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.

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.

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.

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.

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.

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

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)

2A

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

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).

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).

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.

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.

6

In any case where, in the course of dealing in commodity or financial futures, a person has entered into a futures contract and—

a

he has not closed out the contract (as mentioned in subsection (5) above), and

b

he becomes entitled to receive or liable to make a payment, whether under the contract or otherwise, in full or partial settlement of any obligations under the contract,

then, for the purposes of this Act, he shall be treated as having disposed of an asset (namely, that entitlement or liability) and the payment received or made by him shall be treated as consideration for the disposal or, as the case may be, as incidental costs to him of making the disposal.

7

Section 46 shall not apply to obligations under—

a

a commodity or financial futures contract which is entered into by a person in the course of dealing in such futures on a recognised futures exchange; or

b

a commodity or financial futures contract to which an authorised person or listed institution is a party.

8

In this section—

• “authorised person” has the same meaning as in the Financial Services Act 1986, and

• “listed institution” has the same meaning as in section 43 of that Act.

144A Cash-settled options.

1

In any case where—

a

an option is exercised; and

b

the nature of the option (or its exercise) is such that the grantor of the option is liable to make, and the person exercising it is entitled to receive, a payment in full settlement of all obligations under the option,

subsections (2) and (3) below shall apply in place of subsections (2) and (3) of section 144.

2

As regards the grantor of the option—

a

he shall be treated as having disposed of an asset (namely, his liability to make the payment) and the payment made by him shall be treated as incidental costs to him of making the disposal; and

b

the grant of the option and the disposal shall be treated as a single transaction and the consideration for the option shall be treated as the consideration for the disposal.

3

As regards the person exercising the option—

a

he shall be treated as having disposed of an asset (namely, his entitlement to receive the payment) and the payment received by him shall be treated as the consideration for the disposal;

b

the acquisition of the option (whether directly from the grantor or not) and the disposal shall be treated as a single transaction and the cost of acquiring the option shall be treated as expenditure allowable as a deduction under section 38(1)(a) from the consideration for the disposal; and

c

for the purpose of computing the indexation allowance (if any) on the disposal, the cost of the option shall be treated (notwithstanding paragraph (b) above) as incurred when the option was acquired.

4

In any case where subsections (2) and (3) above would apply as mentioned in subsection (1) above if the reference in that subsection to full settlement included a reference to partial settlement, those subsections and subsections (2) and (3) of section 144 shall both apply but with the following modifications—

a

for any reference to the grant or acquisition of the option there shall be substituted a reference to the grant or acquisition of so much of the option as relates to the making and receipt of the payment or, as the case may be, the sale or purchase by the grantor; and

b

for any reference to the consideration for, or the cost of or of acquiring, the option there shall be substituted a reference to the appropriate proportion of that consideration or cost.

5

In this section “appropriate proportion” means such proportion as may be just and reasonable in all the circumstances.

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.

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.

3A

1

In paragraph 3 above the reference to the relevant age shall be construed as follows.

2

Where the scheme is approved before 25th July 1991 and the event occurs before 30th November 1993, the relevant age is pensionable age.

3

Where—

a

the scheme is approved before 25th July 1991,

b

the event occurs on or after 30th November 1993,

c

the scheme defines the period of retention by reference to the age of 60 for both men and women, and

d

the reference to that age is incorporated in the definition by virtue of an alteration approved by the Board under paragraph 4 of Schedule 9 before the event occurs,

the relevant age is 60.

4

Where—

a

the scheme is approved before 25th July 1991,

b

the event occurs on or after 30th November 1993, and

c

sub-paragraph (3) above does not apply,

the relevant age is pensionable age.

5

Where the scheme is approved on or after 25th July 1991, the relevant age is the specified age.

cc

directing the trustees to accept an offer of a qualifying corporate bond, whether alone or with cash or other assets or both, for his shares if the offer forms part of a general offer which is made as mentioned in paragraph (c) above; or

4

In sub-paragraph (1)(cc) above “qualifying corporate bond” shall be construed in accordance with section 117 of the 1992 Act.

5A

1

Paragraph 5(2) to (6) above apply where there occurs in relation to any of a participant’s shares (“the original holding”) a relevant transaction which would result in a new holding being equated with the original holding for the purposes of capital gains tax, were it not for the fact that what would be the new holding consists of or includes a qualifying corporate bond; and “relevant transaction” here means a transaction mentioned in Chapter II of Part IV of the 1992 Act.

2

In paragraph 5(2) to (6) above as applied by this paragraph—

a

references to a company reconstruction are to the transaction referred to in sub-paragraph (1) above;

b

references to the new holding are to what would be the new holding were it not for the fact mentioned in sub-paragraph (1) above;

c

references to the original holding shall be construed in accordance with sub-paragraph (1) above (and not paragraph 5(1));

d

references to shares, in the context of the new holding, include securities and rights of any description which form part of the new holding.

3

In sub-paragraph (1) above “qualifying corporate bond” shall be construed in accordance with section 117 of the 1992 Act.

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.

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.

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.

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.

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.

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.

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.

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.

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.

9

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

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.

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.

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.

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.

2

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

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

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).

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.

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.

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.