income dividends; and
b
a part shown as available for distribution as foreign income dividends.
6
Amounts deriving from income under Schedule A may not be included in any amount shown in the distribution accounts as available for distribution as yearly interest.
7
Where distribution accounts show an amount as available for distribution to unit holders in the way set out in subsection (5) above there shall not be any discrimination between unit holders having accumulation units and other unit holders (or between unit holders on other grounds).
Dividend and foreign income distributions
468J Dividend distributions.
1
Subsection (2) below applies where the total amount or a part of the total amount shown in the distribution accounts as available for distribution to unit holders is shown as available for distribution as dividends which are not foreign income dividends.
2
The Tax Acts shall have effect as if the total amount or, as the case may be, the part were dividends on shares paid on the distribution date by the company referred to in section 468(1) to the unit holders in proportion to their rights.
3
The trustees of an authorised unit trust may not make an election under section 246A in respect of dividends paid by virtue of this section.
4
In the following provisions of this Chapter “a dividend distribution” means a dividend treated as paid by virtue of subsection (2) above.
468K Foreign income distributions.
1
Subsection (2) below applies where the total amount or a part of the total amount shown in the distribution accounts as available for distribution to unit holders is shown as available for distribution as foreign income dividends.
2
The Tax Acts shall have effect (subject to what follows) as if the total amount or, as the case may be, the part were foreign income dividends on shares paid on the distribution date by the company referred to in section 468(1) to the unit holders in proportion to their rights.
3
In relation to the paying of foreign income dividends by authorised unit trusts Chapter VA of Part VI shall have effect as if the following provisions were omitted—
a
sections 246A and 246B (provisions with respect to election to pay foreign income dividends);
b
sections 246K to 246M (special provisions for subsidiaries); and
c
sections 246S to 246W (international headquarters companies).
4
In the following provisions of this Chapter “a foreign income distribution” means a foreign income dividend treated as paid by virtue of subsection (2) above.
Interest distributions
468L Interest distributions.
1
Subsection (2) below applies where the total amount shown in the distribution accounts as available for distribution to unit holders is shown as available for distribution as yearly interest.
2
The Tax Acts shall have effect (subject to what follows) as if the total amount were payments of yearly interest made on the distribution date by the company referred to in section 468(1) to the unit holders in proportion to their rights.
3
In the following provisions of this Chapter “an interest distribution” means a payment of yearly interest treated as made by virtue of subsection (2) above.
4
The obligation under section 349(2) to deduct a sum in its application to an interest distribution is subject to sections 468M and 468N (and, in its application to an interest distribution to a unit holder in respect of his accumulation units, is an obligation to deduct a sum out of the amount being invested on the unit holder’s behalf).
5
Interest distributions shall not be a charge on income for the purposes of section 338(1) but any interest distributions for a distribution period which are interest distributions with respect to which the obligation under section 349(2) (if and to the extent that it applies) is complied with shall be allowed as a deduction against the profits of the authorised unit trust for the accounting period in which the last day of that distribution period falls.
6
The deduction mentioned in subsection (5) above may be made—
a
in computing the total profits for the accounting period, after the deduction of any expenses deductible in computing profits apart from section 75 and either before or after the deduction under that section of sums disbursed as expenses of management; or
b
against total profits as reduced by any other relief from tax or against total profits not so reduced.
7
Where in any accounting period the amount deductible by virtue of subsection (5) above exceeds the amount from which the deduction is made—
a
the excess may be carried forward to the succeeding accounting period; and
b
the amount so carried forward shall be treated as if it were deductible in that succeeding accounting period by virtue of subsection (5) above.
468M Deduction of tax (simple case).
1
Subsection (2) below applies where—
a
an interest distribution is made for a distribution period to a unit holder; and
b
the gross income entered in the distribution accounts for the purpose of computing the total amount available for distribution to unit holders derives from eligible income entirely.
2
Where this subsection applies, the obligation to deduct under section 349(2) shall not apply to the interest distribution to the unit holder if the residence condition is on the distribution date fulfilled with respect to him.
3
Section 468O makes provision with respect to the circumstances in which the residence condition is fulfilled with respect to a unit holder.
4
Subject to subsection (5) below, in this Chapter “eligible income” means—
a
any interest on a security which falls within paragraph 5(5)(d) of Schedule 19AA;
b
any interest on a security which is a quoted Eurobond for the purposes of section 124;
c
any dividends falling within section 17(1)3;
d
any proceeds or other realisation falling within section 17(1)4;
e
any amount taxable by virtue of section 123;
f
any other amount, if it is not subject to income tax by deduction.
5
“Eligible income” does not include—
a
franked investment income;
b
income under Schedule A;
c
any foreign income dividend;
d
any amount afforded relief from taxation imposed under the laws of a territory outside the United Kingdom under arrangements having effect by virtue of section 788 in relation to that territory.
468N Deduction of tax (mixed funds).
1
Subsection (2) below applies where—
a
an interest distribution is made for a distribution period to a unit holder; and
b
the gross income entered in the distribution accounts for the purposes of computing the total amount available for distribution to unit holders does not derive from eligible income entirely.
2
Where this subsection applies, the obligation to deduct under section 349(2) shall not apply to the relevant amount of the interest distribution to the unit holder if the residence condition is on the distribution date fulfilled with respect to him.
3
Section 468O makes provision with respect to the circumstances in which the residence condition is fulfilled with respect to a unit holder.
4
This is how to calculate the relevant amount of the interest distribution—
$R = A x \frac{B}{C}$
Where—
R = the relevant amount;
A = the amount of the interest distribution before deduction of tax to the unit holder in question;
B = such amount of the gross income as derives from eligible income;
C = the amount of the gross income.
5
In subsection (4) above the references to the gross income are references to the gross income entered as mentioned in subsection (1)(b) above.
468O Residence condition.
1
For the purposes of sections 468M and 468N, the residence condition is fulfilled with respect to a unit holder if—
a
there is a valid declaration made by him that he is not ordinarily resident in the United Kingdom; or
b
he holds the rights as a personal representative of a unit holder and—
i
before his death the deceased made a declaration valid at the time of his death that he was not ordinarily resident in the United Kingdom; or
ii
the personal representative has made a declaration that the deceased, immediately before his death, was not ordinarily resident in the United Kingdom.
2
For the purposes of sections 468M and 468N, the residence condition is also fulfilled with respect to a unit holder if the unit holder is a company and there is a valid declaration made by the company that it is not resident in the United Kingdom.
3
The Board may by regulations make such provision as appears to them to be necessary or expedient modifying the application of this section and section 468P in relation to interest distributions made to or received under a trust.
4
Regulations under subsection (3) above may—
a
make different provision for different cases; and
b
contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
468P Residence declarations.
1
A declaration made for the purposes of section 468O must—
a
be in such form as may be required or authorised by the Board;
b
be made in writing to the trustees of the authorised unit trust in question; and
c
contain any details or undertakings required by subsections (2) to (4) below.
2
A declaration made as mentioned in section 468O(1)(a) or (b)(i) must contain—
a
the name and principal residential address of the person making it; and
b
an undertaking that he will notify the trustees if he becomes ordinarily resident in the United Kingdom.
3
A declaration made as mentioned in section 468O(1)(b)(ii) must contain the name of the deceased and his principal residential address immediately before his death.
4
A declaration made as mentioned in section 468O(2) must contain—
a
the name of the company making it and the address of its registered or principal office; and
b
an undertaking that the company will notify the trustees if it becomes resident in the United Kingdom.
5
For the purposes of determining whether an interest distribution should be made with or without any deduction, the trustees may not treat a declaration as valid if—
a
they receive a notification in compliance with an undertaking under subsection (2) or (4) above that the person in question has become ordinarily resident or, as the case may be, resident in the United Kingdom; or
b
they come into possession of information by some other means which indicates that the person in question is or may be ordinarily resident or, as the case may be, resident in the United Kingdom;
but, subject to that, they are entitled to treat the declaration as valid.
6
The trustees shall, on being required to do so by a notice given by an officer of the Board, make available for inspection by such an officer any declarations made to them under this section or any specified declaration or description of declarations.
7
Where a notice has been given to the trustees under subsection (6) above, the declarations shall be made available within such time as may be specified in the notice and the person carrying out the inspection may take copies of or extracts from them.
8
The Board may by regulations make provision for giving effect to this section, including in particular provision requiring trustees and managers of authorised unit trusts to supply information and make available books, documents and other records for inspection on behalf of the Board.
9
Regulations under subsection (8) above may—
a
make different provision for different cases; and
b
contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
Distributions to corporate unit holder
468Q Dividend distribution to corporate unit holder.
1
Subsection (2) below applies where—
a
a dividend distribution for a distribution period is made to a unit holder by the trustees of an authorised unit trust; and
b
on the distribution date for that distribution period the unit holder is within the charge to corporation tax.
2
For the purpose of computing corporation tax chargeable in the case of the unit holder the unfranked part of the dividend distribution shall be deemed—
a
to be an annual payment and not a dividend distribution, a foreign income distribution or an interest distribution; and
b
to have been received by the unit holder after deduction of income tax at the lower rate for the year of assessment in which the distribution date falls, from a corresponding gross amount.
3
This is how to calculate the unfranked part of the dividend distribution—
$U = ((A + B) x \frac{C}{D}) - B$
Where—
U = the unfranked part of the dividend distribution to the unit holder;
A = the amount of the dividend distribution;
B = the amount of any foreign income distribution for the distribution period for which that dividend distribution is made to the unit holder;
C = such amount of the gross income as does not derive from franked investment income;
D = the amount of the gross income.
4
If the calculation in accordance with subsection (3) above produces a value of U that is less than O, it shall be assumed for the purposes of this section that no part of the dividend distribution is unfranked.
5
Where the unit holder is on the distribution date the manager of the scheme, subsection (2) above shall not apply in so far as the rights in respect of which the dividend distribution is made are held by him in the ordinary course of his business as manager of the scheme.
6
For the purposes of this section the references to the gross income are references to the gross income entered in the distribution accounts for the purpose of computing the total amount available for distribution to unit holders for the distribution period in question.
468R Foreign income distribution to corporate unit holder.
1
Subsection (2) below applies where—
a
a foreign income distribution for a distribution period is made to a unit holder by the trustees of an authorised unit trust; and
b
on the distribution date for that distribution period the unit holder is within the charge to corporation tax.
2
The provisions of subsections (2) to (6) of section 468Q shall have effect, with the necessary modifications, in relation to the foreign income distribution as they have effect in relation to a dividend distribution, and in particular as if for the provisions of subsection (3) of that section there were substituted the provisions of subsection (3) below.
3
This is how to calculate the unfranked part of the foreign income distribution—
$U = ((A + B) x \frac{E}{D}) - A$
Where—
U = the unfranked part of the foreign income distribution to the unit holder in question;
A = the amount of any dividend distribution for the distribution period for which that foreign income distribution is made to the unit holder;
B = the amount of that foreign income distribution;
E = such amount of the gross income as does not derive from foreign income dividends;
D = the amount of the gross income.

Other amendments

3

1

Section 468 (authorised unit trusts) shall be amended as follows.

2

At the end of subsection (1) there shall be inserted “ but paragraph (b) above is without prejudice to the making of distributions which are interest distributions (within the meaning of section 468L) to unit holders ”.

3

Subsection (2) (notional dividends of authorised unit trusts) shall be omitted.

4

In subsection (3) for the words “subsections (1) and (2) above” there shall be substituted “ subsection (1) above ”.

5

In subsection (6) the definition of “distribution period” shall be omitted.

4

Sections 468F and 468G shall cease to have effect.

5

In section 469 (other unit trusts), in subsection (6) (meaning of “distribution period”) for the words “has the same meaning as in section 468, but” there shall be substituted “ means a period beginning on or after 1st April 1987 over which income from the investments subject to the trusts is aggregated for the purposes of ascertaining the amount available for distribution to unit holders, but ”.

6

In section 834(3) of the Taxes Act 1988 (date on which dividends treated as paid) for the words from “except in so far as” to the end there shall be substituted “ except in so far as Chapter III of Part XII makes other provision for dividends treated as paid by virtue of that Chapter ”.

Commencement

7

1

Subject to sub-paragraph (2) below, this Schedule shall have effect in relation to distribution periods beginning on or after 1st April 1994.

2

Nothing in the amendments made by this Schedule shall be taken to permit—

a

the total amount shown in the distribution accounts for a distribution period of an authorised unit trust, or

b

a part of that total amount,

to be shown as available for distribution as foreign income dividends unless the distribution date for that distribution period is 1st July 1994 or a subsequent date.

SCHEDULE 15 Enterprise investment scheme

Section 137.

Amendments of the Taxes Act 1988

1

Chapter III of Part VII of the Taxes Act 1988 shall be amended as follows:

2

For section 289 (the relief) and the heading preceding it there is substituted—

Enterprise Investment Scheme
289 Eligibility for relief.
1
For the purposes of this Chapter, an individual is eligible for relief, subject to the following provisions of this Chapter, if—
a
eligible shares in a qualifying company for which he has subscribed are issued to him and, under section 291, he qualifies for relief in respect of those shares,
b
the shares are issued in order to raise money for the purpose of a qualifying business activity, and
c
the money raised by the issue is employed not later than the time mentioned in subsection (3) below wholly for the purpose of that activity.
2
In this Chapter “qualifying business activity”, in relation to a company, means—
a
the company or any subsidiary—
i
carrying on a qualifying trade which, on the date the shares are issued, it is carrying on, or
ii
preparing to carry on a qualifying trade which, on that date, it intends to carry on wholly or mainly in the United Kingdom and which it begins to carry on within two years after that date,
but only if, at any time in the relevant period when the qualifying trade is carried on, it is carried on wholly or mainly in the United Kingdom,
b
the company or any subsidiary carrying on research and development—
i
which, on the date the shares are issued, it is carrying on or which it begins to carry on immediately afterwards, and
ii
from which it is intended that a qualifying trade which the company or any subsidiary will carry on wholly or mainly in the United Kingdom will be derived,
but only if, at any time in the relevant period when the research and development or the qualifying trade derived from it is carried on, it is carried on wholly or mainly in the United Kingdom, or
c
the company or any subsidiary carrying on oil exploration—
i
which, on the date the shares are issued, it is carrying on or begins to carry on immediately afterwards, and
ii
from which it is intended that a qualifying trade which the company or any subsidiary will carry on wholly or mainly in the United Kingdom will be derived,
but only if, at any time in the relevant period when the oil exploration or the qualifying trade derived from it is carried on, it is carried on wholly or mainly in the United Kingdom.
3
The time referred to in subsection (1)(c) above is—
a
the end of the period of twelve months beginning with the issue of the eligible shares, or
b
in the case of money raised only for the purpose referred to in subsection (2)(a) above, the end of that period or, if later, the end of the period of twelve months beginning when the company or subsidiary concerned begins to carry on the qualifying trade,
and for the purposes of this Chapter, the condition in subsection (1)(c) above does not fail to be satisfied by reason only of the fact that an amount of money which is not significant is employed for another purpose.
4
Subsection (2)(c) above shall not apply unless—
a
throughout the period of three years beginning with the date on which the shares were issued, the company or any subsidiary holds an exploration licence which was granted to it, or to another subsidiary,
b
the exploration is carried out solely within the area to which the licence applies, and
c
on the date on which the shares were issued, neither the company nor any subsidiary held an appraisal licence or a development licence relating to that area or any part of that area.
5
Where, at any time after the issue of the shares but before the end of the period mentioned in subsection (4)(a) above, the company or any subsidiary comes to hold an appraisal licence or development licence which relates to the area, or any part of the area, to which the exploration licence relates, the exploration licence and that other licence shall be treated for the purposes of subsection (4)(a) above as a single exploration licence.
6
An individual is not eligible for relief in respect of any shares unless the shares are subscribed, and issued, for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
7
In this Chapter “eligible shares” means new ordinary shares which, throughout the period of five years beginning with the date on which they are issued, carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed.
8
Section 312(1A)(b) applies to determine the relevant period for the purposes of this section.
289A Form of relief.
1
Where an individual eligible for relief in respect of any amount subscribed for eligible shares makes a claim, then, subject to the following provisions of this Chapter, the amount of his liability for the year of assessment in which the shares were issued (“the current year”) to income tax on his total income shall be the following amount.
2
That amount is the amount to which he would be so liable apart from this section less whichever is the smaller of—
a
an amount equal to tax at the lower rate for the current year on the amount or, as the case may be, the aggregate of the amounts subscribed for eligible shares issued in that year in respect of which he is eligible for relief, and
b
the amount which reduces his liability to nil.
3
Subject to subsection (4) below, if in the case of any issue of relevant shares, that is, shares—
a
which are issued before 6th October in the current year, and
b
in respect of the amount subscribed for which the individual is eligible for relief,
the individual so requests in his claim, subsection (1) above shall apply as if, in respect of such part of that issue as may be specified in his claim, the shares had been issued in the preceding year of assessment; and his liability to income tax for both years of assessment shall be determined accordingly.
4
Not more than half of the relevant shares comprised in any issue may be treated by virtue of subsection (3) above as issued in the previous year; and the number of relevant shares (comprised in any issues) so treated as issued in a particular year shall not be such that the total amount subscribed for them exceeds £15,000.
5
In determining for the purposes of subsection (2) above the amount of income tax to which a person would be liable apart from this section, no account shall be taken of—
a
any income tax reduction under Chapter I of Part VII of this Act or under section 347B,
b
any income tax reduction under section 353(1A),
c
any income tax reduction under section 54(3A) of the Finance Act 1989,
d
any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 or by way of a credit under section 790(1), or
e
any tax at the basic rate on so much of that person’s income as is income the income tax on which he is entitled to charge against any other person or to deduct, retain or satisfy out of any payment.
6
A claim for relief shall not be allowed unless subsection (7) below is complied with but, where it is complied with, the relief may be given at any time when it appears that the conditions for the relief may be satisfied.
7
This subsection is complied with if—
a
in the case of shares issued for the purpose of a qualifying business activity falling within paragraph (a) of section 289(2), the company or subsidiary concerned has carried on the trade for four months,
b
in the case of shares issued for the purpose of a qualifying business activity falling within paragraph (b) of that subsection or within both paragraph (a) and paragraph (b) of that subsection, the company or subsidiary concerned has carried on the research and development for four months, and
c
in the case of shares issued for the purpose of a qualifying business activity falling within paragraph (c) of that subsection, the company or subsidiary concerned has carried on the exploration for four months.
8
Where—
a
the company or subsidiary concerned, by reason of its being wound up, or dissolved without winding up, carries on a trade for a period shorter than four months, and
b
it is shown that the winding up or dissolution was for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax,
subsection (7)(a) above shall have effect as if it referred to that shorter period.
9
Where effect is given to a claim for relief by repayment of tax, section 824 shall have effect in relation to the repayment as if the time from which the twelve months mentioned in subsections (1)(a) and (3)(a) of that section are to be calculated were the end of the year of assessment in which the shares are issued or, if subsection (7) above is first complied with in a later year, the end of that later year.
289B Attribution of relief to shares.
1
References in this Chapter, in relation to any individual, to the relief attributable to any shares or issue of shares shall be read, subject to the provisions of this Chapter providing for the reduction or withdrawal of relief, as references to any reduction made in the individual’s liability to income tax which is attributed to those shares or that issue in accordance with this section.
2
Where an individual’s liability to income tax is reduced in any year of assessment (“the current year”) under section 289A, then—
a
where the reduction is given by reason of an issue of shares made (or treated as made) in the current year, the amount of the reduction shall be attributed to that issue, and
b
where the reduction is given by reason of two or more issues of shares made (or treated as made) in the current year, the reduction—
i
shall be apportioned between those issues in the same proportions as the amounts subscribed by the individual for each issue, and
ii
shall be attributed to those issues accordingly.
3
Where under this section an amount of any reduction of income tax is attributed to an issue of shares (“the original issue”) in a company to an individual—
a
a proportionate part of that amount shall be attributed to each share comprised in the original issue, and
b
if any bonus shares in that company which are eligible shares are issued to him at any subsequent time—
i
a proportionate part of the total amount attributed immediately before that time to shares comprised in the original issue shall be attributed to each of the shares in the holding comprising those shares and the bonus shares, and
ii
this Chapter shall apply as if the original holding had comprised all those shares.
4
Subject to subsection (5) below, in this Chapter references to an issue of shares in any company to an individual are to any shares in the company issued to him on the same day.
5
Where section 289A(1) applies in the case of any issue of shares as if part of the issue had been issued in a previous year, this section and the following provisions of this Chapter (except section 290(1)) shall have effect as if that part and the remainder were separate issues of shares (and that part had been issued on a day in the previous year).
6
Where, at a time when any relief is attributable to, or to any part of, any issue of shares, the relief falls to be withdrawn or reduced under this Chapter—
a
where it falls to be withdrawn, the relief attributable to each of the shares in question shall be reduced to nil, and
b
where it falls to be reduced by any amount, the relief attributable to each of the shares in question shall be reduced by a proportionate part of that amount.

3

1

In section 290 (minimum and maximum subscriptions), for subsection (2) there is substituted—

2
An individual shall not be eligible for relief in any year of assessment in respect of any amount subscribed for eligible shares exceeding £100,000 (whether the shares are issued in that or a subsequent year).

2

Sub-paragraph (1) above shall have effect for the year 1994-95 and subsequent years of assessment.

3

An individual shall not be eligible for relief in respect of the year 1993-94 in respect of any amount subscribed for eligible shares (whether the shares are issued in that or a subsequent year) which, when aggregated with the amounts (if any) on which relief is claimed under the old scheme in respect of that year, exceeds £40,000.

4

In this paragraph the “old scheme” means Chapter III of Part VII of the Taxes Act 1988 as it had effect before the amendments made by this Schedule.

4

1

In section 290A (restriction of relief)—

a

for subsection (1) there is substituted—

1
Where—
a
a company raises any amount through the issue of eligible shares, and
b
the aggregate of that amount and of all other amounts (if any) so raised within the period mentioned in subsection (2) below exceeds £1 million,
the relief shall not be given in respect of the excess

b

in subsection (4), for “£750,000” there is substituted “ £1 million ”,

c

subsection (10) and the definition of “prospectus” in subsection (11) are omitted, and

d

after subsection (11) there is added—

12
Section 312(1A)(b) applies to determine the relevant period for the purposes of this section.

2

References in that section to amounts raised through the issue of eligible shares include amounts raised through the issue before 1st January 1994 of shares which were eligible shares under the old scheme; and the “old scheme” has the same meaning as in paragraph 3 above.

5

For section 291 (individuals qualifying for relief) there is substituted—

291 Individuals qualifying for relief.
1
An individual qualifies for relief in respect of eligible shares in a company (referred to in this section and sections 291A and 291B as the “issuing company”) if—
a
he subscribes for the shares on his own behalf, and
b
subject to section 291A(4), he is not at any time in the relevant period connected with the company.
2
For the purposes of this section and sections 291A and 291B, an individual is connected with the issuing company if he, or an associate of his, is—
a
an employee of, or of a partner of, the issuing company or any subsidiary,
b
a partner of the issuing company or any subsidiary, or
c
subject to section 291A, a director of, or of a company which is a partner of, the issuing company or any subsidiary,
or if he, or an associate of his, is so connected by virtue of section 291B.
3
In subsection (2) above “subsidiary”, in relation to the issuing company, means a 51 per cent. subsidiary of the issuing company—
a
whether it becomes such a subsidiary before, during or after the year of assessment in respect of which the individual concerned claims relief, and
b
whether or not it is such a subsidiary while he or his associate is such an employee, partner or director.
4
For the purposes of subsections (2) and (3) above and section 291A, in the case of a person who is both a director and an employee of a company—
a
references (however expressed) to him in his capacity as a director of the company include him in his capacity as an employee of the company, but
b
(apart from that) he is not to be treated as an employee of the company.
5
Section 312(1A)(a) applies to determine the relevant period for the purposes of this section and sections 291A and 291B.
291A Connected persons: directors.
1
An individual is not connected with the issuing company by reason only that he, or an associate of his, is a director of that or another company unless he or his associate (or a partnership of which he or his associate is a member)—
a
receives a payment from the issuing company or a related person during the relevant period, or
b
is entitled to receive such a payment in respect of that period or any part of it.
2
In this section—
a
“related person”, in relation to the issuing company, means—
i
any company of which the individual or his associate is a director and which is a subsidiary or a partner of the issuing company or of a subsidiary, and
ii
any person connected with the issuing company or with a company falling within sub-paragraph (i) above, and
b
any reference to a payment to an individual includes a payment made to him indirectly or to his order or for his benefit.
3
For the purposes of subsection (1) above there shall be disregarded—
a
any payment or reimbursement of travelling or other expenses wholly, exclusively and necessarily incurred by him or his associate in the performance of his duties as a director,
b
any interest which represents no more than a reasonable commercial return on money lent to the issuing company or a related person,
c
any dividend or other distribution which does not exceed a normal return on the investment,
d
any payment for the supply of goods which does not exceed their market value,
e
any payment of rent for any property occupied by the issuing company or a related person which does not exceed a reasonable and commercial rent for the property, and
f
any reasonable and necessary remuneration which —
i
is paid for services rendered to the issuing company or related person in the course of a trade or profession (not being secretarial or managerial services or services of a kind provided by the person to whom they are rendered), 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.
4
An individual (“the subscriber”) who subscribes for eligible shares (“the relevant shares”) may qualify for the relief notwithstanding his connection with the company at any time in the relevant period if—
a
he is so connected by reason only of his, or his associate’s, being a director of, or of a company which is a partner of, the issuing company or a subsidiary in receipt of, or entitled to receive, remuneration as such, and
b
the following conditions are satisfied;
and in this subsection and subsection (5) below “remuneration” includes any benefit or facility.
5
The conditions are that—
a
in relation to the director (whether he is the subscriber or his associate), his remuneration, or the remuneration to which he is entitled, (leaving out of account any reasonable and necessary remuneration falling within subsection (3)(f) above) consists only of remuneration which is reasonable remuneration for services rendered to the company of which he is a director in his capacity as such,
b
the subscriber was issued with eligible shares (whether the relevant shares or a previous issue of eligible shares) at a time when he had never been—
i
connected with the issuing company, or
ii
an employee of any person who previously carried on the trade carried on by the issuing company, and
c
where the issue of the relevant shares did not satisfy paragraph (b) above, they were not issued after the end of the period of five years beginning with the date of the latest issue of eligible shares which satisfied that paragraph,
and in paragraph (b) above “trade” includes any business, profession or vocation, and the reference to a trade previously carried on includes part of such a trade.
6
In this section “subsidiary”, in relation to the issuing company, means a 51 per cent. subsidiary of the issuing company.
291B Connected persons: persons interested in capital etc. of company.
1
An individual is connected with the issuing company if he directly or indirectly possesses or is entitled to acquire more than 30 per cent. of—
a
the issued ordinary share capital of the company or any subsidiary,
b
the loan capital and issued share capital of the company or any subsidiary, or
c
the voting power in the company or any subsidiary.
2
An individual is connected with the issuing company if he directly or indirectly possesses or is entitled to acquire such rights as would, in the event of the winding up of the company or any subsidiary or in any other circumstances, entitle him to receive more than 30 per cent. of the assets of the company or subsidiary (the “company in question”) which would then be available for distribution to equity holders of the company in question.
3
For the purposes of subsection (2) above—
a
the persons who are equity holders of the company in question, and
b
the percentage of the assets of the company in question to which the individual would be entitled,
shall be determined in accordance with paragraphs 1 and 3 of Schedule 18, taking references in paragraph 3 to the first company as references to an equity holder and references to a winding up as including references to any other circumstances in which assets of the company in question are available for distribution to its equity holders.
4
An individual is connected with a company if he has control of it or of any subsidiary.
5
Where an individual subscribes for shares in a company with which (apart from this subsection) he is not connected, he shall nevertheless be treated as connected with it if he subscribes for the shares as part of any arrangement which provides for another person to subscribe for shares in another company with which (assuming it to be an issuing company) that or any other individual who is a party to the arrangement is connected.
6
In this section “subsidiary”, in relation to the issuing company, means a 51 per cent. subsidiary of the issuing company—
a
whether it becomes such a subsidiary before, during or after the year of assessment in respect of which the individual concerned claims relief, and
b
whether or not it is such a subsidiary while he has, or is entitled to acquire, such capital, voting power, rights or control as are mentioned in this section.
7
For the purposes of this section the loan capital of a company shall be treated as including any debt incurred by the company—
a
for any money borrowed or capital assets acquired by the company,
b
for any right to receive income created in favour of the company, or
c
for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium on it).
8
For the purposes of this section an individual shall be treated as entitled to acquire anything which he is entitled to acquire at a future date or will at a future date be entitled to acquire, and there shall be attributed to any person any rights or powers of any other person who is an associate of his.
9
In determining for the purposes of this section whether an individual is connected with a company, no debt incurred by the company or any subsidiary by overdrawing an account with a person carrying on a business of banking shall be treated as loan capital of the company or subsidiary if the debt arose in the ordinary course of that business.
10
Section 840 applies for the purposes of this section.

6

In section 292 (parallel trades)—

a

in subsection (1), for the words preceding paragraph (a) there is substituted “ An individual is not eligible for relief in respect of any shares in a company if, at the date mentioned in subsection (2) below ”, and

b

in subsection (4)(a) for “any of its subsidiaries” there is substituted “ any company which is a 51 per cent. subsidiary of that company on the date referred to in subsection (2) above ”.

7

In section 293 (qualifying companies)—

a

for subsections (1) to (3) there is substituted—

1
Subject to section 294, a company is a qualifying company (whether it is resident in the United Kingdom or elsewhere) if it complies with the requirements of this section.
2
The company must, throughout the relevant period, be an unquoted company and be—
a
a 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, or
b
a company whose business consists wholly of—
i
the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the company, or
ii
both the holding of such shares or securities, or the making of such loans, and the carrying on of one or more qualifying trades.
3
In this section “qualifying subsidiary”, in relation to a company, means a subsidiary of a kind which that company may hold by virtue of section 308

b

subsection (4) is omitted,

c

in subsection (7), at the end there is inserted “ or would not be fully paid up if any undertaking to pay cash to the company at a future date were disregarded ”,

d

for subsection (8) there is substituted—

8
Subject to section 308, the company must not—
a
at any time in the relevant period control (or together with any person connected with it control) another company or be under the control of another company (or another company and any other person connected with that other company), or
b
at any such time be a 51 per cent. subsidiary of another company or itself have a 51 per cent. subsidiary,
and no arrangements must be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b) above.
8A
Section 312(1A)(b) applies to determine the relevant period for the purposes of this section and sections 294, 295 and 296

e

subsections (9) to (11) are omitted.

8

In section 294 (companies with interests in land), in subsection (1), for the words preceding paragraph (a) there is substituted “ Subject to section 296, a company is not a qualifying company in relation to any shares if at any time during the relevant period ”.

9

In section 296 (provisions supplementary to section 294), subsection (6) is omitted.

10

In section 297 (qualifying trades)—

a

in subsection (1), “(6) and” is omitted,

b

in subsection (2)—

i

in paragraph (a), for “commodities, shares, securities, land or futures” there is substituted “ land, in commodities or futures or in shares, securities or other financial instruments ”,

ii

in paragraph (g), after “another person” there is inserted “ (other than a company of which the company providing the services or facilities is the subsidiary) ”, and

iii

paragraphs (h) and (j) are omitted,

F360c

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

F361d

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

11

In section 298 (supplementary provisions)—

a

for subsection (4) there is substituted—

4
The Treasury may by order amend section 297 and this section in such manner as they consider expedient

b

in subsection (5), the definition of “property development” is omitted,

c

at the end of that subsection there is inserted—

“ and section 312(1A)(b) shall apply to determine the relevant period for the purposes of that section ”, and

d

subsections (6) to (8) are omitted.

12

For section 299 (disposal of shares) there is substituted—

299 Disposal of shares.
1
Where an individual makes any disposal of eligible shares before the end of the relevant period, then—
a
if the disposal is made otherwise than by way of a bargain made at arm’s length, any relief attributable to those shares shall be withdrawn, and
b
in the case of any disposal made by way of a bargain made at arm’s length—
i
if, apart from this subsection, the relief attributable to those shares is greater than the amount mentioned in subsection (2) below, it shall be reduced by that amount, and
ii
if sub-paragraph (i) above does not apply, any relief attributable to those shares shall be withdrawn.
2
The amount referred to in subsection (1) above is an amount equal to tax at the lower rate for the year of assessment for which the relief was given on the amount or value of the consideration which the individual receives for the shares.
3
Where, in relation to any issue of shares held by any person, the disposal referred to in subsection (1) above is a disposal of part of the shares, that subsection shall apply to the relief that was attributable to that part.
4
Where an individual’s liability to income tax has been reduced in any year of assessment under section 289A in respect of any issue of shares and the amount of the reduction (“A”) is less than the amount (“B”) which is equal to tax at the lower rate for that year on the amount subscribed for the issue, subsection (2) above shall have effect as if the amount or value referred to in that subsection were reduced by multiplying it by the fraction—
$\frac{A}{B}$
5
Where an option, the exercise of which would bind the grantor to purchase any shares, is granted to an individual during the relevant period, any relief attributable to the shares to which the option relates shall be withdrawn.
6
Where any relief is attributable to shares of any class in a company which have been issued to an individual at different times, any disposal by him of shares of that class shall be treated for the purposes of this section as relating to those issued earlier rather than to those issued later.
7
Where relief is attributable to any shares which have by virtue of any such allotment as is mentioned in section 126(2)(a) of the 1992 Act (not being an allotment for payment) fallen to be treated under section 127 of that Act as the same asset as a new holding, a disposal of the whole or part of the new holding shall be treated for the purposes of this section as a disposal of the whole or a corresponding part of those shares.
8
For the purposes of this section—
a
shares in a company shall not be treated as being of the same class unless they would be so treated if dealt with on the Stock Exchange,
b
references to a disposal of shares include references to the grant of an option the exercise of which would bind the grantor to sell the shares, and
c
section 312(1A)(a) applies to determine the relevant period.

13

In section 299A (loan linked investments)—

a

in subsection (1), for the words preceding paragraph (a) there is substituted “ An individual is not eligible for relief in respect of any shares in a company if ”, and

b

after subsection (2) there is inserted—

3
Section 312(1A)(a) applies to determine the relevant period for the purposes of this section.

14

In section 300 (value received from company)—

a

for subsection (1) there is substituted—

1
Subsection (1A) below applies where an individual who subscribes for eligible shares in a company—
a
has, before the issue of the shares but within the relevant period, received any value from the company, or
b
after their issue but before the end of the relevant period, receives any such value.
1A
Where any relief is attributable to those shares, then (unless the amount of the relief has already been reduced on account of the value received)—
a
if it is greater than the amount mentioned in subsection (1B) below, it shall be reduced by that amount, and
b
if paragraph (a) above does not apply, the relief shall be withdrawn.
1B
The amount referred to in subsection (1A) above is an amount equal to tax at the lower rate for the year of assessment for which the relief was given on the amount of the value received; and section 299(4) above applies for the purposes of this subsection as it applies for the purposes of subsection (2) of that section.
1C
References in subsection (1) above to the receipt of value from a company include references to the receipt of value from a 51 per cent. subsidiary of that company, whether it becomes such a subsidiary before or after the individual concerned receives any value from it; and other references to the company in this section and section 301 shall be read accordingly.
1D
Notwithstanding anything in subsection (2) below, for the purposes of this section an individual is not to be treated as receiving value from a company by reason only of the payment to him, or any associate of his, of any remuneration for services rendered to the company as a director if the remuneration is reasonable remuneration.
1E
Section 291(4) applies for the purposes of subsection (1D) above as it applies for the purposes of section 291A, and the reference in subsection (1D) above to the payment of remuneration includes the provision of any benefit or facility

b

in subsection (2)—

i

in paragraph (c), for “291(3)(a) or (e)” there is substituted “ 291A(3)(a) or (f) ”, and

ii

in paragraph (h), for “section 291(3)(a), (b), (c), (d) or (e)” there is substituted “ any of the paragraphs of section 291A(3) ”.

15

In section 301 (provisions supplementary to section 300)—

a

subsections (1) and (2) are omitted,

b

after subsection (6) there is inserted—

6A
Section 312(1A)(a) applies to determine the relevant period for the purposes of section 300

c

subsection (7) is omitted.

16

In section 302 (replacement capital)—

a

for subsection (1) there is substituted—

1
Any relief attributable to any shares in a company held by an individual shall be withdrawn if—
a
at any time in the relevant period, the company or any subsidiary—
i
begins to carry on as its trade or as part of its trade a trade which was previously carried on at any time in that period otherwise than by the company or any subsidiary, or
ii
acquires the whole, or a greater part, of the assets used for the purposes of a trade previously so carried on, and
b
subsection (2) below applies in relation to that individual

b

in subsection (3), for the words preceding paragraph (a) there is substituted “ Any relief attributable to any shares in a company held by an individual shall be withdrawn if ”,

c

after subsection (4) there is inserted—

4A
In determining whether any relief attributable to any shares in a company (the “issuing company”) held by a person who—
a
is a director of, or of a company which is a partner of, the issuing company or any subsidiary, and
b
is in receipt of, or entitled to receive, remuneration as such a director falling within section 291A(5)(a),
is to be withdrawn, the second reference in paragraph (b) of each of subsections (2) and (3) above and, so far as relating to those paragraphs, in subsection (1)(a)(i) above to any time in the relevant period shall be read as a reference to any time before the end of the relevant period.
4B
Section 291(4) applies for the purposes of subsection (4A) above as it applies for the purposes of section 291A, and in subsection (4A) above “remuneration” includes any benefit or facility

d

in subsection (5)—

i

for the definition of “subsidiary” there is substituted—

“ “subsidiary” means a company which would be a subsidiary if the relevant period for the purposes of section 308 were the period referred to in section 312(1A)(a) ”, and

ii
at the end of that subsection there is inserted— “ and section 312(1A)(a) applies to determine the relevant period for the purposes of this section ”.

17

In section 303 (value received by persons other than claimants)—

a

for subsection (1) there is substituted—

1
Where any relief is attributable to any shares in a company held by an individual, subsection (1A) below shall apply if at any time in the relevant period the company or any subsidiary repays, redeems or repurchases any of its share capital which belongs to any member other than—
a
that individual, or
b
another individual the relief attributable to whose shares in the company is thereby withdrawn or reduced by virtue of section 299 or 300(2)(a),
or makes any payment to any such member for giving up his right to any of the share capital of the company or subsidiary on its cancellation or extinguishment.
1A
The relief—
a
if it is greater than the amount mentioned in subsection (1B) below, shall be reduced by that amount, and
b
if paragraph (a) above does not apply, shall be withdrawn.
1B
The amount referred to in subsection (1A) above is an amount equal to tax at the lower rate for the year of assessment for which the relief was given on the amount receivable by the member or, if greater, the nominal value of the share capital in question; and section 299(4) above applies for the purposes of this subsection as it applies for the purposes of subsection (2) of that section

F362b

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

F362c

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

d

subsection (8) is omitted,

e

after subsection (9) there is inserted—

9A
References in this section to a subsidiary of a company are references to a 51 per cent. subsidiary of the company, whether it becomes such a subsidiary before or after the redemption, repayment, repurchase or payment in question or, as the case may be, the receipt of value in question.
9B
Section 312(1A)(a) applies to determine the relevant period for the purposes of this section

f

subsections (10) and (11) are omitted.

18

For section 304 (husband and wife) there is substituted—

304 Husband and wife.
1
Section 299(1) shall not apply to a disposal of shares to which an amount of relief is attributable made by a married man to his wife or a married woman to her husband at a time when they are living together.
2
Where such shares issued to one of them (“the transferor”) are transferred to the other (“the transferee”) by a transaction inter vivos to which that section does not apply, this Chapter shall have effect, in relation to any subsequent disposal or other event, as if—
a
the transferee were the person who had subscribed for the shares,
b
the transferee’s liability to income tax had been reduced under section 289A in respect of those shares for the same year of assessment as that for which the transferor’s liability was so reduced and, accordingly, that amount of relief had continued to be attributable to the shares notwithstanding the transfer.
3
Any assessment for reducing or withdrawing the relief by reason of any such disposal or other event shall be made on the transferee

19

For section 305 (re-organisation of share capital) there is substituted—

305 Reorganisation of share capital.
1
Subsection (2) below applies where—
a
there is by virtue of any allotment in the relevant period, being such an allotment for payment as is mentioned in section 126(2)(a) of the 1992 Act, a reorganisation affecting ordinary shares,
b
immediately before the reorganisation an amount of relief (“X”) is attributable to the shares, and
c
both—
i
the amount subscribed for the shares (“Z”), and
ii
the market value of the shares immediately before the reorganisation,
exceed the market value of the shares immediately after the reorganisation.
2
Where this subsection applies, the relief attributable to the shares shall be reduced by the following amount—
$\frac{X x Y}{Z}$
where “Y” is whichever is the smaller of the amounts by which Z, and the market value of the shares immediately before the reorganisation, exceed the market value of the shares immediately after the reorganisation.
3
Subsection (2) above also applies where—
a
an individual, who at any time in the relevant period has received, or become entitled to receive, in respect of any ordinary shares in a company, a provisional allotment of shares in or debentures of the company, disposes of his rights, and
b
that subsection would have applied if he had not disposed of the rights but the allotment had been made to him by virtue of those rights.
4
Section 312(1A)(a) applies to determine the relevant period for the purposes of this section

20

After section 305 there is inserted—

305A Relief for loss on disposal of shares.
1
Section 574 shall apply on the disposal by an individual of shares to which relief is attributable as it applies to a disposal by him of shares in a qualifying trading company for which he has subscribed (“qualifying trading company” and “subscribed” having for this purpose the same meaning as in that section).
2
For the purposes of that section (as applied by this) sections 575(1) and (3) and 576(2) and (3) shall apply

21

In section 306 (claims)—

a

in subsection (1)—

F363i

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

F364ii

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

b

after subsection (3) there is inserted—

3A
A company may not furnish an inspector with a statement in respect of any shares issued in any year of assessment—
a
later than two years after the end of that year of assessment, or
b
if the period of four months referred to in subsection (1)(a) above ended after the end of that year, later than two years after the end of that period,
but section 289B(5) shall not apply for the purposes of this subsection

c

in subsection (8), for “entitled to” there is substituted “ eligible for ”,

d

in subsection (10), the second sentence is omitted, and

e

after that subsection there is inserted—

11
Section 312(1A)(b) applies to determine the relevant period for the purposes of this section

22

In section 307 (withdrawal of relief)—

a

in subsection (1), the words from “but” to the end are omitted,

b

for subsection (2) there is substituted—

1A
Relief may not be withdrawn, in relation to shares issued by a company on any date, on the ground that the company is not a qualifying company or that the requirements of section 289(1)(b) or (c) are not met unless—
a
the company has given notice under section 310, or
b
an inspector has given notice to the company stating that, by reason of that ground, the whole or any part of the relief given to individuals to whom the shares were issued on that date was not, in his opinion, due.
1B
The giving of notice by an inspector under subsection (1A) above shall be taken, for the purposes of the provisions of the Management Act relating to appeals against decisions on claims, to be a decision refusing a claim made by the company.
2
Subject to subsections (3) to (7) below, no assessment for withdrawing relief may be made, and no notice may be given under subsection (1A) above, more than six years after the end of the year of assessment—
a
in which the time mentioned in section 289(3) falls, or
b
in which the event by reason of which the claimant ceases to be eligible for relief occurs,
whichever is the later

c

in subsection (6)—

i

in paragraph (a), for “289(11)” there is substituted “ 289(6) ”,

ii

after that paragraph there is inserted—

aa
in the case of relief withdrawn by virtue of section 289(1)(c), the date on which the relief was granted

iii

after paragraph (c) there is inserted—

cca
in the case of relief withdrawn by virtue of section 299(5), the date on which the option was granted

d

after subsection (8) there is inserted—

8A
References in this section to the withdrawal of relief include its reduction

e

subsection (9) is omitted.

23

In section 308 (application to subsidiaries)—

a

after subsection (5) there is inserted—

5A
Section 312(1A)(b) applies to determine the relevant period for the purposes of this section

a

in subsection (1)—

i

in the definition of “control”, for “291(7), 308(2) and 309(6)(a)” there is substituted “ 291B(4) and 308(2) ”,

ii

after the definition of “director” there is inserted—

“eligible for relief” has the meaning given by section 289(1),
“eligible shares” has the meaning given by section 289(7)

iii

the definition of “fixed-rate preference share capital” is omitted,

iv

the definition of “the relevant period” is omitted,

v

for the definition of “the relief” and “relief” there is substituted—

“relief” means relief under this Chapter,
“subsidiary”, in relation to any company (except in the expression “51 per cent. subsidiary” or where otherwise defined), means a subsidiary of that company of a kind which that company may hold under section 308,
“51 per cent. subsidiary”, in relation to any company, means (except in the case of references to a company which is a 51 per cent. subsidiary on a particular date or at a particular time) a company which is a 51 per cent. subsidiary of that company at any time in the relevant period (applying subsection (1A)(a) below)

vi

for the definition of “unquoted company” there is substituted—

“unquoted company” means a company none of whose shares, stocks, debentures or other securities are marketed to the general public

b

after that subsection there is inserted—

1A
In any provision of this Chapter “relevant period”, in relation to relief in respect of any eligible shares issued by a company, means whichever of the following periods is applied for the purposes of that provision (disregarding section 289B(5))—
a
the period beginning with the incorporation of the company (or, if the company was incorporated more than two years before the date on which the shares were issued, beginning two years before that date) and ending five years after the issue of the shares, and
b
the period beginning with the date on which the shares were issued and ending either—
i
three years after that date, or
ii
in a case falling within section 289(2)(a) where the company or subsidiary concerned had not begun to carry on the trade in question on that date, three years after the date on which it begins to carry on that trade.
1B
For the purposes of the definition of “unquoted company” in subsection (1) above, shares, stocks, debentures or other securities are marketed to the general public if they are—
a
listed on a recognised stock exchange,
b
listed on a designated exchange in a country outside the United Kingdom, or
c
dealt in on the Unlisted Securities Market or dealt in outside the United Kingdom by such means as may be designated.
1C
In subsection (1B) above “designated” means designated by an order made by the Board for the purposes of that subsection; and an order made for the purposes of paragraph (b) of that subsection may designate an exchange by name, or by reference to any class or description of exchanges, including a class or description framed by reference to any authority or approval given in a country outside the United Kingdom.
1D
Section 828(1) does not apply to an order made for the purposes of subsection (1B) above.
1E
Where a company is an unquoted company at the time when any shares are issued, it shall not be treated for the purposes of this Chapter as ceasing to be an unquoted company in relation to those shares at any subsequent time by reason only that any shares, stocks, debentures or other securities of the company are at that time listed on an exchange, or dealt in by any means, designated by such an order if the order was made after the shares were issued

c

in subsection (2), for “section 291” there is substituted “ sections 291 to 291B ”,

d

for subsections (4) and (5) there is substituted—

4
In this Chapter—
a
references in any provision to the reduction of any relief attributable to any shares include a reference—
i
to the reduction of the relief to nil, and
ii
where no relief has yet been given, to the reduction of the amount which apart from that provision would be the relief, and
b
references to the withdrawal of any relief, in respect of any shares, are to the withdrawal of the relief attributable to those shares or, in a case where no relief has yet been given, to ceasing to be eligible for relief in respect of those shares.
5
For the purposes of this Chapter, the market value at any time of any asset shall be taken to be the price which it might reasonably be expected to fetch on a sale at that time in the open market free from any interest or right which exists by way of security in or over it

e

in subsection (7), for “289(1)(d)” there is substituted “ 289(2)(c) ”.

Amendments of the Taxation of Chargeable Gains Act 1992

28

The M143Taxation of Chargeable Gains Act 1992 shall be amended as follows:

29

In section 150 (business expansion schemes), at the end of subsection (1) there is inserted “ and references in this section to Chapter III of Part VII of the Taxes Act or any provision of that Chapter are to that Chapter or provision as it applies in relation to shares issued before 1st January 1994 ”.

30

After that section there is inserted—

150A Enterprise investment scheme.
1
For the purpose of determining the gain or loss on any disposal of eligible shares by an individual where—
a
an amount of relief is attributable to the shares, and
b
apart from this subsection there would be a loss,
the consideration given by him for the shares shall be treated as reduced by the amount of the relief.
2
Subject to subsection (3) below, if on any disposal of eligible shares by an individual after the end of the period referred to in section 312(1A)(a) of the Taxes Act where an amount of relief is attributable to the shares, there would (apart from this subsection) be a gain, the gain shall not be a chargeable gain.
3
Where—
a
an individual’s liability to income tax has been reduced (or treated by virtue of section 304 of the Taxes Act (husband and wife) as reduced) for any year of assessment under section 289A of that Act in respect of any issue of shares, and
b
the amount of the reduction (“A”) is less than the amount (“B”) which is equal to tax at the lower rate for that year on the amount subscribed for the issue,
then, if there is a disposal of the shares on which there is a gain, subsection (2) above shall apply only to so much of the gain as is found by multiplying it by the fraction—
$\frac{A}{B}$
4
Any question as to—
a
which of any shares issued to a person at different times a disposal relates, being shares to which relief is attributable, or
b
whether a disposal relates to shares to which relief is attributable or to other shares,
shall for the purposes of capital gains tax be determined as for the purposes of section 299 of the Taxes Act; and Chapter I of this Part shall have effect subject to the foregoing provisions of this subsection.
5
Sections 104, 105 and 107 shall not apply to shares to which relief is attributable.
6
Where—
a
an individual holds shares which form part of the ordinary share capital of a company, and
b
relief is attributable to some of the shares but not others,
then, if there is within the meaning of section 126 a reorganisation affecting those shares, section 127 shall apply (subject to the following provisions of this section) separately to the shares to which relief is attributable and to the other shares (so that shares of each kind are treated as a separate holding of original shares and identified with a separate new holding).
7
Where—
a
an individual holds shares (“the existing holding”) which form part of the ordinary share capital of a company,
b
there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the existing holding, and
c
immediately following the reorganisation, relief is attributable to the existing holding or the allotted shares,
sections 127 to 130 shall not apply in relation to the existing holding.
8
Sections 135 and 136 shall not apply in respect of shares to which relief is attributable.
9
Where the relief attributable to any shares is reduced by virtue of section 305(2) of the Taxes Act—
a
the sums allowable as deductions from the consideration in the computation, for the purposes of capital gains tax, of the gain or loss accruing to an individual on the disposal of any of the allotted shares or debentures shall be taken to include the amount of the reduction apportioned between the allotted shares or (as the case may be) debentures in such a way as appears to the inspector, or on appeal to the Commissioners concerned, to be just and reasonable, and
b
the sums so allowable on the disposal (in circumstances in which the preceding provisions of this section do not apply) of any of the shares referred to in section 305(1)(a) shall be taken to be reduced by the amount mentioned in paragraph (a) above, similarly apportioned between those shares.
10
There shall be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.
11
Chapter III of Part VII of the Taxes Act (enterprise investment scheme) applies for the purposes of this section to determine whether relief is attributable to any shares and, if so, the amount of relief so attributable; and “eligible shares” has the same meaning as in that Chapter.
12
References in this section to Chapter III of Part VII of the Taxes Act or any provision of that Chapter are to that Chapter or provision as it applies in relation to shares issued on or after 1st January 1994

31

At the end of section 164M of that Act (exclusion of double relief) there is inserted “ but the reference in this section to that Chapter is to that Chapter as it applies in relation to shares issued before 1st January 1994 ”.

32

1

After that section there is inserted—

164MA Exclusion of double relief
If a person makes a claim for relief under Chapter III of Part VII of the Taxes Act (enterprise investment scheme) in respect of any shares, those shares shall not be, or be treated as ever having been, eligible shares

2

This paragraph has effect in relation to shares issued on or after 1st January 1994.

33

In section 164N(1), in the definition of “eligible shares”, for “and 164M” there is substituted “ 164M and 164MA ”.

34

In section 231(1)(d), “(business expansion scheme)” is omitted.

SCHEDULE 16 Foreign income dividends

Section 138.

Part I The new Chapter

F3661

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

Part II Liability for and collection of advance corporation tax

F3672

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

3 F3681

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

F3682

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

F3683

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

F3684

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

F3695

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

F3696

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

F3697

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

F3698

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

F3699

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

F36910

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

F36811

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

F36912

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

F36813

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

Part III Insurance companies etc.

F3704

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

5

1

Section 434 of the Taxes Act 1988 (franked investment income etc.) shall be amended as follows.

F3712

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

F3713

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

F3724

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

F3725

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

F3736

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

F3747

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

F3758

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

F3769

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

Part IV Other provisions

Penalties

10

In the first column of the Table in section 98 of the M144Taxes Management Act 1970 (penalties for failure to furnish particulars etc.) the following entry shall be inserted after the entry relating to section 234 of the principal Act— “ section 246H; ”.

Small companies’ relief

F37711

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

Expenses of management

F37812

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

Group income

F37913

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

Mutual business etc.

F38014

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

Discretionary trusts

F38115

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

Personal representatives

F38216

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

Purchase and sale of securities

17

1

Section 731 of the Taxes Act 1988 (application and interpretation of provisions relating to purchase and sale of securities) shall be amended as follows.

2

In subsection (9), in the definition of “interest” the words from “and in applying” to the end of paragraph (b) shall be omitted.

3

The following subsections shall be inserted after subsection (9)—

9A
In applying references in the relevant provisions to interest in relation to a qualifying distribution other than a foreign income dividend—
a
“gross interest” means the qualifying distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it, and
b
“net interest” means the qualifying distribution exclusive of any such tax credit.
9B
In applying references in the relevant provisions to interest in relation to a foreign income dividend paid in circumstances where section 246D(1), (3) or (4) applies—
a
“gross interest” means the amount of the income arrived at under section 246D(1) by reference to the dividend, and
b
“net interest” means the dividend.
9C
Where a foreign income dividend is paid in circumstances other than those where section 246D(1), (3) or (4) applies—
a
in applying section 735(2) in relation to the dividend the words “the gross amount corresponding with” shall be disregarded, and
b
in applying references in the relevant provisions (including section 735(2)) to interest in relation to the dividend “net interest” means the dividend.
9D
In this section “foreign income dividend” shall be construed in accordance with Chapter VA of Part VI.

Manufactured dividends

F38318

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

F38419

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

Interest on tax overpaid

20

1

Section 826 of the Taxes Act 1988 shall be amended as follows.

2

In subsection (1) the following paragraph shall be inserted after paragraph (a)—

aa
a repayment falls to be made under sections 246N and 246Q of advance corporation tax paid by a company in respect of distributions made by it in such an accounting period; or

F3853

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

SCHEDULE 17 Minor corrections

Section 146.

1

Section 43(1) of the Taxes Act 1988 shall have effect, and be deemed always to have had effect, as if the words “or IV” were omitted.

2

1

Subsection (1) of section 271 of that Act shall have effect, and be deemed always to have had effect, as if—

a

the words “or contract”, wherever they occur, were omitted;

b

in paragraph (b), the words “or the contract was made after that date” were omitted; and

c

in paragraph (c), the words “or, as the case may be, the body with which the contract was made” were omitted.

2

Subsection (2) of that section shall have effect, and be deemed always to have had effect, as if paragraph (b) and the word “or” immediately preceding it were omitted.

F3863

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

F3874

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

5

Section 561(2)(c) of that Act shall have effect, and be deemed always to have had effect, as if for “subsection (4)” there were substituted “subsection (6)”.

6

Section 576(5) of that Act (in its application as amended by the M145Taxation of Chargeable Gains Act 1992) shall have effect, and be deemed always to have had effect, as if after “128(2)” there were inserted “of the 1992 Act”.

7

Section 768(6) of that Act (in its application as amended by the M146Capital Allowances Act 1990) shall have effect, and be deemed always to have had effect, as if for “section 161(5)” there were substituted “section 161(6)”.

8

Sections 842(4) and 843(2) of that Act (in their application as amended by the M147Taxation of Chargeable Gains Act 1992) shall have effect, and be deemed always to have had effect, as if, in each case, for “the 1990 Act” there were substituted “the 1992 Act”.

9

Paragraph 8(b) of Schedule 11 to that Act (in its application as amended by the M148Capital Allowances Act 1990) shall have effect, and be deemed always to have had effect, as if the words “Chapter II of Part I of the 1968 Act or” were omitted.

F388 F388SCHEDULE 18

Annotations:

Amendments (Textual)

F388

Sch. 18 repealed (with effect as mentioned in s. 83(3) of the amending Act) by Finance Act 2002 (c. 23), s. 141, Sch. 40 Pt. 3(13)

F449 Application of insurance companies provisions relating to loan relationships

Annotations:

Amendments (Textual)

F449

Sch. 18 paras. 1, 1A and cross-heading substituted for Sch. 18 paras. 1 and 2 (29.4.1996 with effect as mentioned in s. 105(1) of the amending Act) by 1996 c. 8, s. 104, Sch. 14 para. 79 (with savings etc. in Pt. IV Ch. II (ss. 80-105))

F448 C461

1

Part I of Schedule 11 to the Finance Act 1996 (special provision with respect to loan relationships for insurance companies) shall have effect (subject to sub-paragraph (2) below) in relation to qualifying contracts as it has effect in relation to loan relationships which are creditor relationships within the meaning of Chapter II of Part IV of that Act.

2

That Part of that Schedule shall have effect in its application in relation to qualifying contracts, as if—

a

references to section 82(2) of the Finance Act 1996 were references to section 159 of this Act, and

b

references to credits and debits given by Chapter II of Part IV of that Act in respect of a loan relationship were references, respectively, to the profits and losses deriving from the contract.

b

accordingly, the whole of that profit or loss shall be treated for the purposes of section 160 of this Act as a non-trading profit or loss.

Interpretation

4

In this Schedule—

F451. . .
F452. . .
“non-life mutual business” means any mutual trading, or any mutual insurance or other mutual business, which (in either case) is not life assurance business.

F453. . .

SCHEDULE 19 Management: other amendments

Section 196.

Part I Amendments of Management Act

Notice of liability to income tax and capital gains tax

1

For section 7 of the Management Act there shall be substituted the following section—

7 Notice of liability to income tax and capital gains tax.
1
Every person who—
a
is chargeable to income tax or capital gains tax for any year of assessment, and
b
has not received a notice under section 8 of this Act requiring a return for that year of his total income and chargeable gains,
shall, subject to subsection (3) below, within six months from the end of that year, give notice to an officer of the Board that he is so chargeable.
2
In the case of a person who is chargeable as mentioned in subsection (1) above as a trustee of a settlement, that subsection shall have effect as if the reference to a notice under section 8 of this Act were a reference to a notice under section 8A of this Act.
3
A person shall not be required to give notice under subsection (1) above in respect of a year of assessment if for that year his total income consists of income from sources falling within subsections (4) to (7) below and he has no chargeable gains.
4
A source of income falls within this subsection in relation to a year of assessment if—
a
all payments of, or on account of, income from it during that year, and
b
all income from it for that year which does not consist of payments,
have or has been taken into account in the making of deductions or repayments of tax under section 203 of the principal Act.
5
A source of income falls within this subsection in relation to any person and any year of assessment if all income from it for that year has been or will be taken into account—
a
in determining that person’s liability to tax, or
b
in the making of deductions or repayments of tax under section 203 of the principal Act.
6
A source of income falls within this subsection in relation to any person and any year of assessment if all income from it for that year is—
a
income from which income tax has been deducted;
b
income from or on which income tax is treated as having been deducted or paid; or
c
income chargeable under Schedule F,
and that person is not for that year liable to tax at a rate other than the basic rate or the lower rate.
7
A source of income falls within this subsection in relation to any person and any year of assessment if all income from it for that year is income from which he could not become liable to tax under a self-assessment made under section 9 of this Act in respect of that year.
8
If any person, for any year of assessment, fails to comply with subsection (1) above, he shall be liable to a penalty not exceeding the amount of the tax—
a
in which he is assessed under section 9 or 29 of this Act in respect of that year, and
b
which is not paid on or before the 31st January next following that year.

2

This paragraph has effect as respects the year 1995-96 and subsequent years of assessment.

European Economic Interest Groupings

2

In subsection (2) of section 12A of the Management Act (European Economic Interest Groupings), for the words “making assessments to income tax, corporation tax and capital gains tax on members of a grouping” there shall be substituted the words “ securing that members of a grouping are assessed to income tax and capital gains tax or (as the case may be) corporation tax ”.

Records for purposes of returns

3

After section 12A of the Management Act there shall be inserted the following section—

Records
12B Records to be kept for purposes of returns.
1
Any person who may be required by a notice under section 8, 8A, 11 or 12AA of this Act (or under any of those sections as extended by section 12 of this Act) to make and deliver a return for a year of assessment or other period shall—
a
keep all such records as may be requisite for the purpose of enabling him to make and deliver a correct and complete return for the year or period; and
b
preserve those records until the end of whichever of the following is the later, namely—
i
the day mentioned in subsection (2) below; and
ii
where a return delivered by him is enquired into by an officer of the Board, the day on which, by virtue of section 28A(5) or 28B(5) of this Act, the officer’s enquiries are treated as completed.
2
The day referred to in subsection (1) above is—
a
in the case of a person carrying on a trade, profession or business alone or in partnership or a company, the fifth anniversary of the 31st January next following the year of assessment or (as the case may be) the sixth anniversary of the end of the period;
b
in any other case, the first anniversary of the 31st January next following the year of assessment or, where a return is delivered by the person concerned after that date, the quarter day next following the first anniversary of the day on which the return is delivered;
and the quarter days for the purposes of this subsection are 31st January, 30th April, 31st July and 31st October.
3
In the case of a person carrying on a trade, profession or business alone or in partnership—
a
the records required to be kept and preserved under subsection (1) above shall include records of the following, namely—
i
all amounts received and expended in the course of the trade, profession or business and the matters in respect of which the receipts and expenditure take place, and
ii
in the case of a trade involving dealing in goods, all sales and purchases of goods made in the course of the trade; and
b
the duty under that subsection shall include a duty to preserve until the day mentioned in subsection (2) above all supporting documents relating to such items as are mentioned in paragraph (a)(i) or (ii) above.
4
The duty under subsection (1) above to preserve records may be discharged by the preservation of the information contained in them; and where information is so preserved a copy of any document forming part of the records shall be admissible in evidence in any proceedings before the Commissioners to the same extent as the records themselves.
5
Any person who fails to comply with subsection (1) above in relation to a year of assessment or accounting period shall be liable to a penalty not exceeding £3,000.
6
For the purposes of this section—
a
a person engaged in the letting of property shall be treated as carrying on a trade; and
b
“supporting documents” includes accounts, books, deeds, contracts, vouchers and receipts.

Recovery of overpayment of tax etc.

4

1

After subsection (1A) of section 30 of the Management Act (recovery of overpayment of tax etc.) there shall be inserted the following subsection—

1B
Subsections (2) to (8) of section 29 of this Act shall apply in relation to an assessment under subsection (1) above as they apply in relation to an assessment under subsection (1) of that section; and subsection (4) of that section as so applied shall have effect as if the reference to the loss of tax were a reference to the repayment of the amount of tax which ought not to have been repaid.

2

For subsection (5) of that section there shall be substituted the following subsection—

5
An assessment under this section shall not be out of time under section 34 of this Act if it is made before the end of whichever of the following ends the later, namely—
a
the chargeable period following that in which the amount assessed was repaid or paid as the case may be, or
b
where a return delivered by the person concerned, or an amendment of such a return, is enquired into by an officer of the Board, the period ending with the day on which, by virtue of section 28A(5) of this Act, the officer’s enquiries are treated as completed.

Assessing procedure

5

1

After section 30 of the Management Act there shall be inserted the following section—

30A Assessing procedure.
1
Except as otherwise provided, all assessments to tax which are not self-assessments shall be made by an officer of the Board.
2
All income tax which falls to be charged by an assessment which is not a self-assessment may, notwithstanding that it was chargeable under more than one Schedule, be included in one assessment.
3
Notice of any such assessment shall be served on the person assessed and shall state the date on which it is issued and the time within which any appeal against the assessment may be made.
4
After the notice of any such assessment has been served on the person assessed, the assessment shall not be altered except in accordance with the express provisions of the Taxes Acts.
5
Assessments to tax which under any provision in the Taxes Acts are to be made by the Board shall be made in accordance with this section.

2

This paragraph, so far as it relates to partnerships whose trades, professions or businesses are set up and commenced before 6th April 1994, has effect as respects the year 1997-98 and subsequent years of assessment.

Amendment of partnership statement where loss of tax discovered

6

After section 30A of the Management Act there shall be inserted the following section—

30B Amendment of partnership statement where loss of tax discovered.
1
Where an officer of the Board or the Board discover, as regards a partnership statement made by any person (the representative partner) in respect of any period—
a
that any profits which ought to have been included in the statement have not been so included, or
b
that an amount of profits so included is or has become insufficient, or
c
that any relief claimed by the representative partner is or has become excessive,
the officer or, as the case may be, the Board may, subject to subsections (3) and (4) below, by notice to that partner so amend the statement as to make good the omission or deficiency or eliminate the excess.
2
Where a partnership statement is amended under subsection (1) above, the officer shall by notice to each of the relevant partners so amend their self-assessments under section 9 or 11AA of this Act as to give effect to the amendments of the partnership statement.
3
Where the situation mentioned in subsection (1) above is attributable to an error or mistake as to the basis on which the partnership statement ouade, no amendment shall be made under that subsection if that statement was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made.
4
No amendment shall be made under subsection (1) above unless one of the two conditions mentioned below is fulfilled.
5
The first condition is that the situation mentioned in subsection (1) above is attributable to fraudulent or negligent conduct on the part of—
a
the representative partner or a person acting on his behalf, or
b
a relevant partner or a person acting on behalf of such a partner.
6
The second condition is that at the time when an officer of the Board—
a
ceased to be entitled to give notice of his intention to enquire into the representative partner’s return under section 12AA of this Act; or
b
informed that partner that he had completed his enquiries into that return,
the officer could not have been reasonably expected, on the basis of the information made available to him before that time, to be aware of the situation mentioned in subsection (1) above.
7
Subsections (6) and (7) of section 29 of this Act apply for the purposes of subsection (6) above as they apply for the purposes of subsection (5) of that section; and those subsections as so applied shall have effect as if—
a
any reference to the taxpayer were a reference to the representative partner;
b
any reference to the taxpayer’s return under section 8, 8A or 11 were a reference to the representative partner’s return under section 12AA of this Act; and
c
sub-paragraph (ii) of paragraph (a) of subsection (7) were omitted.
8
An objection to the making of an amendment under subsection (1) above on the ground that neither of the two conditions mentioned above is fulfilled shall not be made otherwise than on an appeal against the amendment.
9
In this section—
“profits” has the same meaning as in section 29 of this Act;
“relevant partner” means a person who was a partner at any time during the period in respect of which the partnership statement was made.
10
Any reference in this section to the representative partner includes, unless the context otherwise requires, a reference to any successor of his.

Right of appeal

F3897

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

Error or mistake

8 F3901

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

2

The proviso to subsection (2) of that section shall cease to have effect and after that subsection there shall be inserted the following subsection—

2A
No relief shall be given under this section in respect of—
a
an error or mistake as to the basis on which the liability of the claimant ought to have been computed where the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made; or
b
an error or mistake in a claim which is included in the return.

9

After section 33 of the Management Act there shall be inserted the following section—

33A Error or mistake in partnership statement.
1
This section applies where, in the case of a trade, profession or business carried on by two or more persons in partnership, those persons allege that the tax charged by self-assessments of theirs under section 9 or 11AA of this Act was excessive by reason of some error or mistake in a partnership statement.
2
One of those persons (the representative partner) may, not later than five years after the filing date, by notice in writing make a claim to the Board for relief.
3
On receiving the claim the Board shall inquire into the matter and shall, subject to subsection (5) below, so amend the partnership statement so as to give such relief in respect of the error or mistake as is reasonable or just.
4
Where a partnership statement is amended under subsection (3) above, the Board shall by notice to each of the relevant partners so amend their self-assessments under section 9 or 11AA of this Act as to give effect to the amendment of the partnership statement.
5
No relief shall be given under this section in respect of an error or mistake as to the basis on which the liability of the partners ought to have been computed where the partnership statement was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made.
6
In determining the claim the Board—
a
shall have regard to all the relevant circumstances of the case, and
b
in particular shall consider whether the granting of relief would result in the exclusion from charge to tax of any part of the profits of any of the partners;
and for the purposes of this subsection the Board may take into consideration the liability of the partners and their self-assessments in respect of chargeable periods other than that to which the claim relates.
7
If any appeal is brought from the decision of the Board on the claim, the Special Commissioners shall hear and determine the appeal in accordance with the principles to be followed by the Board in determining claims under this section.
8
Neither the representative partner nor the Board shall be entitled to require a case to be stated under section 56 of this Act otherwise than on a point of law arising in connection with the computation of profits.
9
In this section—
“filing date” has the same meaning as in section 12AC of this Act;
“profits” has the same meaning as in section 33 of this Act;
“relevant partner” means a person who was a partner at any time during the period in respect of which the partnership statement was made.
10
Any reference in this section to the representative partner includes, unless the context otherwise requires, a reference to any successor of his.

Time limits for assessments

F39110

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

11

1

In subsection (1) of section 36 of the Management Act (fraudulent or negligent conduct), for the words from “twenty years” to the end there shall be substituted the words—

a
in the case of an assessment to income tax or capital gains tax, twenty years after the 31st January next following the year of assessment to which it relates; and
b
in the case of an assessment to corporation tax, twenty-one years after the end of the accounting period to which it relates.

2

For subsection (2) of that section there shall be substituted the following subsection—

2
Where the person in default carried on a trade, profession or business with one or more other persons at any time in the period for which the assessment is made, an assessment in respect of the profits or gains of the trade, profession or business for the purpose mentioned in subsection (1) above may be made not only on the person in default but also on his partner or any of his partners.

12

In subsections (1) and (2) of section 40 of the Management Act (assessments on personal representatives), for the words “the third year next following the year of assessment” there shall be substituted the words “ the period of three years beginning with the 31st January next following the year of assessment ”.

Claims etc.

13

For section 42 of the Management Act there shall be substituted the following section—

42 Procedure for making claims etc.
1
Where any provision of the Taxes Acts provides for relief to be given, or any other thing to be done, on the making of a claim, this section shall, unless otherwise provided, have effect in relation to the claim.
2
Subject to subsection (3) below, where notice has been given under section 8, 8A, 11 or 12AA of this Act, a claim shall not at any time be made otherwise than by being included in a return under that section if it could, at that or any subsequent time, be made by being so included.
3
Subsection (2) above shall not apply in relation to any claim which falls to be taken into account in the making of deductions or repayments of tax under section 203 of the principal Act.
4
A claim made by a company for payment of a tax credit shall be made by being included in a return under section 11 of this Act.
5
The references in subsections (2) and (4) above to a claim being included in a return include references to a claim being so included by virtue of an amendment of the return; and the reference in subsection (4) above to a claim for payment includes a reference to a claim resulting in payment.
6
In the case of a trade, profession or business carried on by persons in partnership, a claim under any of the provisions mentioned in subsection (7) below shall be made—
a
where subsection (2) above applies, by being included in a return under section 12AA of this Act, and
b
in any other case, by such one of those persons as may be nominated by them for the purpose.
7
The provisions are—
a
sections 84, 91B, 101(2), 120(2), 401, 471, 472, 484, 504, 531, 534, 535, 537A, 538, 570, 571(4), 579(4), 723(3), 732(4), 810 of, and paragraphs 2, 6 and 11 of Schedule 5 to, the principal Act;
b
section 43(5) of the Finance Act 1989;
c
sections 1, 11, 17, 22, 23, 24, 25, 30, 31, 33, 37, 48, 49, 53, 55, 68(5), 68(9), 77, 78, 124A, 129(2), 140(3), 141 and 158 of the Capital Allowances Act 1990; and
d
sections 41 and 42 of the Finance (No. 2) Act 1992.
8
A claim may be made on behalf of an incapacitated person by his trustee, guardian, tutor or curator; and a person who under Part VIII of this Act has been charged with tax on the profits of another person may make any such claim for relief by discharge or repayment of that tax.
9
Where a claim has been made (whether by being included in a return under section 8, 8A, 11 or 12AA of this Act or otherwise) and the claimant subsequently discovers that an error or mistake has been made in the claim, the claimant may make a supplementary claim within the time allowed for making the original claim.
10
This section shall apply in relation to any elections and notices as it applies in relation to claims.
11
Schedule 1A to this Act shall apply as respects any claim, election or notice which—
a
is made otherwise than by being included in a return under section 8, 8A, 11 or 12AA of this Act, and
b
does not fall to be taken into account in the making of deductions or repayments of tax under section 203 of the principal Act.
12
Schedule 2 to this Act shall have effect as respects the Commissioners to whom an appeal lies under Schedule 1A to this Act.
13
In this section “profits”—
a
in relation to income tax, means income,
b
in relation to capital gains tax, means chargeable gains, and
c
in relation to corporation tax, means profits as computed for the purposes of that tax.

F39214

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

F39315

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

Determination of Commissioners

F39416

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

Procedure on appeal

17

1

For subsections (6) and (7) of section 50 of the Management Act (procedure on appeal) there shall be substituted the following subsections—

6
If, on an appeal, it appears to the majority of the Commissioners present at the hearing, by examination of the appellant on oath or affirmation, or by other F395. . . evidence—
a
that, by reason of an amendment under section 28A(2) or (4) of this Act, the appellant is overcharged by a self-assessment;
b
that, by reason of an amendment under section 28B(3) or 30B(1) of this Act, any amounts contained in a partnership statement are excessive; or
c
that the appellant is overcharged by an assessment other than a self-assessment,
the assessment or amounts shall be reduced accordingly, but otherwise the assessment or statement shall stand good.
7
If, on an appeal, it appears to the Commissioners—
a
that the appellant is undercharged to tax by a self-assessment which has been amended under section 28A(2) or (4) of this Act;
b
that any amounts contained in a partnership statement which has been amended under section 28B(3) or 30B(1) of this Act are insufficient; or
c
that the appellant is undercharged by an assessment other than a self-assessment,
the assessment or amounts shall be increased accordingly.

2

In subsection (8) of that section, after the words “an assessment” there shall be inserted the words “ (other than a self-assessment) ”.

F3963

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

Postponement of tax pending appeal

18

1

For subsection (1) of section 55 of the Management Act there shall be substituted the following subsection—

1
This section applies to an appeal to the Commissioners against—
a
an amendment made under section 28A(2) or (4) of this Act of a self-assessment,
b
an assessment to tax made under section 29 of this Act,
c
an assessment to income tax made under Schedule 16 to the principal Act (income tax on company payments) other than an assessment charging tax the time for the payment of which is given by paragraph 4(1) or 9 of that Schedule, or
d
a notice under subsection (1) or (3) of section 753 of that Act where, before the appeal is determined, the appellant is assessed to tax under section 747(4)(a) of that Act by reference to an amount of chargeable profits specified in that notice.

2

In the following provisions of that section, for the word “assessment”, in each place where it occurs, there shall be substituted the words “ amendment or assessment ”.

Collection and recovery

F39719

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

F39820

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

21

1

In subsection (2) of section 70 of the Management Act (evidence), for the words “that interest is payable” to “ another collector ” there shall be substituted the words—

a
that a penalty is payable under Part II, VA or X of this Act, that a surcharge is payable under Part VA of this Act or that interest is payable under Part IX of this Act, and
b
that payment of the penalty, surcharge or interest has not been made to him or, to the best of his knowledge and belief, to any other collector or to any person acting on his behalf or on behalf of another collector,

2

Subsection (3) of that section shall cease to have effect.

22

1

After section 70 of the Management Act there shall be inserted the following section—

70A Payments by cheque.
1
For the purposes of this Act and the provisions mentioned in subsection (2) below, where—
a
any payment to an officer of the Board or the Board is made by cheque, and
b
the cheque is paid on its first presentation to the banker on whom it is drawn,
the payment shall be treated as made on the day on which the cheque was received by the officer or the Board.
2
The provisions are—
a
sections 824 to 826 of the principal Act (repayment supplements and interest on tax overpaid); and
b
section 283 of the 1992 Act (repayment supplements).

2

This paragraph has effect as respects cheques received on or after 6th April 1996.

Interest on overdue tax or tax recovered

F39923

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

24

In subsection (1) of section 87A of the Management Act (interest on overdue corporation tax etc.), for the words “section 10 of the principal Act” there shall be substituted the words “ section 59D of this Act ”.

Penalties

25

For section 93 of the Management Act there shall be substituted the following section—

93 Failure to make return for income tax and capital gains tax.
1
This section applies where—
a
any person (the taxpayer) has been required by a notice served under or for the purposes of section 8 or 8A of this Act (or either of those sections as extended by section 12 of this Act) to deliver any return, and
b
he fails to comply with the notice.
2
The taxpayer shall be liable to a penalty which shall be £100.
3
If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, the taxpayer shall be liable to a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed).
4
If—
a
the failure by the taxpayer to comply with the notice continues after the end of the period of six months beginning with the filing date, and
b
no application is made under subsection (3) above before the end of that period,
the taxpayer shall be liable to a further penalty which shall be £100.
5
Without prejudice to any penalties under subsections (2) to (4) above, if—
a
the failure by the taxpayer to comply with the notice continues after the anniversary of the filing date, and
b
there would have been a liability to tax shown in the return,
the taxpayer shall be liable to a penalty of an amount not exceeding the liability to tax which would have been so shown.
6
No penalty shall be imposed under subsection (3) above in respect of a failure at any time after the failure has been remedied.
7
If the taxpayer proves that the liability to tax shown in the return would not have exceeded a particular amount, the penalty under subsection (2) above, together with any penalty under subsection (4) above, shall not exceed that amount.
8
On an appeal against the determination under section 100 of this Act of a penalty under subsection (2) or (4) above, neither section 50(6) to (8) nor section 100B(2) of this Act shall apply but the Commissioners may—
a
if it appears to them that, throughout the period of default, the taxpayer had a reasonable excuse for not delivering the return, set the determination aside; or
b
if it does not so appear to them, confirm the determination.
9
References in this section to a liability to tax which would have been shown in the return are references to an amount which, if a proper return had been delivered on the filing date, would have been payable by the taxpayer under section 59B of this Act for the year of assessment.
10
In this section—
“the filing date” means the day mentioned in section 8(1A) or, as the case may be, section 8A(1A) of this Act;
“the period of default”, in relation to any failure to deliver a return, means the period beginning with the filing date and ending with the day before that on which the return was delivered.

26

After section 93 of the Management Act there shall be inserted the following section—

93A Failure to make partnership return.
1
This section applies where, in the case of a trade, profession or business carried on by two or more persons in partnership—
a
a partner (the representative partner) has been required by a notice served under or for the purposes of section 12AA(2) or (3) of this Act to deliver any return, and
b
he fails to comply with the notice.
2
Each relevant partner shall be liable to a penalty which shall be £100.
3
If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, each relevant partner shall be liable, for each day on which the failure continues after the day on which the representative partner is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed), to a further penalty or penalties not exceeding £60.
4
If—
a
the failure by the representative partner to comply with the notice continues after the end of the period of six months beginning with the filing date, and
b
no application is made under subsection (3) above before the end of that period,
each relevant partner shall be liable to a further penalty which shall be £100.
5
No penalty shall be imposed under subsection (3) above in respect of a failure at any time after the failure has been remedied.
6
Where, in respect of the same failure to comply, penalties under subsection (2), (3) or (4) above are determined under section 100 of this Act as regards two or more relevant partners—
a
no appeal against the determination of any of those penalties shall be brought otherwise than by the representative partner;
b
any appeal by that partner shall be a composite appeal against the determination of each of those penalties; and
c
section 100B(3) of this Act shall apply as if that partner were the person liable to each of those penalties.
7
On an appeal against a determination under section 100 of this Act of a penalty under subsection (2) or (4) above, neither section 50(6) to (8) nor section 100B(2) of this Act shall apply but the Commissioners may—
a
if it appears to them that, throughout the period of default, the representative partner had a reasonable excuse for not delivering the return, set the determination aside; or
b
if it does not so appear to them, confirm the determination.
8
In this section—
“the filing date” means the day specified in the notice under section 12AA(2) or (3) of this Act;
“the period of default”, in relation to any failure to deliver a return, means the period beginning with the filing date and ending with the day before that on which the return was delivered;
“relevant partner” means a person who was a partner at any time during the period in respect of which the return was required.

27

1

In subsection (1) of section 95 of the Management Act (incorrect return or accounts for income tax or capital gains tax), for the words “section 8 or 8A or 9 of this Act (or any of those sections” there shall be substituted the words “ section 8 or 8A of this Act (or either of those sections ”.

2

In subsection (3) of that section, the words from “and the references” to the end shall cease to have effect.

28

After section 95 of the Management Act there shall be inserted the following section—

95A Incorrect partnership return or accounts.
1
This section applies where, in the case of a trade, profession or business carried on by two or more persons in partnership—
a
a partner (the representative partner)—
i
delivers an incorrect return of a kind mentioned in section 12AA of this Act, or
ii
makes any incorrect statement or declaration in connection with such a return, or
iii
submits to an officer of the Board any incorrect accounts in connection with such a return, and
b
either he does so fraudulently or negligently, or his doing so is attributable to fraudulent or negligent conduct on the part of a relevant partner.
2
Each relevant partner shall be liable to a penalty not exceeding the difference between—
a
the amount of income tax or corporation tax payable by him for the relevant period (including any amount of income tax deducted at source and not repayable), and
b
the amount which would have been the amount so payable if the return, statement, declaration or accounts made or submitted by the representative partner had been correct;
and in determining each such penalty, regard shall be had only to the fraud or negligence, or the fraudulent or negligent conduct, mentioned in subsection (1(b) above.
3
Where, in respect of the same return, statement, declaration or accounts, penalties under subsection (2) above are determined under section 100 of this Act as regards two or more relevant partners—
a
no appeal against the determination of any of those penalties shall be brought otherwise than by the representative partner;
b
any appeal by that partner shall be a composite appeal against the determination of each of those penalties; and
c
section 100B(3) of this Act shall apply as if that partner were the person liable to each of those penalties.
4
In this section—
“relevant partner” means a person who was a partner at any time during the relevant period;
“relevant period” means the period in respect of which the return was made.

29

After section 97 of the Management Act there shall be inserted the following section—

97AA Failure to produce documents under section 19A.
1
Where a person fails to comply with a notice or requirement under section 19A(2) or (3) of this Act, he shall be liable, subject to subsection (4) below—
a
to a penalty which shall be £50, and
b
if the failure continues after a penalty is imposed under paragraph (a) above, to a further penalty or penalties not exceeding the relevant amount for each day on which the failure continues after the day on which the penalty under that paragraph was imposed (but excluding any day for which a penalty under this paragraph has already been imposed).
2
In subsection (1)(b) above “the relevant amount” means—
a
in the case of a determination of a penalty by an officer of the Board under section 100 of this Act, £30;
b
in the case of a determination of a penalty by the Commissioners under section 100C of this Act, £150.
3
An officer of the Board authorised by the Board for the purposes of section 100C of this Act may commence proceedings under that section for any penalty under subsection (1)(b) above, notwithstanding that it is not a penalty to which subsection (1) of section 100 of this Act does not apply by virtue of subsection (2) of that section.
4
No penalty shall be imposed under subsection (1) above in respect of a failure within that subsection at any time after the failure has been remedied.

30

1

For subsection (2) of section 98B of the Management Act (European Economic Interest Groupings) there shall be substituted the following subsections—

2
Subsections (2A) to (4) below apply where a grouping or member of a grouping required by a notice given under section 12A of this Act to deliver a return or other document fails to comply with the notice.
2A
The grouping or member shall be liable to a penalty not exceeding £300 multiplied by the number of members of the grouping at the time of the failure to comply.
2B
If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, the grouping or member shall be liable, for each day on which the failure continues after the day on which the grouping or member is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed), to a further penalty or penalties not exceeding £60 multiplied by the number of members of the grouping at the end of that day.

2

In subsection (3) of that section, for the words “subsection (2)” there shall be substituted the words “ subsection (2A) or (2B) ”.

3

In subsection (4) of that section, for the words “subsection (2)” there shall be substituted the words “ subsections (2A) and (2B) ”.

31

1

In subsection (1) of section 100B of the Management Act (appeals against penalty determinations), after the words “subject to” there shall be inserted the words “ sections 93, 93A and 95A of this Act ”.

2

At the beginning of subsection (2) of that section there shall be inserted the words “ Subject to sections 93(8) and 93A(7) of this Act ”.

32

In subsection (2) of section 103 of the Management Act (time limit for penalties), for the words “the end of the chargeable period” there shall be substituted the words “ the 31st January next following the chargeable period ”.

33

After section 103 of the Management Act there shall be inserted the following section—

103A Interest on penalties.
A penalty under any of the provisions of Part II or VA or this Part of this Act shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the date on which it becomes due and payable until payment.

Interpretation

34

1

In subsection (1) of section 118 of the Management Act (interpretation), after the definition of F400“the Special Commissioners Regulations” there shall be inserted the following definitions—

“successor”, in relation to a person who has made and delivered a return under section 12AA of this Act, and “predecessor” and “successor”, in relation to the successor of such a person, shall be construed in accordance with section 12AC(6) of this Act;

2

Subsection (3) of that section (effect of assessments in partnership name) shall cease to have effect.

3

Sub-paragraph (2) above, so far as it relates to partnerships whose trades, professions or businesses are set up and commenced before 6th April 1994, has effect as respects the year 1997-98 and subsequent years of assessment.

Claims etc. not included in returns

35

After Schedule 1 to the Management Act there shall be inserted the following Schedule—

Schedule 1A Claims etc. not Included in Returns
Preliminary
1
In this Schedule—
“claim” means a claim, election or notice as respects which this Schedule applies;
“partnership claim” means a claim made in accordance with section 42(6)(b) of this Act;
“profits” has the same meaning as in section 42 of this Act;
“relevant partner”, in relation to a partnership claim, means any person who was a partner at any time during the period in respect of which the claim is made;
“successor”, in relation to a person who—
a
has made a partnership claim, but
b
is no longer a partner or is otherwise no longer available,
means such other partner who may at any time be nominated for the purposes of this paragraph by the majority of the partners at that time, and “predecessor” and “successor”, in relation to a person so nominated, shall be construed accordingly.
Making of claims
2
1
Subject to any provision in the Taxes Acts for a claim to be made to the Board, every claim shall be made to an officer of the Board.
2
No claim requiring the repayment of tax shall be made unless the claimant has documentary proof that the tax has been paid by deduction or otherwise.
3
A claim shall be made in such form as the Board may determine.
4
The form of claim shall provide for a declaration to the effect that all the particulars given in the form are correctly stated to the best of the information and belief of the person making the claim.
5
The form of claim may require—
a
a statement of the amount of tax which will be required to be discharged or repaid in order to give effect to the claim;
b
a return of profits to be made in support of the claim; and
c
any such particulars of assets acquired as may be required in a return by virtue of section 12 of this Act.
6
In the case of a claim made by or on behalf of a person who is not resident, or who claims to be not resident or not ordinarily resident or not domiciled, in the United Kingdom, an officer of the Board or the Board may require a statement or declaration in support of the claim to be made by affidavit.
Amendments of claims
3
1
Subject to sub-paragraph (2) below—
a
at any time before the end of the period of nine months beginning with the day on which a claim is made, an officer of the Board may by notice to the claimant so amend the claim as to correct any obvious errors or mistakes in the return (whether errors of principle, arithmetical mistakes or otherwise); and
b
at any time before the end of the period of twelve months beginning with the day on which the claim is made, the claimant may amend his claim by notice to an officer of the Board.
2
No amendment of a claim may be made under sub-paragraph (1) above at any time during the period—
a
beginning with the day on which an officer of the Board gives notice of his intention to enquire into the claim, and
b
ending with the day on which the officer’s enquiries into the claim are completed.
Giving effect to claims and amendments
4
1
An officer of the Board or the Board shall, as soon as practicable after a claim other than a partnership claim is made, or such a claim is amended under paragraph 3 above, give effect to the claim or amendment by discharge or repayment of tax.
2
An officer of the Board or the Board shall, as soon as practicable after a partnership claim is made, or such a claim is amended under paragraph 3 above, give effect to the claim or amendment, as respects each of the relevant partners, by discharge or repayment of tax.
Power to enquire into claims
5
1
An officer of the Board may enquire into—
a
a claim made by any person, or
b
any amendment made by any person of a claim made by him,
if, before the end of the period mentioned in sub-paragraph (2) below, he gives notice in writing of his intention to do so to that person or, in the case of a partnership claim, any successor of that person.
2
The period referred to in sub-paragraph (1) above is the period ending with the quarter day next following the first anniversary of the day on which the claim or amendment was made; and the quarter days for the purposes of this subsection are 31st January, 30th April, 31st July and 31st October.
3
A claim or amendment which has been enquired into under sub-paragraph (1) above shall not be the subject of a further notice under that sub-paragraph.
Power to call for documents for purposes of enquiries
6
1
This paragraph applies where an officer of the Board gives notice under paragraph 5 above to any person (the claimant) of his intention to enquire into—
a
a claim made by the claimant, or
b
any amendment made by the claimant of such a claim.
2
For the purpose of enquiring into the claim or amendment, the officer may at the same or any subsequent time by notice in writing require the claimant, within such time (which shall not be less than 30 days) as may be specified in the notice—
a
to produce to the officer such documents as are in the claimant’s possession or power and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which the claim or amendment is incorrect, and
b
to furnish the officer with such accounts or particulars as he may reasonably require for that purpose.
3
Subsections (3) to (11) of section 19A of this Act apply for the purposes of this paragraph as they apply for the purposes of that section; and those subsections as so applied shall have effect as if any reference to subsection (2) of that section were a reference to sub-paragraph (2) above.
4
Where this paragraph applies in relation to a partnership claim, any reference in this paragraph to the claimant includes a reference to any predecessor or successor of his.
Amendments of claims where enquiries made
7
1
This paragraph applies where an officer of the Board gives notice under paragraph 5(1) above to any person (the claimant) of his intention to enquire into—
a
a claim made by the claimant, or
b
any amendment made by the claimant of such a claim.
2
At any time in the period of 30 days beginning with the day on which the officer’s enquiries are completed, the claimant may so amend his claim—
a
as to eliminate or make good any excess or deficiency which, on the basis of the conclusions stated in the officer’s notice under sub-paragraph (4) below, is an excess or deficiency which could be made good or eliminated under sub-paragraph (3) below; or
b
as to give effect to any amendments to the claim which he has notified to the officer.
3
If, at any time in the period of 30 days beginning immediately after the period mentioned in sub-paragraph (2) above, the officer is of opinion that—
a
the claimant’s claim is excessive or insufficient, and
b
in a case falling within sub-paragraph (1)(b) above, the excess or deficiency is attributable (wholly or partly) to the claimant’s amendment,
the officer may by notice to the claimant so amend the claim as to eliminate or make good the excess or deficiency or, where paragraph (b) above applies, so much of the excess or deficiency as is so attributable.
4
Subject to sub-paragraph (5) below, the officer’s enquiries shall be treated as completed at such time as he by notice—
a
informs the claimant that he has completed his enquiries, and
b
states his conclusions as to the amount which should be the amount of the claimant’s claim.
5
Subsections (6) and (7) of section 28A of this Act apply for the purposes of sub-paragraph (4) above as they apply for the purposes of subsection (5) of that section.
6
Where this paragraph applies in relation to a partnership claim, any reference in this paragraph to the claimant includes a reference to any predecessor or successor of his.
Giving effect to such amendments
8
1
An officer of the Board or the Board shall, within 30 days of a claim other than a partnership claim being amended under paragraph 7(2) or (3) above, give effect to the amendment by making such adjustment as may be necessary, whether—
a
by way of assessment on the claimant, or
b
by discharge of tax or, on proof to the satisfaction of the officer or the Board that any tax has been paid by the claimant by deduction or otherwise, by repayment of tax.
2
An officer of the Board or the Board shall, within 30 days of a partnership claim being amended under paragraph 7(2) or (3) above, give effect to the amendment, as respects each of the relevant partners, by making such adjustment as may be necessary, whether—
a
by way of assessment on the partner, or
b
by discharge of tax or, on proof to the satisfaction of the officer or the Board that any tax has been paid by the partner by deduction or otherwise, by repayment of tax.
3
An assessment made under sub-paragraph (1) or (2) above shall not be out of time if it is made within the time mentioned in that sub-paragraph.
Appeals against such amendments
9
1
An appeal may be brought against an amendment made under paragraph 7(3) above by giving written notice to the officer within 30 days of the amendment being made.
2
Where, in the case of such an appeal, the issues arising include—
a
any question arising under section 278 of the principal Act (personal reliefs for non-residents);
b
any question of residence, ordinary residence or domicile; or
c
the question whether a fund is one to which section 615(3) of that Act applies (pension funds for service abroad),
the time for bringing the appeal shall be three months from the making of the amendment under paragraph 7(3) above.
3
On an appeal under this paragraph, the Commissioners may vary the amendment appealed against whether or not the variation is to the advantage of the appellant.
4
Where an amendment made under paragraph 7(3) above is varied, whether by the Commissioners or by the order of any court, paragraph 8 above shall (with the necessary modifications) apply in relation to the variation as it applied in relation to the amendment.

F40136

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

Part II Amendments of Taxes Act 1988

Time limits for claims under section 96

37

1

In subsection (8) of section 96 of the Taxes Act 1988 (farming and market gardening: relief for fluctuating profits)—

a

for the words “two years after the end of” there shall be substituted the words “ twelve months from the 31st January next following ”; and

b

for the words “before the end of” there shall be substituted the words “ before the 31st January next following ”.

2

This paragraph has effect where the first of the two years of assessment to which the claim relates is the year 1996-97 or any subsequent year.

Interest on Schedule E tax

38

In subsection (2)(dd) of section 203 of the Taxes Act 1988 (PAYE), the words from “(being not less” to “due)” shall cease to have effect.

Time limits for claims under sections 534 and 537A

39

In subsection (5) of section 534 of the Taxes Act 1988 (relief for copyright payments etc.), for the words from “and such a claim” to the end there shall be substituted the words “ and such a claim may be made at any time not later than seven years from the 31st January next following the year of assessment in which the work’s first publication occurs. ”

40

In subsection (5) of section 537A of the Taxes Act 1988 (relief for payments in respect of designs), for the words from “and such a claim” to “eight years after” there shall be substituted the words “ and such a claim may be made at any time not later than seven years from the 31st January next following the year of assessment in which ”.

Repayment supplements: income tax

41

1

For subsection (1) of section 824 of the Taxes Act 1988 (repayment supplements: individuals and others) there shall be substituted the following subsection—

1
Subject to the following provisions of this section, a repayment made by the Board or an officer of the Board of any of the following, namely—
a
an amount paid on account of income tax under section 59A of the Management Act;
b
any income tax paid by or on behalf of an individual for a year of assessment;
c
a surcharge imposed under section 59C of that Act; and
d
a penalty incurred by an individual under any of the provisions of that Act,
shall be increased under this section by an amount (a “repayment supplement”) equal to interest on the amount repaid at the rate applicable under section 178 of the Finance Act 1989 for the period (if any) between the relevant time and the date on which the order for the repayment is issued.

2

For subsection (3) of that section there shall be substituted the following subsection—

3
For the purposes of subsection (1) above—
a
if the repayment is of an amount paid on account of income tax, the relevant time is either the date on which the amount became due and payable in accordance with section 59A of the Management Act or, if later, the date on which the amount was paid;
b
if the repayment is of income tax, the relevant time is either the 31st January next following the year of assessment for which the tax was charged or, if later, the date on which the tax was paid; and
c
if the repayment is of a penalty or surcharge, the relevant timee is either the date following the expiry of 30 days from the date on which the penalty or surcharge was incurred or imposed or, if later, the date on which the penalty or surcharge was paid.

3

The following shall cease to have effect, namely—

a

subsection (5) of that section;

b

in subsection (9) of that section the words “a partnership” and the words “(within the meaning of section 111 of the Finance Act 1989)”; and

c

subsection (10) of that section.

4 Interest on tax overpaid

42

In subsection (2) of section 826 of the Taxes Act 1988 (interest on tax overpaid), for the words “section 10” there shall be substituted the words “ section 59D of the Management Act (payment of corporation tax) ”.

Time limits for elections under Schedule 5

43

1

In sub-paragraph (3) of paragraph 2 of Schedule 5 to the Taxes Act 1988 (farming: election for the herd basis), for the words from “not later” to the end there shall be substituted the following paragraphs—

a
in the case of an election by a person chargeable to income tax, not later than twelve months from the 31st January next following the qualifying year of assessment;
b
in the case of an election on behalf of persons in partnership, not later than twelve months from the 31st January next following the year of assessment in which the qualifying period of account ends; and
c
in the case of an election by a person chargeable to corporation tax, not later than two years from the end of the qualifying accounting period.

2

In sub-paragraph (4) of that paragraph, for paragraphs (a) and (b) there shall be substituted the following paragraphs—

a
in a case falling within sub-paragraph (3)(a) above, for the qualifying year of assessment and all subsequent years;
b
in a case falling within sub-paragraph (3)(b) above, for the qualifying period of account and all subsequent periods of account; and
c
in a case falling within sub-paragraph (3)(c) above, for the qualifying accounting period and all subsequent accounting periods.

3

After that sub-paragraph there shall be inserted the following sub-paragraphs—

5
Where, in a case falling within sub-paragraph (3)(a) above, the commencement year immediately precedes the qualifying year of assessment, sub-paragraph (4)(a) above shall have effect as if the reference to the qualifying year of assessment were a reference to the commencement year.
6
In this paragraph—
“commencement year”, in relation to a person chargeable to income tax, means the year of assessment in which his trade is set up and commenced;
“period of account”, in relation to persons in partnership, means any period for which accounts are drawn up;
“qualifying accounting period”, in relation to a person chargeable to corporation tax, means the first accounting period during the whole or part of which it kept a production herd of the class in question;
“qualifying period of account”, in relation to persons in partnership, means the first period of account during the whole or part of which those persons kept such a herd;
“qualifying year of assessment”, in relation to a person chargeable to income tax, means the first year of assessment after the commencement year for which the amount of profits or gains or losses in respect of his farming is computed for tax purposes by reference to the facts of a period during the whole or part of which he kept such a herd.

4

In paragraph 6 of that Schedule, for sub-paragraphs (2) to (4) there shall be substituted the following sub-paragraphs—

2
An election for the herd basis made by virtue of sub-paragraph (1) above shall only be valid if made—
a
in the case of an election by a person chargeable to income tax, not later than twelve months from the 31st January next following the qualifying year of assessment;
b
in the case of an election on behalf of persons in partnership, not later than twelve months from the 31st January next following the year of assessment in which the qualifying period of account ends; and
c
in the case of an election by a person chargeable to corporation tax, not later than two years from the end of the qualifying accounting period.
3
An election for the herd basis made by virtue of sub-paragraph (1) above shall, notwithstanding paragraph 2(4) above, have effect—
a
in a case falling within sub-paragraph (2)(a) above, for the qualifying year of assessment and all subsequent years;
b
in a case falling within sub-paragraph (2)(b) above, for the qualifying period of account and all subsequent periods of account; and
c
in a case falling within sub-paragraph (2)(c) above, for the qualifying accounting period and all subsequent accounting periods.
4
In this paragraph—
“period of account”, in relation to persons in partnership, means any period for which accounts are drawn up;
“qualifying accounting period”, in relation to a person chargeable to corporation tax, means the first accounting period in which the compensation is relevant;
“qualifying period of account”, in relation to persons in partnership, means the first period of account in which the compensation is relevant;
“qualifying year of assessment”, in relation to a person chargeable to income tax, means the first year of assessment for which the amount of profits or gains or losses in respect of his farming falls to be computed for tax purposes by reference to the facts of a period in which the compensation is relevant.

Part III Amendments of other enactments

Setting of rates of interest

44

In subsection (2)(f) of section 178 of the M149Finance Act 1989 (setting of rates of interest), for the words “sections 86, 86A, 87, 87A, and 88” there shall be substituted the words “ sections 59C, 86, 86A, 87, 87A, 88 and 103A ”.

Class 4 contributions

45

In subsection (1) of section 16 of the M150Social Security Contributions and Benefits Act 1992 (application of Income Tax Acts to class 4 contributions), for paragraph (b) there shall be substituted the following paragraph—

b
the provisions of Part VA (payment of tax) and Part X (penalties) of the Taxes Management Act 1970,

Repayment supplements: capital gains tax

46

1

In subsection (1) of section 283 of the M151Taxation of Chargeable Gains Act 1992 (repayment supplements)—

a

for the words from “for which” to “that year of assessment” there shall be substituted the words “ a repayment of that ta is made by the Board or an officer of the Board ”, and

b

for the words “the end of the tax month in which” there shall be substituted the words “ the date on which ”.

2

For subsection (2) of that section there shall be substituted the following subsection—

2
For the purposes of subsection (1) above, the relevant time is either the 31st January next following the year of assessment for which the tax was payable or, if later, the date on which the tax was paid.

3

In subsection (4) of that section, for the words from “partnership” to “section 701(9) of that Act)” there shall be substituted the words “ trust or ”.

4

Subsection (5) of that section shall cease to have effect.

SCHEDULE 20 Changes for facilitating self-assessment: transitional provisions and savings

Section 218.

Assessment under Cases I and II of Schedule D

1

Subject to paragraph 3(2) below, this paragraph applies in the case of a trade, profession or vocation set up and commenced before 6th April 1994 and continuing after 5th April 1997.

2

The basis period for the year 1996-97 shall be as follows—

a

where an accounting date falls within the year, the period of twelve months ending with that accounting date; and

b

in any other case, the period of twelve months ending with 5th April 1997.

3

Where the basis period for the year 1996-97 is given by paragraph (b) of sub-paragraph (2) above, section 62 of the Taxes Act 1988 shall have effect in relation to the accounting change by virtue of which that paragraph applies as if that change were made in the first year of assessment in which accounts are made up to the new date.

4

In this paragraph “accounting date” and “the new date” have the same meanings as in section 62 of the Taxes Act 1988.

2

1

Subject to paragraph 3(2) and (4) below, this paragraph applies in the case of a trade, profession or vocation set up and commenced before 6th April 1994 and continuing after 5th April 1997.

C402

Subject to sub-paragraph (3) below, sections 60 to 63A of the Taxes Act 1988 shall have effect in relation to the year 1996-97 as if they required income tax under Case I or II of Schedule D to be charged on the appropriate percentage of the aggregate of—

a

the full amount of the profits or gains of the basis period for that year, and

b

the full amount of the profits or gains of the relevant period.

3

Where, in the case of the year 1995-96, the period on the profits or gains of which income tax is chargeable under Case I or II of Schedule D is that year, sub-paragraph (2) above shall have effect as if for the words from “the appropriate percentage” to the end there were substituted the words “the full amount of the profits or gains of that year”.

C414

Section 63A of the Taxes Act 1988 shall have effect as if the amount of profits or gains of the basis period for the year 1997-98 which arise F402after the end of—

a

the basis period for the year 1996-97; or

b

in the case of a trade or profession carried on by a person in partnership with other persons, the basis period of the partnership for that year,

and (in either case) before 6th April 1997 were an overlap profit for the purposes of that section.

F4034A

In calculating the amount of the profits or gains of the basis period for the year 1997-98 which arise as mentioned in sub-paragraph (4) above, any deduction of a capital allowance and any addition of a balancing charge shall be ignored.

4B

Sub-paragraph (4A) above does not apply in the case of a trade or profession carried on by persons who include both an individual and a company.

5

In this paragraph—

“the appropriate percentage” means the following expressed as a percentage, that is, 365 divided by the number of days in the basis period for the year 1996-97 and the relevant period taken together;
“the relevant period” means the period which—
1. a
  begins immediately after the end of the period on the profits or gains of which tax is chargeable for the year 1995-96, and
2. b
  ends immediately before the beginning of the basis period for the year 1996-97.

3

sections 64, 66 and 67 of the Taxes Act 1988 shall have effect as if section 206 of this Act had not been enacted.

Assessment under Cases IV and V of Schedule D

6

1

This paragraph applies in the case of income which—

a

is from a source arising before 6th April 1994 and continuing after 5th April 1998, and

b

is chargeable to tax under Case IV or V of Schedule D.

2

Subject to sub-paragraph (3) below, section 65 of the Taxes Act 1988 shall have effect in relation to the year 1996-97 as if—

C44a

subsection (1) required income tax chargeable under Case IV or V of Schedule D to be computed on 50 per cent. of the aggregate of—

i

the full amount of the income arising within that year; and

ii

the full amount of the income arising within the year 1995-96,

subject (in either case) to the deductions and allowances there mentioned in the case of income not received in the United Kingdom;

b

paragraph (a) of subsection (5) required income tax chargeable under Case IV of Schedule D to be computed on 50 per cent. of the aggregate of—

i

the full amount, so far as it can be computed, of the sums received in the United Kingdom in that year; and

ii

the full amount, so far as it can be computed, of the sums received in the United Kingdom in the year 1995-96,

without (in either case) any deduction or abatement; and

c

paragraph (b) of that subsection required income tax chargeable under Case V of Schedule D to be computed on 50 per cent. of the aggregate of—

i

the full amount of the actual sums received in the United Kingdom in that year; and

ii

the full amount of the actual sums received in the United Kingdom in the year 1995-96,

without (in either case) any deduction or abatement other than as there mentioned.

3

Sub-paragraph (2) above does not apply if section 66(1)(c) of that Act applied in relation to the year 1995-96.

C454

Section 63A of the Taxes Act 1988 (as applied by section 65(3) of that Act) shall have effect as if the amount of profits or gains of the basis period for the year 1997-98 which arise before 6th April 1997 were an overlap profit for the purposes of that section.

7

In the case of income which—

a

is from a source arising before 6th April 1994 and ceasing before 6th April 1998, and

b

is chargeable to tax under Case IV or V of Schedule D,

sections 65 to 68 of that Act shall have effect as if section 207 of this Act and its associated repeals had not been enacted.

Loss relief

8

Sections 380(1) and 574(1) of the Taxes Act 1988 (as substituted by sections 209(1) and 210(1) of this Act) shall have effect as respects the years 1994-95 and 1995-96 as if for the words “twelve months from the 31st January next following” there were substituted the words “two years after”.

Capital allowances

9

the amount of income from that source to be taken into account in determining what credit is so allowable shall be the appropriate percentage of the aggregate of the full amount of the income of the basis period for that year and the full amount of the income of the relevant period.

5

F404Subject to sub-paragraph (5A) below, the amount of foreign tax to be taken into account in determining whether and, if so, what credit is allowable under Part XVIII of the Taxes Act 1988 against income tax which, in respect of income from any source, is chargeable for the year 1996-97 under Case IV or V of Schedule D shall be 50 per cent. of the aggregate of—

a

the amount of foreign tax paid on income from that source arising, or (as the case may require) received in the United Kingdom, in that year; and

b

the amount of foreign tax paid on income from that source arising, or (as the case may require) received in the United Kingdom, in the year 1995-96.

F4055A

Where the period on the profits or gains of which income tax is chargeable under Case IV or V of Schedule D for the year 1995-96 is that year, sub-paragraph (5) above shall have effect as if for the words from “50 per cent.” to the end there were substituted the words “the amount of foreign tax paid on income arising, or (as the case may require) received in the United Kingdom, in that year”.

6

In this paragraph—

“the appropriate percentage” and “the relevant period” have the same meanings as in paragraph 2 above;
“double taxation arrangements” means arrangements having effect by virtue of section 788 of the Taxes Act 1988;
“foreign tax” means tax chargeable under the law of a territory outside the United Kingdom for which credit may be allowed under double taxation arrangements or section 790(1) of that Act.

11

1

Subject to paragraph 12(2) below, this paragraph applies in the case of—

a

a trade, profession or vocation set up and commenced before 6th April 1994 and continuing after 5th April 1998; or

b

income from a source arising before the former date and continuing after the latter date.

2

Sub-paragraph (3) below applies where—

a

credit against income tax for the year 1995-96 or any earlier year of assessment is or has been allowed by virtue of subsection (1) of section 804 of the Taxes Act 1988 in respect of any income (“the original income”), and

b

the source of that income ceases in a subsequent year of assessment (“the subsequent year”).

3

The following shall be set off one against the other, namely—

a

the amount of the credit which, under Part XVIII of the Taxes Act 1988 (including section 804), has been allowed against income tax in respect of the original income, and

b

the aggregate of—

i

the amount of the credit which, apart from that section, would have been so allowed, and

ii

the difference between the amount of the credit which, on the assumptions mentioned in sub-paragraph (4) below, would have been allowable under Part XVIII of that Act for the year 1996-97 and the amount of credit which has been so allowed;

and if the amount given by paragraph (a) exceeds that given by paragraph (b) above, the person chargeable in respect of income (if any) arising in the subsequent year from the same source as the original income shall be treated as having received in that year a payment chargeable under Case VI of Schedule D of an amount such that income tax on it at the basic rate is equal to the excess.

4

The assumptions are—

a

that the words “the appropriate percentage of” were omitted from paragraph 2(2) above;

b

that the words “50 per cent. of” were omitted from paragraphs (a), (b) and (c) of paragraph 6(2) above; and

c

that paragraph 10 above had not been enacted.

5

Where the period on the income of which income tax is chargeable for the year 1996-97 is that year, sub-paragraph (3) above shall have effect as if for paragraph (b) there were substituted the following paragraph—

b
the amount of the credit which, apart from that section, would have been so allowed;

6

Any reference in sub-paragraph (2) or (3) above to section 804 or Part XVIII of the Taxes Act 1988 includes a reference to the corresponding provisions of any earlier enactments.

7

Any payment which a person is treated by virtue of sub-paragraph (3) above as having received shall not on that account constitute income of his for any of the purposes of the Income Tax Acts other than that sub-paragraph and in particular no part of it shall constitute profits or gains brought into charge to income tax for the purposes of section 348 of the Taxes Act 1988.

12

1

In the case of—

a

a trade, profession or vocation set up and commenced before 6th April 1994 and ceasing before 6th April 1998, being a trade, profession or vocation in respect of which a direction has been given under paragraph 3(2) above, or

b

income from a source arising before the former date and ceasing before the latter date, being income to which paragraph 7 above applies,

section 804 of the Taxes Act 1988 shall have effect as if section 217 of this Act and its associated repeals had not been enacted.

2

In the case of a trade, profession or vocation set up and commenced before 6th April 1994 and ceasing on or after 6th April 1998 but before 6th April 1999, being a trade, profession or vocation in respect of which a direction has been given under paragraph 3(4) above—

a

paragraphs 10 and 11 above shall not apply, and

b

section 804 of the Taxes Act 1988 shall have effect as if section 217 of this Act and its associated repeals had not been enacted.

13

Paragraphs 2(2) and 6(2) above shall have effect as if any reference to the full amount of any profits or gains, or the full amount of any income, were a reference to that amount after any reduction which is treated as made by section 811 of the Taxes Act (deduction for foreign tax where no credit allowable).

Supplemental

14

1

In this Schedule—

a

any reference to a source of income arising before any date (“the earlier date”) and continuing after or ceasing before some other date (“the later date”) is a reference to a source of income arising to any person before the earlier date and continuing to be possessed by that person after, or (as the case may be) ceasing to be possessed by that person before, the later date; and

b

any reference to a source of income includes a reference to a part of such a source.

2

Where, as respects income from any source, income tax is to be charged under Case IV or V of Schedule D by reference to the amounts of income received in the United Kingdom, the source shall be treated for the purposes of this Schedule as arising on the date on which the first amount of income is so received.

SCHEDULE 21 Lloyd’s underwriters: individuals

Section 228.

Year of assessment in which profits or losses arise

1 F4061

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

2

Subsection (3) of that section shall cease to have effect.

3

In this paragraph—

F406a

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

b

sub-paragraph (2) has effect for the year 1996-97 and subsequent years of assessment.

2

1

In subsection (1) of section 172 of the 1993 Act (year of assessment in which profits or losses arise), for paragraphs (a) and (b) there shall be substituted the following paragraphs—

a
in the case of profits or losses arising directly from his membership of one or more syndicates, those of any previous year or years which are declared in the corresponding underwriting year;
b
in the case of profits or losses arising from assets forming part of a premiums trust fund, those allocated under the rules or practice of Lloyd’s to any previous year or years the profits or losses of which are declared in the corresponding underwriting year; and

2

Sub-paragraph (1) above does not have effect for the years 1994-95, 1995-96 and 1996-97, but in relation to those years that section shall have effect as if paragraphs (a) and (b) of subsection (1) were omitted.

Premiums trust funds

3

For subsection (1) of section 174 of the 1993 Act (premiums trust funds) there shall be substituted the following subsection—

1
For the purposes of the Income Tax Acts and the Gains Tax Acts—
a
a member shall be treated as absolutely entitled as against the trustees to the assets forming part of a premiums trust fund of his; and
b
where a deposit required by a regulatory authority in a country or territory outside the United Kingdom is paid out of such a fund, the money so paid shall be treated as still forming part of that fund.

Reinsurance to close

4

1

After subsection (4) of section 177 of the 1993 Act (reinsurance to close) there shall be inserted the following subsection—

5
This section also applies in any case where the member to whom the premium is payable is a corporate member within the meaning of Chapter V of Part IV of the Finance Act 1994.

2

This paragraph has effect for the underwriting year 1993 and subsequent underwriting years.

Cessation etc.

6

1

In section 179 of the 1993 Act (cessation: final year of assessment), subsection (3) and, in subsection (2), the words “to subsection (3) below and” shall cease to have effect.

2

After that section there shall be inserted the following section—

179A Death of member.
1
This section applies where a member ceases to carry on his underwriting business by reason of death.
2
For the purposes of assessing the profits of the member’s underwriting business, the member shall be treated as having died at the end of the year of assessment which corresponds to the underwriting year immediately preceding that in which he actually died.
3
For the purposes of the Income Tax Acts—
a
the carrying on of the member’s underwriting business by his personal representatives shall not be treated as a change in the persons engaged in the carrying on of that business; and
b
subject to the provisions of any regulations made by the Board, the business shall be treated as continuing until the member’s deposit at Lloyd’s is paid over to his personal representatives.

3

This paragraph has effect in any case where the member dies after the end of the year 1993-94.

Regulations

7

1

In section 182 of the 1993 Act (regulations), subsections (2) to (4) shall cease to have effect.

2

This paragraph has effect for the year 1997-98 and subsequent years of assessment.

Interpretation

8

“payment”, unless the contrary intention appears, means a payment in money;

2

In paragraph 7(2) of that Schedule (payments out of fund on cessation), for the words “money’s worth” there shall be substituted the words “ in assets forming part of the fund ”.

3

This paragraph has effect for the year 1992-93 and subsequent years of assessment.

13

1

For paragraph 8 of that Schedule (entitlement of member for tax purposes) there shall be substituted the following paragraph—

8
1
Subject to sub-paragraph (2) 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.

2

This paragraph has effect for the year 1994-95 and subsequent years of assessment.

14

1

In sub-paragraphs (1) to (4) of paragraph 10 of that Schedule (tax consequences of payments into and out of fund), for the word “corresponding”, in each place where it occurs, there shall be substituted the word “ relevant ”.

2

After sub-paragraph (4) of that paragraph there shall be inserted the following sub-paragraph—

5
In this paragraph “the relevant underwriting year”, in relation to a year of assessment, means the underwriting year next but two before its corresponding underwriting year.

3

Sub-paragraphs (1) and (2) above do not have effect for the years 1994-95, 1995-96 and 1996-97, but in relation to those years that Schedule shall have effect as if paragraph 10 were omitted.

15

1

In sub-paragraph (2) of paragraph 11 of that Schedule (tax consequences of cessation), for the words “the final year of assessment” there shall be substituted the words “ the relevant year of assessment ” and for the words “the relevant year” there shall be substituted the words “ the relevant underwriting year ”.

2

In sub-paragraphs (3) and (4) of that paragraph, for the words “the relevant year” there shall be substituted the words “ the penultimate underwriting year ”.

3

For sub-paragraph (5) of that paragraph there shall be substituted the following sub-paragraph—

5
In this paragraph, subject to the provisions of any regulations made by the Board—
“the penultimate underwriting year” means the underwriting year immediately preceding that in which the member’s deposit at Lloyd’s is paid over to him or his personal representatives or assigns;
“the relevant underwriting year” means—
a
in the case of a member who dies before his deposit at Lloyd’s is paid over to him or his assigns, the underwriting year immediately preceding that corresponding to the relevant year of assessment; and
b
in any other case, the underwriting year immediately preceding that in which his deposit at Lloyd’s is paid over to him or his assigns;
“the relevant year of assessment” means—
a
in the case of a member who dies before his deposit at Lloyd’s is paid over to him or his assigns, the year of assessment at the end of which he is treated, by virtue of section 179A(2) of this Act, as having died; and
b
in any other case, his final year of assessment.

16

1

In sub-paragraph (1) of paragraph 13 of that Schedule (winding up of old-style funds), the words from “and a transfer” to the end shall cease to have effect.

2

After sub-paragraph (5) of that paragraph there shall be inserted the following sub-paragraph—

6
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.

3

This paragraph has effect for the year 1992-93 and subsequent years of assessment.

SCHEDULE 22 Supplementary provisions as to elections by reference to pipe-line usage

Sections 231 and 234.

Part I Procedure for and in connection with an election

The election

3

In a case where paragraph 9 below applies (or would apply if an election were accepted) sub-paragraphs (1) and (2) above shall require the electing participator additionally to furnish copies of the same documents to the responsible person for any non-chargeable field mentioned in sub-paragraph (3) of that paragraph.

4

In a case where paragraph 11 below applies (or would apply if an election were accepted) sub-paragraphs (1) and (2) above shall require the electing participator additionally to furnish copies of the same documents to the old participator referred to in that paragraph.

Penalties for incorrect information

6

Where a participator fraudulently or negligently furnishes any incorrect information or makes any incorrect declaration in or in connection with an election he shall be liable to a penalty not exceeding—

a

in the case of negligence, £50,000, and

b

in the case of fraud, £100,000.

Re-opening election decisions on grounds of incorrect information

7

1

Without prejudice to paragraph 6 above, this paragraph applies if, at any time after notice of the acceptance of an election has been served by the Board, it appears to the Board that, as a result of an error in the information furnished to the Board, the election should not have been accepted.

2

If, in a case where this paragraph applies, either—

a

the error was attributable, in whole or in part, to the fraudulent or negligent conduct of the electing participator or a person acting on his behalf, or

b

on the error coming to the notice of the electing participator, or a person acting on his behalf, the error was not remedied without unreasonable delay,

the Board may serve on the electing participator and on the responsible person for the field to which the election applies a notice rescinding the acceptance and stating what appears to the Board to be the correct position.

3

When a notice under sub-paragraph (2) above becomes effective, the election shall be treated as having been rejected in accordance with paragraph 3 above.

4

If, in a case where this paragraph applies,—

a

neither of the conditions in sub-paragraph (2) above is fulfilled, and

b

the Board are of the opinion that, if the correct information had been furnished, the election could have been accepted,

the election shall be treated as having been made and accepted subject to such modifications (being modifications to correct the effect of the error) as the Board may direct, by notice served on the electing participator and on the responsible person for the field to which the election applies.

5

A notice served under sub-paragraph (2) or sub-paragraph (4) above shall become effective either—

a

on the expiry of the period during which notice of appeal against the notice may be served on the Board under paragraph 8 below without such notice of appeal being served; or

b

where such notice of appeal is served, when the notice can no longer be varied or quashed by the Special Commissioners or by the order of any court.

Appeals against re-opening notices

8

1

This paragraph applies where the Board serve notice under sub-paragraph (2) or sub-paragraph (4) of paragraph 7 above; and in the following provisions of this paragraph such a notice is referred to as a “re-opening notice”.

2

The electing participator may, by notice of appeal served on the Board within thirty days beginning on the date of the re-opening notice, appeal to the Special Commissioners against the re-opening notice.

3

A notice of appeal under sub-paragraph (2) above shall state the grounds on which the appeal is brought.

4

An appeal under this paragraph may at any time be abandoned by notice served on the Board by the electing participator.

5

A re-opening notice may be withdrawn at any time before it becomes effective.

6

In any case where—

a

the electing participator serves notice of appeal against a re-opening notice served under sub-paragraph (4) of paragraph 7 above, and

b

before the appeal is determined by the Special Commissioners, the Board and the electing participator agree as to the modifications necessary to correct the effect of the error concerned,

the re-opening notice shall take effect subject to such modifications as may be necessary to give effect to that agreement; and thereupon the appeal shall be treated as having been abandoned.

7

Subject to sub-paragraph (8) below, on an appeal against a re-opening notice the Special Commissioners may vary the notice, quash the notice or dismiss the appeal; and the notice may be varied whether or not the variation is to the advantage of the electing participator.

8

The provisions relating to the variation of a re-opening notice referred to in sub-paragraph (7) above shall not apply in respect of any such notice served under sub-paragraph (2) of paragraph 7 above.

Part II Supplementary provisions

Assets used in connection with more than one taxable field

9

b

any reference to the electing participator were a reference to him in his capacity as a participator in the non-chargeable field.

3

In sub-paragraph (1) above the expressions “the old participator” and “the new participator” have the same meaning as in Schedule 17 to the Finance Act 1980.

11

1

In section 2 (assessable profits and allowable losses), in subsection (5) (amounts to be included in calculation of gross profit or loss) in each of paragraphs (b) and (c), after the word “oil”, in the first place where it occurs, there shall be inserted “ (not being light gases) ” and after paragraph (c) there shall be inserted—

ca
the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won and disposed of by him otherwise than in sales at arm’s length as was delivered by him in the period; and
cb
the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won as was relevantly appropriated by him in the period without being disposed of; and

2

In subsection (9) of that section (amounts to be taken into account in determining amount of debit or credit in respect of expenditure), in paragraph (a)—

a

in sub-paragraph (i) the words “or, as the case may be” shall be omitted;

b

in that sub-paragraph after the words “delivery was made” there shall be inserted the words “ or (in the case of light gases) its market value as determined in accordance with paragraph 3A of Schedule 3 to this Act, as the case may require ”; and

c

at the end of sub-paragraph (ii) there shall be inserted the words “ or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act ”.

2

In Schedule 2 (management and collection of PRT), in paragraph 2(2) (returns by participators), in paragraph (a)(iii) after the words “delivery was made” and in paragraph (b)(ii) after the word “made” there shall be inserted the words “ or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act ”.

3

1

In Schedule 3 (miscellaneous provisions relating to PRT), in paragraph 2 (definition of market value of oil)—

a

at the beginning of sub-paragraph (1) there shall be inserted the words “ Except in the case of light gases ”; and

b

at the end of that sub-paragraph there shall be added the words “ and, accordingly, references in the following provisions of this paragraph to oil do not apply to light gases ”.

2

In paragraph 2A of that Schedule (definition of market value of oil consisting of or including gas), after sub-paragraph (1) there shall be inserted the following sub-paragraph—

1A
Sub-paragraphs (2) and (3) below also apply where the market value of any light gases falls to be ascertained under paragraph 3A below.

3

In sub-paragraph (2) of paragraph 2A, after the words “paragraph 2 above”, in each place where they occur, there shall be inserted “ or, as the case may require, sub-paragraph (2)(b) of paragraph 3A below ”.

4

In sub-paragraph (3) of paragraph 2A, after the words “paragraph 2”, in the first place where they occur, there shall be inserted “ or, as the case may require, in accordance with paragraph 3A below ”.

5

Sub-paragraph (4) of paragraph 2A shall be omitted.

4

After paragraph 3 of Schedule 3 (aggregate market value of oil) there shall be inserted—

Definition of market value of light gases
3A
1
The market value of any light gases for the purposes of this Part of this Act is the price at which, having regard to all the circumstances relevant to the disposal or appropriation in question, light gases of that kind might reasonably have been expected to be sold under a contract of sale satisfying the conditions specified in sub-paragraph (2) below.
2
The conditions referred to in sub-paragraph (1) above are that—
a
the contract is for the sale of the gases at arm’s length to a willing buyer;
b
the contract requires the gases to have been subjected to appropriate initial treatment before delivery; and
c
the contract requires the gases to be delivered—
i
in the case of gases extracted in the United Kingdom, at the place of extraction; or
ii
in the case of gases extracted from strata in the sea bed and subsoil of the territorial sea of the United Kingdom or of a designated area, at the place in the United Kingdom or another country at which the seller could reasonably be expected to deliver the gases or, if there is more than one such place, the one nearest to the place of extraction.
3
If the circumstances referred to in sub-paragraph (1) above are such that the price referred to in that sub-paragraph might reasonably be expected to include—
a
any such payments as are referred to in subsection (2) of section 114 of the Finance Act 1984 (treatment of certain payments relating to gas sales), or
b
any capacity payments, as defined in subsection (5) of that section,
section 114 of the Finance Act 1984 shall apply accordingly in relation to the notional contract specified in sub-paragraph (1) above as it applies in relation to an actual contract.
4
This paragraph has effect subject to sub-paragraphs (2) and (3) of paragraph 2A above.

SCHEDULE 24 Provisions relating to the Railways Act 1993

Section 252.

Interpretation

1

In this Schedule—

F408. . .
“the Board” means the British Railways Board;
F409“the Capital Allowances Act” means the Capital Allowances Act 2001 and includes, where the context admits, enactments which under the Taxes Act 1988 are to be treated as contained in the Capital Allowances Act 2001;
“fixture” has the same meaning as it has in F410Chapter 14 of Part 2 of the Capital Allowances Act;
“franchise company” has the meaning given by section 85(8) of the M156Railways Act 1993;
“the Franchising Director” means the Director of Passenger Rail Franchising;
“the Gains Act” means the M157Taxation of Chargeable Gains Act 1992;
“predecessor”, in relation to any relevant transfer, means the body from which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;
“property”, “rights” and “liabilities” have the same meaning as they have in Part II of the Railways Act 1993;
“publicly owned railway company” has the same meaning as it has in the Railways Act 1993;
“relevant transfer” means a transfer of any property, rights or liabilities by virtue of a restructuring scheme;
“restructuring scheme” means a section 85 transfer scheme made by, or pursuant to a direction of, the Secretary of State, if and to the extent that the transfer scheme provides for the transfer of property, rights or liabilities from—
1. a
  the Board,
2. b
  a wholly owned subsidiary of the Board,
3. c
  a publicly owned railway company, or
4. d
  a company which is wholly owned by the Franchising Director,
to any other body falling within paragraphs (a) to (d) above;
“section 85 transfer scheme” means a scheme made under or by virtue of section 85 of the Railways Act 1993;
“subsidiary” has the meaning given by section 736 of the M158Companies Act 1985;
“successor company” has the same meaning as it has in Part II of the Railways Act 1993;
“transfer date” shall be construed in accordance with section 85(6) of the Railways Act 1993;
“transfer scheme” means a scheme made under or by virtue of section 85 or 86 of the Railways Act 1993;
“transferee”, in relation to a relevant transfer, means the body to which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;
“wholly owned subsidiary” has the meaning given by section 736 of the M159Companies Act 1985.

ix
paragraphs 2(1), 7(2), 11(3) and (4) and 25(2) of Schedule 24 to the Finance Act 1994;

3

Section 171(1) of the Gains Act (which makes provision in relation to the disposal of assets from one member of a group of companies to another member of the group) shall not apply where the disposal in question is a relevant transfer.

Chargeable gains: receipt of compensation or insurance policies

3

1

Subsection (4) of section 23 of the Gains Act (adjustments where compensation or insurance money used for purchase of replacement asset) shall have effect in accordance with sub-paragraph (3) below in any case where—

a

there is a relevant transfer such that—

i

any capital sum received by the predecessor by way of compensation for the loss or destruction of any asset, or under a policy of insurance of the risk of the loss or destruction of any asset, becomes available to the transferee; or

any claim under the subsection in question must be made by the predecessor and the transferee; and

ii

any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the predecessor; and

b

in a case falling within sub-paragraph (1)(a)(ii) or (2)(a)(ii) above—

i

any claim under the subsection in question must be made by the transferee; and

ii

any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the transferee.

Chargeable gains: section 30 of the Gains Act

I234

1

Nothing in Part II or III of the M161Railways Act 1993, and no instrument or agreement made, or other thing done, under or by virtue of either of those Parts, shall be regarded as a scheme or arrangement for the purposes of section 30 of the Gains Act (value-shifting).

2

In any case where—

a

an asset which is the subject of a relevant transfer or qualifying disposal has previously been the subject of a scheme or arrangements falling within subsection (1) of that section,

b

in consequence, subsection (5) of that section (consideration on disposal to be treated as increased for certain purposes) would, apart from sub-paragraph (3) below, have had effect in relation to the consideration for the relevant transfer or qualifying disposal, and

c

the consideration for the relevant transfer or qualifying disposal falls to be determined under paragraph 2 above or paragraph 7(2), 11(3) or 25(2) below,

sub-paragraph (3) below shall apply.

3

Where this sub-paragraph applies—

a

the said subsection (5) shall not have effect in relation to the consideration for the relevant transfer or qualifying disposal; but

b

on the first subsequent disposal of the asset which is neither a relevant transfer or qualifying disposal nor a group disposal—

i

that subsection shall have effect in relation to the consideration for that disposal (whether or not it would otherwise have done so); and

ii

the increase that falls to be made under that subsection shall be so calculated as to include any increase which would, but for paragraph (a) above, have fallen to be made in relation to the relevant transfer or qualifying disposal.

4

In this paragraph—

“group disposal” means a disposal which falls to be treated by virtue of section 171(1) of the Gains Act as made for a consideration such that no gain or loss accrues to the person making the disposal;
“qualifying disposal” means—
1. a
  a disposal to which paragraph 7(2) below applies; or
2. b
  a disposal falling within paragraph 11(3) or 25(2) below.

Chargeable gains: section 41 of the Gains Act

5

Subsection (1) of section 174 of the Gains Act (which applies section 41 of that Act to cases where assets have been acquired without gain or loss) shall have effect, without prejudice to paragraph 2 above or paragraph 7(2), 11(3) or (4) or 25(2) below, where there has been—

a

a relevant transfer,

b

a disposal to which paragraph 7(2) below applies, or

c

a disposal falling within paragraph 11(3) or (4) or 25(2) below,

as if the asset to which the transfer or disposal relates had thereby been transferred and acquired in relevant circumstances, within the meaning of that subsection.

Chargeable gains: roll-over relief

6

1

Subject to the following provisions of this paragraph, where any asset, or any interest in an asset, is the subject of a relevant transfer, sections 152 to 160 of the Gains Act (roll-over relief on replacement of business assets) shall have effect as if—

a

the asset or interest had been acquired by the transferee—

i

at the time at which, and for the consideration for which, the predecessor acquired it; and

ii

for the purpose of the asset’s use in a trade carried on by the transferee (and not wholly or partly for the purpose of realising a gain from the disposal of the asset or interest), but only to the extent that the predecessor’s acquisition was for the purpose of the asset’s use in a trade carried on by him (and not wholly or partly for the purpose of realising a gain from the disposal of the asset or interest);

b

throughout the period during which the asset or interest was owned by the predecessor, it had been owned by the transferee; and

c

to the extent that the predecessor—

i

used the asset, or

ii

in the case of an asset falling within head A of Class 1 in section 155 of that Act, used and occupied the asset,

during that period for the purposes of a trade carried on by him, the transferee had used or, as the case may be, used and occupied the asset for the purposes of a trade carried on by him.

2

In any case where—

a

a held-over gain would, but for the provisions of section 154 of the Gains Act (depreciating assets), have been carried forward to a depreciating asset, and

b

that asset is the subject of a relevant transfer,

that section shall have effect as if the gain had accrued to, and the claim for it to be held over had been made by, the transferee and as if the predecessor’s acquisition of the depreciating asset had been the transferee’s acquisition of that asset.

3

Where an asset, or an interest in an asset, is the subject of a relevant transfer, the predecessor shall not be entitled at any time after the coming into force of the relevant transfer to make any claim under section 152 or 153 of the Gains Act in respect of his acquisition of the asset or interest.

4

Where an asset, or an interest in an asset, is the subject of a relevant transfer, the transferee shall not, by virtue of any provision of this Schedule, be treated for the purposes of sections 152 to 154 of the Gains Act as having applied the whole or any part of the consideration for any disposal—

a

in acquiring the asset or interest by virtue of the relevant transfer; or

b

in acquiring the asset or interest as postulated in sub-paragraph (1)(a) above, if the predecessor has made a claim under section 152 or 153 of that Act in respect of his acquisition of the asset or interest.

5

Without prejudice to paragraph 1(4)(b) above, expressions used in sub-paragraph (2) above and in section 154 of the Gains Act have the same meaning in that sub-paragraph as they have in that section.

Chargeable gains: agreements and instruments by virtue of section 91(1)(c) of the Railways Act 1993

7

1

Sub-paragraph (2) below applies to any disposal effected pursuant to an obligation imposed by a section 85 transfer scheme by virtue of section 91(1)(c) of the M162Railways Act 1993 (obligations to enter into agreements or execute instruments) if the person making the disposal is—

a

the Board,

b

a wholly owned subsidiary of the Board,

c

a publicly owned railway company, or

d

a company which is wholly owned by the Franchising Director,

and the person to whom the disposal is made is either a person falling within paragraphs (a) to (d) above or the Franchising Director.

2

A disposal to which this sub-paragraph applies shall be taken for the purposes of corporation tax on chargeable gains, in relation to the person to whom the disposal is made as well as the person making the disposal, to be effected for a consideration such that no gain or loss accrues to the person making the disposal.

3

Section 171(1) of the Gains Act (transfers within a group) shall not apply where the disposal in question is one to which sub-paragraph (2) above applies.

4

Section 17 of that Act (disposals and acquisitions treated as made at market value) shall not have effect in relation to a disposal or the corresponding acquisition if—

a

the disposal is effected pursuant to an obligation imposed by a section 85 transfer scheme by virtue of section 91(1)(c) of the M163Railways Act 1993,

b

the person making the disposal is either a person falling within paragraphs (a) to (d) of sub-paragraph (1) above or the Franchising Director, and

c

the person making the corresponding acquisition is neither a person falling within those paragraphs nor the Franchising Director,

unless the person making the disposal is connected with the person to whom the disposal is made.

5

In this paragraph, “the corresponding acquisition”, in the case of any disposal, means the acquisition made by the person to whom the disposal is made.

Chargeable gains: group transactions

8

1

For the purposes of section 179 of the Gains Act (company ceasing to be a member of a group), where any company (“the degrouped company”) ceases, by virtue of a qualifying transaction, to be a member of a group of companies, the degrouped company shall not, by virtue of that qualifying transaction, be treated under that section as having sold, and immediately reacquired, any asset acquired from a company which was at the time of acquisition a member of that group.

2

Where sub-paragraph (1) above applies in relation to any asset, section 179 of the Gains Act shall have effect on the first subsequent occasion on which the degrouped company ceases to be a member of a group of companies (the “subsequent group”), otherwise than by virtue of a qualifying transaction, as if both the degrouped company and the company from which the asset was acquired had been members of the subsequent group at the time of acquisition.

3

Where, disregarding any preparatory transactions, a company would be regarded for the purposes of section 179 of the Gains Act (and, accordingly, of this paragraph) as ceasing to be, or becoming, a member of a group of companies by virtue of a qualifying transaction, it shall be regarded for those purposes as so doing by virtue of the qualifying transaction and not by virtue of any preparatory transactions.

4

In this paragraph—

“preparatory transaction” means anything done under or by virtue of Part II of the Railways Act 1993 for the purpose of initiating, advancing or facilitating the qualifying transaction in question;
“qualifying transaction” means—
1. a
  a relevant transfer;
2. b
  any other transfer or disposal under or by virtue of section 85, 88(6) or (7) or 89 of the Railways Act 1993.

5

Expressions used in this paragraph and in section 179 of the Gains Act have the same meaning in this paragraph as they have in that section.

Chargeable gains: disposal of debts

9

1

Where by virtue of any relevant transfer—

a

any debt owed to the predecessor is transferred to the transferee, and

b

the predecessor would, apart from this sub-paragraph, be the original creditor in relation to that debt for the purposes of section 251 of the Gains Act (disposal of debts),

that Act shall have effect as if the transferee and not the predecessor were the original creditor for those purposes.

2

Where, by virtue of any relevant transfer, any obligations of the predecessor under a guarantee of the repayment of a loan are transferred to the transferee, the transferee shall be treated for the purposes of section 253(4) of the Gains Act (relief for guarantors) as a person who gave the guarantee.

3

In any case where—

a

by virtue of any relevant transfer, a debt owed to the predecessor is transferred to the transferee,

an allowable loss determined by reference to that amount has been treated under that subsection as accruing to the predecessor, and

c

the whole or any part of that amount is at any time recovered by the transferee or by a company in the same group of companies as the transferee,

that Act shall have effect as if a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered had accrued to the transferee or, as the case may be, to the company in the same group as the transferee.

7

In any case where—

a

any right to the recovery of an amount falling within subsection (4) of section 253 of the Gains Act is transferred by virtue of a relevant transfer,

b

an allowable loss determined by reference to that amount has been treated under that subsection as accruing to the predecessor, and

c

the whole or any part of the amount mentioned in subsection (4)(a), or the whole or any part of the amount of the payment mentioned in subsection (4)(b), of that section is at any time recovered by the transferee or by a company in the same group of companies as the transferee,

8

In any case where—

a

any right to recovery of the relevant outstanding amount, as defined in subsection (11) of section 254 of the Gains Act, is transferred by virtue of a relevant transfer,

b

an allowable loss determined by reference to that amount has been treated under subsection (2) of that section (relief for debts on qualifying corporate bonds) as accruing to the predecessor, and

c

the whole or any part of that amount is at any time recovered by the transferee or by a company in the same group of companies as the transferee,

9

In any case where sub-paragraph (6), (7) or (8) above applies in relation to an allowable loss, subsections (7) and (8) of section 253 of the Gains Act F412. . . (which deem a chargeable gain to arise where an amount treated as an allowable loss is recovered by another company in the same group) shall not apply in relation to that allowable loss.

10

Expressions used in this paragraph and in section 253 F412. . . of the Gains Act have the same meaning in this paragraph as they have in that section.

Chargeable gains: assets held before 6th April 1965

10

Schedule 2 to the Gains Act (assets held on 6th April 1965) shall have effect in relation to any assets which vest in the transferee by virtue of a relevant transfer as if—

a

the predecessor and the transferee were the same person; and

b

those assets, to the extent that they were in fact acquired or provided by the predecessor, were acquired or, as the case may be, provided by the transferee.

Chargeable gains: miscellaneous disposals and acquisitions

11

1

In this paragraph, “relevant disposal” means—

a

a disposal by virtue of a section 85 transfer scheme, other than a restructuring scheme, to the extent that the scheme provides for the transfer of property, rights and liabilities of—

i

the Board,

ii

a wholly owned subsidiary of the Board,

iii

a publicly owned railway company, or

iv

a company which is wholly owned by the Franchising Director,

to a franchise company or to the Franchising Director;

b

a disposal pursuant to a direction under section 88(6) or (7) or 89 of the M164Railways Act 1993;

c

a disposal by or pursuant to an agreement or instrument made or executed, transaction effected or direction given under or by virtue of paragraph 2, 3 or 14(2) of Schedule 8 to that Act, in a case where the transfer scheme in question is a section 85 transfer scheme, other than a restructuring scheme; or

d

a disposal pursuant to a requirement imposed under paragraph 7(2)(b) of that Schedule, in a case where the transfer to which that Schedule applies is a transfer by virtue of a section 85 transfer scheme.

5

In this paragraph—

“the corresponding acquisition”, in the case of any disposal, means the acquisition made by the person to whom the disposal is made;
“the corresponding disposal” in the case of any acquisition, means the disposal to the person by whom the acquisition is made.

Transfers of trading stock

12

1

This paragraph applies in any case where—

a

by virtue of a relevant transfer, any trading stock belonging to a trade carried on by the predecessor (“the predecessor’s trade”) vests in the transferee, and

b

the trading stock is acquired by the transferee as trading stock for the purposes of a trade which he carries on or which he begins to carry on after the relevant transfer (“the transferee’s trade”).

2

Where this paragraph applies, the trading stock in question shall, for the purposes (whether in relation to the predecessor or the transferee) of computing for the purposes of the Corporation Tax Acts the F413profits of the predecessor’s trade and the transferee’s trade,—

For the purposes of Chapter II of Part VI of the Taxes Act 1988 (definition of distributions), where in the case of any relevant transfer any consideration given or treated as given in respect of a security relating to—

a

any liability, or

b

the use of the principal to which any liability, being a liability to interest or an equivalent liability, relates,

would fall (apart from this sub-paragraph) to be regarded for those purposes as new consideration received by the predecessor, that consideration shall be treated instead, to the extent that it relates to so much of the liability as falls in consequence of the transfer to be discharged by the transferee, as if it were new consideration received by the transferee.

Trading losses

15

1

Subject to the following provisions of this paragraph, where as a result of a relevant transfer, the predecessor falls to be regarded for the purposes of section 343 of the Taxes Act 1988 (company reconstructions without change of ownership) as ceasing to carry on a trade and the transferee falls to be regarded for the purposes of that section as beginning to carry on that trade—

if the transferred loss exceeds the amount of the predecessor’s unrelieved transferred losses before the reduction under paragraph (a) above, or if there are no such losses, the predecessor’s unrelieved trading losses shall be regarded for the purposes of the Corporation Tax Acts as reduced by the amount of that excess or, as the case may be, by an amount equal to the transferred loss.

7

Without prejudice to the generality of sub-paragraphs (1) and (3) above, if the conditions in subsection (1) of section 343 of the Taxes Act 1988 become satisfied at any time on or after the relevant date in relation to any trade (or, where subsection (8) of that section applies, any part of a trade which falls to be treated for the purposes of that section as a separate trade), the company which is the successor, within the meaning of that section, shall not become entitled to relief by virtue of subsection (3) of that section in respect of any amount for which the company which is the predecessor, within the meaning of that section, would have been entitled to relief by virtue of sub-paragraph (3) above had it continued to carry on the trade (or the part of the trade which falls to be treated as a separate trade).

8

Subject to sub-paragraph (9) below, the provisions of a restructuring scheme providing for the determination of the amount which is to be that of any transferred loss may include provision—

a

for such a determination to be made by the Secretary of State in such manner as may be described in the scheme;

b

for any amount determined to be calculated by reference to such factors, or to the opinion of such person, as may be so described; and

c

for a determination under those provisions to be capable of being modified, on one or more occasions, in such manner and in such circumstances as may be so described.

9

The consent of the Treasury shall be required for the making or modification of a determination of any such amount as is mentioned in sub-paragraph (8) above; and the consent of the transferee shall also be required for any such modification after the coming into force of the relevant transfer.

10

Where there is a determination, or a modification of a determination, for any purposes of this paragraph, all necessary adjustments shall be made by making assessments or by repayment or discharge of tax, and shall be so made notwithstanding any limitation on the time within which assessments may be made.

11

For the purposes of this paragraph, a transferee is at any time a “public sector railway company” if, and only if, it is at that time—

a

the Board;

b

a wholly owned subsidiary of the Board;

F414ba

a wholly owned subsidiary of the Strategic Rail Authority;

c

a publicly owned railway company; or

d

a company wholly owned by the Crown.

12

In this paragraph—

“the relevant date” means the date on which the transfer mentioned in sub-paragraph (2)(a) above takes effect;
“trading income” has the same meaning as it has in section 393 of the Taxes Act 1988;
“unrelieved trading losses” means any losses—
1. a
  which were incurred by the predecessor in carrying on a trade in accounting periods ending before the relevant date, or
2. b
  for which the predecessor has, by virtue of section 343(3) of the Taxes Act 1988, become entitled to relief under section 393(1) of that Act,
and which would, apart from the restructuring scheme mentioned in sub-paragraph (2)(a) above, have fallen to be set off under the said section 393(1) against trading income of the predecessor arising in the accounting period in which the relevant date falls;
“unrelieved transferred losses” means so much of a transferred loss as would, apart from the restructuring scheme mentioned in sub-paragraph (2)(a) above, have fallen to be set off under section 393(1) of the Taxes Act 1988, as it applies by virtue of sub-paragraph (3) above, against trading income of the predecessor arising in the accounting period in which the relevant date falls.

13

It shall be assumed for the purposes of the definitions of “unrelieved trading losses” and “unrelieved transferred losses” in sub-paragraph (12) above (if it is not in fact the case) that the trading income mentioned in those definitions is at least equal to the aggregate amount of the losses in question of each of those descriptions.

No reduction in allowable losses on extinguishment of certain liabilities

16

Where any of the liabilities of a successor company are extinguished by virtue of section 106(1) of the M167Railways Act 1993, section 400 of the Taxes Act 1988 (reduction of allowable losses on write-off of government investment) shall not have effect in relation to any amount of government investment in a body corporate which, apart from this paragraph, would thereby fall to be regarded as written-off for the purposes of that section.

Group relief

17

1

The existence of the powers of the Secretary of State or the Franchising Director under Part II of the Railways Act 1993 shall not be regarded as constituting arrangements falling within subsection (1) or (2) of section 410 of the Taxes Act 1988 (arrangements for the transfer of a company to another group or consortium).

2

Nothing in Part II of the Railways Act 1993, and no direction given by the Secretary of State under or by virtue of any provision of that Part, shall be regarded as constituting option arrangements for the purposes of paragraph 5B of Schedule 18 to the Taxes Act 1988.

3

Arrangements relating to the transfer, pursuant to any provision of Part II of the Railways Act 1993, of shares of a subsidiary of the Board to—

a

the Secretary of State,

the Franchising Director,

c

a publicly owned railway company,

d

a company which is wholly owned by the Crown, or

e

a person acting on behalf of a person falling within any of paragraphs (a) to (d) above,

shall not, so far as so relating, be regarded as constituting arrangements falling within section 410(2)(b)(ii) of the Taxes Act 1988.

6

None of sub-paragraphs (3) to (5) above shall have effect in relation to any arrangements if—

a

notwithstanding the provisions of those sub-paragraphs, the arrangements to any extent fall within section 410(1) or (2) of the Taxes Act 1988; or

b

the arrangements form part of a series of subsisting arrangements which to any extent—

i

relate to the transfer of any shares or assets of, or the whole or any part of the trade carried on by, a company to which the first-mentioned arrangements relate, and

ii

notwithstanding the provisions of sub-paragraphs (3) to (5) above, fall within section 410(1) or (2) of the Taxes Act 1988.

7

Section 413(6)(a) of the Taxes Act 1988 (company owned by a consortium) shall have effect for the purposes of sub-paragraph (5) above as it has effect for the purposes of Chapter IV of Part X of that Act.

8

In this paragraph—

“arrangements” has the same meaning as in section 410 of the Taxes Act 1988;
“shares” includes stock.

Securities issued under section 98 or 106 of the Railways Act 1993

b

wholly and exclusively for the purposes of the trade or business carried on by that company.

4

If any debenture issued as mentioned in sub-paragraph (3) above includes provisions for the payment of a sum expressed as interest in respect of a period which falls wholly or partly before the issue of the debenture, any payment made in pursuance of that provision in respect of that period shall be treated for the purposes of the Corporation Tax Acts as if the debenture had been issued at the commencement of that period and, accordingly, as interest on the principal sum payable under the debenture.

5

The value required to be determined for the purposes of sub-paragraph (1)(a) or (2)(a) above is market value, as defined in section 272 of the Gains Act.

6

In this paragraph—

“company” means a body corporate;
“relevant company” means a company which is—
1. a
  a successor company; or
2. b
  in the application of this paragraph in relation to shares or debentures issued pursuant to section 106 of the M170Railways Act 1993, the company, or one of the companies, wholly owning (within the meaning of that section) the successor company whose liabilities are extinguished by the order under subsection (1) of that section.

Leased assets

19

1

For the purposes of section 781 of the Taxes Act 1988 (assets leased to traders and others), where the interest of the lessor or the lessee under a lease, or any other interest in an asset, vests in any person by virtue of a relevant transfer—

a publicly owned railway company,

d

a company wholly owned by the Franchising Director,

e

a successor company, or

f

a franchise company,

under a lease of an asset which at any time before the creation of the lease was used by a body falling within paragraphs (a) to (d) above for the purposes of a trade carried on by that body and which was, when so used, owned by that body.

6

Section 781 of the Taxes Act 1988 shall not, by virtue of sub-paragraph (5) above, apply to any payments to which, by virtue of section 782 of that Act, it would not have applied apart from that sub-paragraph.

7

In this paragraph—

“asset” has the meaning given by section 785 of the Taxes Act 1988;
“associate” shall be construed in accordance with section 783(10) of that Act;
“capital sum” has the meaning given by section 785 of that Act;
“lease” has the meaning given by section 785 of that Act;
“rolling stock” has the meaning given by section 83(1) of the M173Railways Act 1993;
“securities” has the meaning given by section F41674(5) of the Financial Services and Markets Act 2000.

Continuity in relation to capital allowances etc where trade transferred

20

1

Subject to the following provisions of this Schedule, where, apart from this paragraph—

a

the predecessor would be treated for the purposes of the Corporation Tax Acts as having ceased, by virtue of the coming into force of a relevant transfer, to carry on any trade, and

b

c

in the case of a fixture, the expenditure which falls to be treated as incurred by the transferee shall be deemed for the purposes of F426sections 181(1) and 182(1) of that Act to be incurred by the giving of a consideration consisting in a capital sum of that amount.

4

Sub-paragraphs (5) and (6) of paragraph 20 above shall apply in relation to any determination of any amount in accordance with any provision made by a restructuring scheme for the purposes of this paragraph as they apply for the purposes of a determination such as is mentioned in those sub-paragraphs.

5 Capital allowances: actual consideration to be the disposal value in certain other cases

22

1

In this paragraph, “relevant disposal” means—

a

a disposal by virtue of a section 85 transfer scheme, other than a restructuring scheme, to the extent that the scheme provides for the transfer of property, rights and liabilities of—

i

the Board,

ii

a wholly owned subsidiary of the Board,

iii

a publicly owned railway company, or

iv

a company which is wholly owned by the Franchising Director,

to a franchise company or to the Franchising Director;

b

a disposal pursuant to a direction under section 89 of the M174Railways Act 1993;

c

a disposal in accordance with directions under section 125 of that Act;

d

24

No charge to tax shall arise by virtue of section 36 of the Taxes Act 1988 (charge on sale of land with right to reconveyance) where the sale in question is constituted by a disposition to a franchise company—

a

by virtue of a transfer scheme;

b

pursuant to an obligation imposed by a transfer scheme by virtue of section 91(1)(c) of the M179Railways Act 1993; or

c

pursuant to paragraph 2 of Schedule 8 to that Act.

Modifications of restructuring scheme

25

1

Subject to sub-paragraph (2) below, where the effect of a restructuring scheme is modified in pursuance of an agreement or direction under paragraph 2 or 3 of Schedule 8 to the M180Railways Act 1993, the Corporation Tax Acts and this Schedule shall have effect as if—

a

the scheme originally made had been the scheme as modified; and

b

anything done by or in relation to the preceding holder had, so far as relating to the property, rights or liabilities affected by the modification, been done by or in relation to the subsequent holder.

2

A disposal of an asset—

a

which is effected in pursuance of an agreement or direction under paragraph 2 of Schedule 8 to the M181Railways Act 1993, and

b

which is either the grant of a lease of land or the creation of other liabilities and rights over land,

shall be taken for the purposes of corporation tax on chargeable gains, in relation to the person to whom the disposal is made as well as the person making the disposal, to be effected for a consideration such that no gain or loss accrues to the person making the disposal.

3

Section 171(1) of the Gains Act (transfers within a group) shall not apply where the disposal in question falls within sub-paragraph (2) above.

4

Any reference in sub-paragraph (1) or (2) above to an agreement or direction under paragraph 2 or 3 of Schedule 8 to the M182Railways Act 1993 includes a reference to such an agreement or direction as varied in accordance with a direction given by the Secretary of State under paragraph 14(2) of that Schedule.

5

For the purposes of sub-paragraph (1)(b) above—

“the preceding holder” means the person who without the modification in question—
1. a
  became, by virtue of the restructuring scheme in question, entitled or subject to the property, rights or liabilities affected by the modification, or
2. b
  remained, notwithstanding the restructuring scheme in question, entitled or subject to the property, rights or liabilities affected by the modification,
as the case may be;
“the subsequent holder” means the person who, in consequence of the modification in question, becomes, or resumes being, entitled or subject to the property, rights or liabilities affected by the modification.

Income tax exemption for certain interest

26

Where liability for a loan made to the Board is vested in a successor company by virtue of a section 85 transfer scheme, the vesting shall not affect any direction given, or having effect as if given, by the Treasury under section 581 of the Taxes Act 1988 (income tax exemption for interest on foreign currency securities) in respect of the loan.

Employee benefits: transport vouchers

27

1

This paragraph applies to any person (an “eligible person”)—

that the employer of the eligible person does not fall to be regarded as a passenger transport undertaking;

b

that the arrangements under which the transport voucher is provided were not in operation on 25th March 1982; or

c

c

the rate of any discount to the standard fare which is or (as the case may be) was available in the case of concessionary travel under those arrangements, and

d

any limitations on the availability or use of transport vouchers under the arrangements in question.

F4379

Chapter I of Part XIV of the Employment Rights Act 1996, except section 218(6), shall apply for the purposes of this paragraph as it applies for the purposes of that Act.

12

In this paragraph—

“the current transport voucher benefits”, in the case of an eligible person, means the totality of the benefits which, by reason of his employment by an employer engaged in the railway industry, are available in the year in question—
1. a
  to the eligible person, and
2. b
  to relations of his,
by way of transport voucher under the arrangements under which the transport voucher in question is provided;
“the former transport voucher benefits for comparable employees”, in the case of an eligible person, means the totality of the benefits which would, by reason of the employment by the Board of a person of similar status to the eligible person (“the comparable person”), have been available in the year 1993-94—
1. a
  to the comparable person, and
2. b
  to relations of his,
by way of transport voucher under arrangements in operation on 25th March 1982.

13

Subject to paragraph 1(1) and F438sub-paragraph (12) above, expressions used in this paragraph and in section 141 of the Taxes Act 1988 have the same meaning in this paragraph as they have in that section.

14

This paragraph has effect—

a

in relation to transport vouchers received by an employee on or after 11th January 1994; and

b

in relation to expense incurred on or after that date in, or in connection with, the provision of—

i

any transport voucher, or

ii

the money, goods or services for which it is capable of being exchanged,

irrespective of when the transport voucher falls to be regarded as received by the employee in question.

SCHEDULE 25 Northern Ireland Airports Limited

Section 253.

Interpretation

1

In this Schedule—

“the final accounting period” means the last complete accounting period of NIAL ending before the transfer date;
“the Holding Company” means the Northern Ireland Transport Holding Company established under section 47 of the M184Transport Act (Northern Ireland) 1967;
“NIAL” means the subsidiary of the Holding Company incorporated under the name of Northern Ireland Airports Limited;
“the Order” means the M185Airports (Northern Ireland) Order 1994 and any reference to an Article is to an Article of the Order;
“the successor company” means the company nominated under Article 51(1) as the successor company for the purposes of the Order;
“the transfer date” means the day appointed under Article 54(2);
“the transferred trade” means the trade carried on by NIAL and transferred under Article 54(2) to the successor company.

2

This Schedule, so far as it relates to corporation tax on chargeable gains, shall be construed as one with the M186Taxation of Chargeable Gains Act 1992.

Transfers from NIAL to successor company: general

2

1

The following shall apply for the purposes of the Corporation Tax Acts—

a

the transferred trade shall be treated as having been, at the time when it began to be carried on by NIAL and at all times since that time, a separate trade carried on by the successor company;

b

The disposal of the asset by the Holding Company shall be taken for the purposes of corporation tax on chargeable gains to be effected for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the Holding company.

3

In section 35(3)(d) of the Taxation of Chargeable Gains Act 1992 after sub-paragraph (ix) there shall be inserted—

x
paragraph 4(2) of Schedule 25 to the Finance Act 1994.

Leasehold interests in industrial buildings or structures

5

1

This paragraph applies where—

a

NIAL is entitled, under a lease granted by the Holding Company, to a leasehold interest in a building or structure,

b

by virtue of Article 52(2)(b) that interest is deemed to have been surrendered by NIAL,

c

under Article 52(3) the Holding Company and NIAL enter into a lease under which NIAL is entitled to a leasehold interest (“the new interest”) in the property, and

d

under Article 54(2) that interest is transferred to the successor company.

2

For the purposes of F439the Capital Allowances Act 2001—

a

the surrender shall be deemed to be for such an amount (by way of sale, insurance, salvage or compensation moneys) as would secure that no balancing allowance or balancing charge would be made to or on NIAL by reason of the surrender (“the surrender value”);

b

the successor company shall be treated for the purposes of F439the Capital Allowances Act 2001—

i

as if the new interest were the relevant interest in relation to the capital expenditure incurred on the construction of the property; and

ii

as if the amount of the residue of that expenditure immediately after the transfer of the new interest were equal to the surrender value.

3

In this paragraph—

F440. . .
“balancing allowance” and “balancing charge” have the same meanings as in F441Chapter 7 of Part 3 of the Capital Allowances Act 2001;
“the property” means the building or structure referred to in sub-paragraph (1); and
“relevant interest” has the same meaning as in F442Chapter 3 of Part 3 of the Capital Allowances Act 2001.

Securities of successor company

6

1

Any share issued by the successor company under Article 57 shall be treated for the purposes of the Corporation Tax Acts as if it had been issued wholly in consideration of a subscription paid to the company of an amount equal to the nominal value of the share.

2

Any debenture issued by the successor company under Article 57 shall be treated for the purposes of the Corporation Tax Acts as if it had been issued—

a

wholly in consideration of a loan made to the company of an amount equal to the principal sum payable under the debenture, and

b

wholly and exclusively for the purposes of the trade carried on by the company.

3

If any such debenture includes provision for the payment of a sum expressed as interest in respect of a period which falls wholly or partly before the issue of the debenture, any payment made in pursuance of that provision in respect of that period shall be treated for the purposes of the Corporation Tax Acts as if the debenture had been issued at the commencement of that period and, accordingly, as interest on the principal sum payable under the debenture.

SCHEDULE 26Repeals

Section 258.

I24Part I Vehicles excise duty

Annotations:

Commencement Information

I24

Sch. 26 Pt. I in force at Royal Assent except for the repeals at (2) which come into force at 1.6.1994

(1)Rates
Chapter	Short title	Extent of repeal
1971 c. 10.	The Vehicles (Excise) Act 1971.	In Schedule 1, in Part I, paragraph 4(a).
		In Schedule 2, in Part I, paragraphs 3 and 5.
		In Schedule 4, paragraph 6(6)(a), (c) and (d).
1985 c. 54.	The Finance Act 1985.	Section 4(4).
1991 c. 31.	The Finance Act 1991.	In Schedule 3, in Part I, paragraph 21.
1993 c. 34.	The Finance Act 1993.	Section 17(3)(a) and (7)(b).
		Section 20(3).

These repeals have effect in relation to licences taken out after 30th November 1993.

(2)Transitional modifications
Chapter	Short title	Extent of repeal
1971 c. 10.	The Vehicles (Excise) Act 1971.	In section 2A(1), the words “(other than licences for one calendar year)”.
		In Schedule 7, in Part I, paragraphs 1(c), 3(b), 18, 19, 21, and 22 and, so far as it relates to section 26(2), paragraph 23.
1988 c. 54.	The Road Traffic (Consequential Provisions) Act 1988.	In Schedule 2, in Part III, paragraph 23.

These repeals come into force on 1st June 1994.

(3)Other provisions
Chapter	Short title	Extent of repeal
1971 c. 10.	The Vehicles (Excise) Act 1971.	Section 1(4).
		In section 3(3), the words “the restoration of any forfeiture and”.
		Section 4(3)(a).
1971 c. 10. (contd.)	The Vehicles (Excise) Act 1971. (contd.)	In section 16(4), the words following paragraph (b).
		In section 18, subsections (8) and (9) and, in subsection (10), paragraph (b) and the word “and” immediately preceding it.
		Section 21.
		In section 22, in subsection (1), the words “or sign to be exhibited”, “or 21” and “or exhibited” and, in subsection (2), the words “or sign exhibited” and “or sign”.
		In section 23, as set out in paragraph 20 of Part I of Schedule 7, in subsection (1)(f), the words “or the signs” and “or signs”.
		In section 25, in subsection (1), in paragraph (a), the words “temporary licences or” and, in paragraph (b), the words from the beginning to “allocated to the dealer in pursuance of this Act or” and, in subsection (2), the words “requirement or” (in both places).
		In section 26, in subsection (1), the words “or sign to be exhibited” and “or 21” and, in subsection (2)(a), the words “temporary licences or”.
		In section 28(1), “11(2),”.
		In section 29(4), “11(2),”.
		In section 35(2), the words “and forfeitures” (in both places).
		Section 36.
		In section 37—in subsection (3), as set out in paragraph 22 of Part I of Schedule 7, “2(5), 11(3), 14,”,in subsection (3A), as so set out, “14,” and “14 or”, and in subsection (4), “11(3), 14, 15(1), 17(1),”.
		In Schedule 4, paragraph 5 and, in paragraph 15(1), in the definition of “goods vehicle”, the words “(including a tricycle as defined in Schedule 1 to this Act and weighing more than 425 kilograms unladen)”.
1976 c. 40.	The Finance Act 1976.	In section 11, in subsection (2)(c), the words “or, if it falls” onwards and subsection (5).
		In section 12(2)(a), the words “either” and “, or elsewhere”.
1983 c. 28.	The Finance Act 1983.	In Schedule 3, in Part II, paragraph 9.
1986 c. 41.	The Finance Act 1986.	In Schedule 2, in Part I, in paragraph 4, in sub-paragraph (5), in paragraph (a), the words “, including those words where they appear in the subsection as set out in paragraph 12 of Part I of Schedule 7,” and paragraph (c) and sub-paragraph (7)(b).
1987 c. 16.	The Finance Act 1987.	In Schedule 1, in Part III, paragraphs 16(2) and 18(2) and (3).
1988 c. 53.	The Road Traffic Offenders Act 1988.	In Schedule 5, the entry relating to the Vehicles (Excise) Act 1971.
1988 c. 54.	The Road Traffic (Consequential Provisions) Act 1988.	In Schedule 3, paragraph 15.
1990 c. 29.	The Finance Act 1990.	In Schedule 2, in Part II, paragraph 6(1) to (3).
1991 c. 31.	The Finance Act 1991.	In Schedule 3, Part II.
1993 c. 34.	The Finance Act 1993.	In section 19(2), the words “including that subsection as set out in paragraph 12 of Part I of Schedule 7”.

I25Part II Gaming machine licence duty

Annotations:

Commencement Information

I25

Sch. 26 Pt. II: repeals have effect in accordance with Sch. 3 (with appropriate commencement dates)

Chapter	Short title	Extent of repeal
1981 c. 63.	The Betting and Gaming Duties Act 1981.	Section 21A.
		Section 22(5).
		In section 24, subsection (2), in subsections (3) and (4) the word “such”, in subsection (3) the words from “but” to the end, in subsection (4) the words “or there are special licences in force with respect to those machines” and in subsection (6)(a) the words from “or” at the end of sub-paragraph (i) to “greater”.
		In section 26, in subsection (4) the words “section 22(5) or”.
		In Schedule 4, paragraphs 9, 10 and 11A.
1982 c. 39.	The Finance Act 1982.	In Schedule 6, paragraphs 9, 11 and 15.
1984 c. 43.	The Finance Act 1984.	In Schedule 3, paragraphs 3 to 5, 6(b) to (d) and (f), 7(3) to (7) and (9) to (11).
1985 c. 54.	The Finance Act 1985.	In Schedule 5, paragraphs 2, 3(1) and 9(1).
1987 c. 16.	The Finance Act 1987.	Section 4.
		Section 5(1), (4) and (5).
1993 c. 34.	The Finance Act 1993.	Section 15.
		In section 16, subsections (4)(b) and (5).

These repeals have effect in accordance with Schedule 3 to this Act.

Part III Excise duties: enforcement and appeals

Chapter	Short title	Extent of repeal
1979 c. 2.	The Customs and Excise Management Act 1979.	Section 111(2).
		In section 113(4), the words from “and the trader” onwards.
		Section 116A.
		Section 127.
1979 c. 4.	The Alcoholic Liquor Duties Act 1979.	Section 13(4).
		Section 15(8).
		Section 19(3).
1979 c. 7.	The Tobacco Products Duty Act 1979.	Section 8(3).
1981 c. 35.	The Finance Act 1981.	In Schedule 8— (a) in paragraph 2(d), paragraph (ii) and the word “and” immediately preceding it; (b) paragraph 7; (c) in paragraph 12, in sub-paragraph (b), the words from “and after” onwards and sub-paragraph (c); (d) in paragraph 14, the words from “and after” in sub-paragraph (c) to the end of sub-paragraph (d); and (e) in paragraph 15, sub-paragraph (c) and the word “and” immediately preceding it.
1981 c. 63.	The Betting and Gaming Duties Act 1981.	In section 24(5), the words after paragraph (f).
		In Schedule 1— (a) paragraph 11; (b) in paragraph 14(3), the word “reasonably”; and (c) in paragraph 15(1), the words from “(not being” to “9 above)”.
		In Schedule 2, paragraph 5 and, in paragraph 7(6), the words “(1) or”.
		In Schedule 3, paragraphs 14 and 16(4).
		In Schedule 4, paragraph 16(2).
1985 c. 54.	The Finance Act 1985.	In Schedule 5, paragraph 9(2).
1989 c. 26.	The Finance Act 1989.	Section 15.
1992 c. 48.	The Finance (No. 2) Act 1992.	In Schedule 2, paragraph 2(6).

Section 19 of this Act applies to these repeals as it applies to Chapter II of Part I of this Act.

Part IV Value added tax

Chapter	Short title	Extent of repeal
1985 c. 54.	The Finance Act 1985.	In section 20(2)(a) the words “one month after”.

This repeal has effect in accordance with section 46 of this Act.

Part V Income tax, corporation tax and capital gains tax

(1) Reliefs
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 257BB(6).
		In section 257D(5)(d), the words “section 257A and”.
		In section 265(3)(b), the words from “section 257A” to “or under”.
		In section 347B(2), the words “Notwithstanding section 347A(1)(a) but”.
1988 c. 39.	The Finance Act 1988.	In Schedule 3, paragraph 33.
1992 c. 48.	The Finance (No. 2) Act 1992.	In Schedule 5, paragraph 8(2).

The repeals in section 347B of the Income and Corporation Taxes Act 1988 and in the Finance Act 1988 have effect in relation to payments becoming due on or after 6th April 1994 and the other repeals have effect in accordance with section 77(7) of this Act.

(2)Interest relief
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 257D(8)(a).
		Section 265(3)(a).
		Section 353(4) and (5).
1991 c. 31.	The Finance Act 1991.	Section 27(1) to (5) and (7).
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 6(1), the words “353(4), 369(3A)”, the words “certain interest etc. and” and paragraph (a).
1992 c. 48.	The Finance (No. 2) Act 1992.	In section 19, in subsection (3), the words “353(5), 369(3B)” and subsection (5).
1993 c. 34.	The Finance Act 1993.	Section 57(7).
		In Schedule 6, in paragraph 1, the words “353(5), 369(3B)”.

These repeals have effect in accordance with section 81(6) of this Act.

(3)Medical insurance
Chapter	Short title	Extent of repeal
1988 c.1.	The Income and Corporation Taxes Act 1988.	In section 257D(8), paragraph (d).
		In section 265(3), paragraph (d).
1989 c.26.	The Finance Act 1989.	In section 55, in subsection (2) paragraph (e) and the word “and” immediately preceding it, and subsections (3) to (6).

1

The repeals in the Income and Corporation Taxes Act 1988 have effect in accordance with paragraph 3 of Schedule 10 to this Act.

2

The repeals in the Finance Act 1989 have effect in accordance with paragraph 5 of that Schedule.

(4)Vocational training
Chapter	Short title	Extent of repeal
1991 c. 31.	The Finance Act 1991.	In section 32(10), the words after paragraph (b).

This repeal comes into force in accordance with section 84(4) of this Act.

(5)Beneficial loans
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 160(4), the words from “and Part III” to the end.
		Section 167(2A).
		Section 191B(14).
		In Schedule 7, in paragraph 1(5) the words “his employer, being” and Parts III to V.
1991 c. 31.	The Finance Act 1991.	Section 31.
		In Schedule 6, paragraphs 2 and 5.

These repeals have effect in accordance with section 88(5) of this Act.

(6)Vouchers
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 141(1), the words following paragraph (b).

(7)Relief on re-investment
Chapter	Short title	Extent of repeal
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 164A, in subsection (2) the words “Subject to section 164C”, and subsections (3) to (7) and (11).
		Sections 164C to 164E.
		In section 164F, in subsection (5)(a) the words “or 164D” and in subsection (10) the words “(within the meaning of section 164D)”.
		In section 164H(1), the words “within the meaning of section 164C”.

These repeals have effect in accordance with section 91(2) of this Act.

(8)Indexation allowance
Chapter	Short title	Extent of repeal
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 56(1)(a), the words “or loss”.
		Section 103.
		Section 111.
		Sections 182 to 184.
		Section 200.
		In Schedule 7A, in paragraph 2(4) the words “except in relation to the calculation of any indexed rise”, in paragraph 2(9) the definition of “indexed rise”, in paragraph 4(12) the words from “together” to the end and paragraph 4(13).
1993 c. 34.	The Finance Act 1993.	In Schedule 17, paragraph 8.

These repeals have effect in accordance with section 93(11) of this Act.

(9)Commodity and financial futures
Chapter	Short title	Extent of repeal
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	Section 143(4).

This repeal has effect in accordance with section 95(2) of this Act.

(10) Settlements with foreign element: information
Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In the Table in section 98, in the second column the entry relating to paragraphs 11 to 14 of Schedule 5 to the Taxation of Chargeable Gains Act 1992.
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In Schedule 5, paragraphs 11 to 14.

These repeals have effect in accordance with section 97 of this Act.

(11) Profit sharing schemes
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In Schedule 10, in paragraph 3 the words from “In this paragraph” to the end of the paragraph.

(12) Retirement benefits schemes
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 188(1), paragraph (c).
		In section 189, paragraph (b).
		In section 591(2)(g) the words “approved by the Board and”.
		Section 605(1) and (2).
		In section 612(1), the definition of “administrator”.

1

The repeals in sections 188 and 189 have effect in accordance with section 108 of this Act.

2

The repeal in section 591 has effect in accordance with section 107 of this Act.

3

The repeal of section 605(1) and (2) has effect in accordance with section 105 of this Act.

4

The repeal in section 612(1) has effect in accordance with section 103 of this Act.

(13) Authorised unit trusts
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 468, subsection (2), and in subsection (6) the definition of “distribution period”.
		Sections 468F and 468G.
1993 c. 34.	The Finance Act 1993.	In Schedule 6, paragraphs 4, 5 and 25(2).

These repeals have effect in accordance with section 111 of and Schedule 14 to this Act.

(14) Manufactured payments
Chapter	Short title	Extent of repeal
1988 c.1.	The Income and Corporation Taxes Act 1988.	In paragraph 5 of Schedule 23A, in sub-paragraphs (2) and (4) the word “and” at the end of paragraph (b).

These repeals have effect in accordance with section 123 of this Act.

(15) Controlled Foreign Companies
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In paragraph 2 of Schedule 25, in sub-paragraph (1), in paragraph (a) the words “or for some other period which, in whole or in part, falls within that accounting period” and the words following paragraph (d), and sub-paragraph (2).

These repeals have effect in accordance with section 134(5) of this Act.

(16) Repeals connected with foreign income dividends
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 434(6A) the word “and” at the end of paragraph (a).
		In section 438(6) the words from “being” to “that profit,”.
		In section 731(9), in the definition of “interest” the words from “and in applying” to the end of paragraph (b).

(17) Enterprise investment scheme
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 257D(8)(b), the words “or under section 289”.
		In section 265(3)(b), the words “or under section 289”.
		In section 290A, subsection (10) and, in subsection (11), the definition of “prospectus”.
		In section 293, subsection (4) and subsections (9) to (11).
		Section 296(6).
		In section 297, in subsection (1) the words “(6) and” and in subsection (2) paragraphs (h) and (j).
		In section 298, in subsection (5) the definition of “property development” and subsections (6) to (8).
		Section 301(1), (2) and (7).
		Section 303(8), (10) and (11).
		In section 306(10), the second sentence.
		In section 307, in subsection (1) the words from “but” to the end and subsection (9).
		Section 308(6).
		Section 309.
		Section 310(10) and (11).
		In section 312, in subsection (1) the definitions of “fixed-rate preference share capital” and “the relevant period”.
1988 c. 39.	The Finance Act 1988.	Section 50.
		Schedule 4.
1990 c. 29.	The Finance Act 1990.	Section 73.
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 231(1)(d) the words “(business expansion scheme)”.
1992 c. 48.	The Finance (No. 2) Act 1992.	Sections 38 to 40.

These repeals have effect in relation to shares issued on or after 1st January 1994.

(18) Deduction from income
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 808 the words “In this section “securities” includes stocks and shares.”

This repeal has effect in accordance with section 140 of this Act.

(19) Qualifying lenders
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 376(5).
		In section 379, the words “except in section 376(4) and (5)”.
		In section 828(4), “376(5)”.

(20) Premiums referred to pension business
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 431(4), in paragraph (d) the words “approved by the Board and” and in paragraph (e) the words “approved by the Board”.

These repeals have effect in accordance with section 143 of this Act.

(21) Business donations
Chapter	Short title	Extent of repeal
1990 c. 29.	The Finance Act 1990.	Section 75.

(22) Minor corrections
Chapter	Short title	Extent of repeal
1965 c. 25.	The Finance Act 1965.	Section 87.
		Schedule 21.
1966 c. 18.	The Finance Act 1966.	In Schedule 5, paragraph 19.
		In Schedule 6, paragraph 23.
1970 c. 9.	The Taxes Management Act 1970.	In Schedule 4, paragraph 6.
1970 c. 10.	The Income and Corporation Taxes Act 1970.	In Schedule 15, in Part I of the Table in paragraph 11, the entry relating to the Finance Act 1966.
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 43(1), the words “or IV”.
		In section 271— (a) in subsection (1)— (i) the words “or contract”, wherever they occur, (ii) in paragraph (b), the words “or the contract was made after that date”, and (iii) in paragraph (c), the words “or, as the case may be, the body with which the contract was made”, and (b) in subsection (2), paragraph (b) and the word “or” immediately preceding it. Section 614(1). In Schedule 11, in paragraph 8(b), the words “Chapter II of Part I of the 1968 Act or”.

The repeals in sections 43 and 271 of, and Schedule 11 to, the Income and Corporation Taxes Act 1988 have effect in accordance with Schedule 17 to this Act.

(23) Management: self-assessment etc.
Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In section 11(1), the words “inspector or other”.
		Section 11A.
		In section 12, subsections (1) and (4).
		In section 33(2), the proviso.
		In section 95(3), the words from “and the references” to the end.
		Section 118(3).
1975 c. 45.	The Finance (No. 2) Act 1975.	Section 67(1).
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 5.
		Section 10.
		In section 203(2)(dd), the words from “(being not less” to “due)”.
		Section 478.
		In section 824, subsection (5), in subsection (9), the words “a partnership” and the words “(within the meaning of section 111 of the Finance Act 1989)”, and subsection (10).
1992 c. 12	The Taxation of Chargeable Gains Act 1992.	Section 283(5).

1

The repeal of section 118(3) of the Taxes Management Act 1970 has effect in accordance with section 199(2) of, and paragraph 34(3) of Schedule 19 to, this Act.

2

The repeal of section 5 of the Income and Corporation Taxes Act 1988—

a

except so far as it relates to partnerships whose trades, professions or businesses are set up and commenced before 6th April 1994, has effect in accordance with section 199(2) of this Act; and

b

so far as it so relates, has effect as respects the year 1997-98 and subsequent years of assessment.

3

The repeals in section 824 of the Income and Corporation Taxes Act 1988 has effect in accordance with section 199(2) of, and paragraph 41(4) of Schedule 19 to, this Act.

4

The other repeals have effect in accordance with section 199(2) of this Act.

(24) Changes for facilitating self-assessment
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 65, in subsection (1), the words “and sections 66 and 67” and the words “the year preceding”, in subsection (3), the words from “Nothing in this subsection” to the end, and in subsection (5), the words “subject to sections 66 and 67” and the words “the year preceding”, in each place where they occur.
		Sections 66 and 67.
		In section 96, in subsection (5), paragraph (b), in subsection (6), the words from “except that” to the end, and in subsection (7), paragraph (b).
		In section 113, in subsection (1), the words “and of section 114(3)(b)”, subsections (3) to (5) and, in subsection (6), the words from “and where” to the end.
		In section 114, in subsection (3), the words from “except that” to the end, and subsection (4).
		In section 115, subsections (1) to (3) and (6).
		In section 277, in subsection (1), the words “Subject to subsection (2) below”, paragraph (c) and the word “and” immediately preceding that paragraph, and subsection (2).
		Section 380(3).
		Section 381(6).
		Section 383.
		In section 384, in subsection (1), the words “(including any amount in respect of capital allowances which, by virtue of section 383, is to be treated as a loss)”, in subsection (2), the words “or an allowance in respect of expenditure incurred”, paragraph (b) and the word “or” immediately preceding that paragraph, and subsection (5).
		In section 385, subsections (2), (3), (5) and (8).
		Section 386(4).
		In section 388, in subsection (6), paragraphs (b) and (d) and the word “and” immediately preceding paragraph (d), and in subsection (7), the words from the beginning to “an earlier year; and”.
		In section 389, subsections (3) and (5) to (7).
		In section 397(1), the words from “and where” to the end.
		In section 521, in subsections (1) and (2), the words “or its basis period”.
		In section 528(1), the words “or its basis period”.
		In section 530, in subsections (4) and (5), the words “or its basis period”.
		In section 804(8), the definitions of “non-basis period” and “years of commencement” and the words “references to the enactments relating to cessation are references to sections 63, 67 and 113”.
1990 c. 1.	The Capital Allowances Act 1990.	In section 3, in subsections (1) and (2B) to (4), the words “or its basis period”, in each place where they occur.
		In section 4(10), the words “or of which the basis periods end on or before that date”.
		In section 7, in subsections (2) and (3), the words “or its basis period”.
		In section 8, in subsection (3), the words “or its basis period”, and in subsection (5), in paragraph (a), the words from “or” to the end.
		In section 9(3), the words “or its basis period”.
		In section 19(3), the words “or its basis period”, in each place where they occur.
		In section 21(8), the words “or its basis period”.
		In section 23(2), the words “or its basis period”.
		In section 24, in subsections (6), (6A) and (7), the words “or its basis period”, in each place where they occur.
		In section 25, in subsections (1) and (7), the words “or its basis period”.
		In section 33(3), the words “or, as the case may be, in its basis period”.
		In section 37, in subsections (2) and (9), the words “or its basis period”, in subsection (5), the words “or, as the case may be, in its basis period” and, in subsection (6), the words “or in the basis period for which”.
		In section 42(4), the words “or in the basis period for which”.
		In section 46(1), the words “or in the basis period for which”.
		In section 47(1), the words “or in the basis period for which”.
		In section 48, in subsections (3), (4) and (5), the words “or its basis period”.
		In section 49(2), the words “or its basis period”.
		In section 61(5), the words “or its basis period”.
		In section 62A(6), the words “or its basis period”.
		In section 67(6), the words “or its basis period”.
		In section 73(3), the words “or its basis period”.
		In section 79, in subsections (3) and (5), the words “or its basis period”, in each place where they occur.
		In section 85, in subsections (1), (3) and (4), the words “or its basis period”, in each place where they occur.
		In section 87(6), the words “or of which the basis periods end on or before that date”.
		In section 93(3), the words “or its basis period”.
		In section 99, in subsections (1) and (4), the words “or its basis period”.
		In section 101, in subsections (2) and (6) to (8), the words “or its basis period”.
		In section 121(4), the words “or its basis period” and the words “or, as the case may be, its basis period”.
		In section 124(3), the words “or its basis period”.
		In section 126(2), the words “or its basis period”, in each place where they occur.
		In section 128(1), the words “or its basis period”.
		In section 129(3), the words “or the basis periods for which”.
		In section 134(1), the words from “but where a writing-down allowance” to the end.
		In section 138(7), the words “or its basis period”.
		In section 148(7), the words “or its basis period”.
		In section 159, in subsections (4) and (6), the words “or its basis period”.
		In section 159A(4), the words “or its basis period”.
1991 c. 31.	The Finance Act 1991.	In section 72(8), the words “383(6), (7) and (8)”.
1994 c. 9.	The Finance Act 1994.	In section 118(6), the words “or its basis period”.

1

The repeal in section 65(3) of the Income and Corporation Taxes Act 1988 has effect in accordance with sections 207(6) and 218(1)(b) of this Act.

2

The repeal in section 96(6) of the Income and Corporation Taxes Act 1988 has effect in accordance with section 216(5) of this Act.

3

The repeal in section 96(7) of the Income and Corporation Taxes Act 1988 has effect in accordance with section 214(7) of this Act.

4

The following repeals, namely—

a

the repeals in sections 113, 114, 115, 277, 380, 381 and 386 of the Income and Corporation Taxes Act 1988;

b

the repeal of subsection (5) of section 384 of that Act;

c

the repeal of subsections (2) and (5) of section 385 of that Act; and

d

the repeal of subsection (3) of section 389 of that Act,

have effect in accordance with section 215(4) of this Act.

5

The following repeals, namely—

a

the repeals in sections 384(1) and (2), 388, 397, 521, 528 and 530 of the Income and Corporation Taxes Act 1988;

b

the repeal of section 383 of that Act;

c

the repeal of subsections (5) to (7) of section 389 of that Act;

d

the repeals in the Capital Allowances Act 1990;

e

the repeal in section 72 of the Finance Act 1991; and

f

the repeal in section 118 of the Finance Act 1994,

have effect in accordance with sections 211(2) and 218(1)(b) of this Act.

6

The repeals of subsections (3) and (8) of section 385 of the Income and Corporation Taxes Act 1988 have effect in accordance with section 209(7) of this Act.

7

The other repeals have effect in accordance with section 218(1) of this Act.

4

The following repeals, namely—

a

the repeals in sections 113, 114, 115, 277, 380, 381 and 386 of the Income and Corporation Taxes Act 1988;

b

the repeal of subsection (5) of section 384 of that Act;

c

the repeal of subsections (2) and (5) of section 385 of that Act; and

d

the repeal of subsection (3) of section 389 of that Act,

have effect in accordance with section 215(4) of this Act.

(25) Lloyd’s underwriters
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 627.
		Section 641(2).
1993 c. 34.	The Finance Act 1993.	Section 171(3).
		In section 179, in subsection (2), the words “to subsection (3) below and”, and subsection (3).
		In section 182, subsections (2) to (4).
		Section 183(3).
		In section 184(1), the words “or the managing agent of a syndicate of which he is a member”.
		In Schedule 19, Part II.
		In Schedule 20, in paragraph 13(1), the words from “and a transfer” to the end.

1

The repeals in the Income and Corporation Taxes Act 1988 and in section 183 of the Finance Act 1993 have effect in accordance with section 228(4) of this Act.

2

The repeal in section 171 of the Finance Act 1993 has effect in accordance with paragraph 1(3)(b) of Schedule 21 to this Act.

3

The repeals in section 179 of the Finance Act 1993 have effect in accordance with paragraph 6(3) of that Schedule.

4

The repeals in section 182 of the Finance Act 1993 have effect in accordance with paragraph 7(2) of that Schedule.

5

The repeal in paragraph 13(1) of Schedule 20 to the Finance Act 1993 has effect in accordance with paragraph 16(3) of that Schedule.

6

The other repeals have effect in accordance with section 228(3) of this Act.

Part VI Oil taxation

Chapter	Short title	Extent of repeal
1975 c. 22.	The Oil Taxation Act 1975.	In section 2(9)(a)(i), the words “or, as the case may be”.
		In Schedule 3, in paragraph 2A, sub-paragraph (4).
1993 c. 34.	The Finance Act 1993.	Section 190(5)(b).

1

The repeals in the Oil Taxation Act 1975 have effect in accordance with section 236 of this Act.

2

The repeal in the Finance Act 1993 has effect in accordance with section 238 of this Act.

I26Part VII Stamp duty

Annotations:

Commencement Information

I26

Sch. 26 Pt VII(2) not in force at Royal Assent, see s. 245(8).

(1) Exchange, partition, etc.
Chapter	Short title	Extent of repeal
1891 c. 39.	The Stamp Act 1891.	In section 73, the words from first “upon” to “heritable property, or” and the words “exchange or”.
		In Schedule 1, the heading “Exchange or Excambion”.
1991 c. 31.	The Finance Act 1991.	In section 110, subsection (3)(e) and, in subsection (4), the words following “exempt property”.

These repeals have effect in accordance with section 241(6) of this Act.

(2)Production of instruments in Northern Ireland
Chapter	Short title	Extent of repeal
1936 c. 33 (N. I.).	The Finance Act (Northern Ireland) 1936.	Section 9.

This repeal has effect in accordance with section 245(8) of this Act.

I27Part VIII Miscellaneous

Annotations:

Commencement Information

I27

Sch. 26 Pt VIII(1) has effect in accordance with s. 251 which is partly retrospective to 30.11.1993; Sch. 26 Pt. VIII(2) deemed to have come into force on 11.1.1994.

(1) Companies treated as non-resident
Chapter	Short title	Extent of repeal
1988 c.1.	The Income and Corporation Taxes Act 1988.	In section 468F, in subsection (1)(c) the words “and not a dual resident” and in subsection (8) the definition of “dual resident”.
		In section 742(8) the words “, or regarded for the purposes of any double taxation arrangements having effect by virtue of section 788 as resident in a territory outside the United Kingdom,”.
		In section 745(4) the words “, or regarded for the purposes of any double taxation arrangements having effect by virtue of section 788 as resident in a territory outside the United Kingdom,”.
		Section 749(4A).
		Section 751(2)(bb).
1990 c.29.	The Finance Act 1990.	Section 66.
		In section 67, subsections (1) and (2).
1992 c.12.	The Taxation of Chargeable Gains Act 1992.	Section 139(3).
		Section 160.
		In section 166(2) the words “or a company” and the words “or company”.
		In section 171(2), paragraph (e) and the word “or” immediately preceding it.
		Section 172(3)(a).
		In section 175(2) the words from “or a company which” to the end of paragraph (b).
		Section 186.
		In section 187, in subsection (1)(a) the words “or 186” and in subsection (6) the words “or, as the case may be, section 186(2),” and the words “or, as the case may be, section 186(1)”.
		Section 188.
		In section 211(3) the words “(and would not be a gain on which, under any double taxation relief arrangements, it would not be liable to tax)”.
1993 c. 34.	The Finance Act 1993.	Section 61(3).

These repeals have effect in accordance with section 251 of this Act.

(2)Railway taxation provisions
Chapter	Short title	Extent of repeal
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 35(3)(d), the word “and” immediately preceding sub-paragraph (viii).

This repeal shall be deemed to have come into force on 11th January 1994.

(3)Assigned matters: minor corrections
Chapter	Short title	Extent of repeal
1979 c. 2.	The Customs and Excise Management Act 1979.	In section 118A, subsection (7).
1983 c. 55.	The Value Added Tax Act 1983.	In Schedule 7, in paragraph 7, sub-paragraph (6).

1. Cigarettes	An amount equal to 20 per cent. of the retail price plus £52.33 per thousand cigarettes.
2. Cigars	£77.58 per kilogram.
3. Hand-rolling tobacco	£81.86 per kilogram.
4. Other smoking tobacco and chewing tobacco	£34.26 per kilogram.

Finance Act 1994

Part I Customs and Excise

Chapter I General

Rates of duty

1 Wine, made-wine and cider.

1

2

3

2 Tobacco products.

1

TABLE

2

3 Hydrocarbon oil.

1

2

3

4

F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions

5 Vehicles excise duty: miscellaneous provisions.

6 Gaming machine licence duty.

C13Chapter II Appeals and Penalties

VAT and duties tribunals

I17VAT and duties tribunals.

F21

F22

3

4

a

b

5

6

7

Civil penalties

I28 Penalty for evasion of excise duty.

1

a

b

2

a

b

c

3

4

a

b

5

a

b

6

a

b

7

a

b

c

d

8

C2C3I3C4C59 Penalties for contraventions of statutory requirements.

1

2

a

b

3

a

b

4

a

b

5

a

b

6

7

8

a

b

9

C6I410 Exceptions to liability under section 9.

1

C2 C3 I3 C4 C59 Penalties for contraventions of statutory requirements.

C6 I410 Exceptions to liability under section 9.

C7 I612 Assessments to excise duty.