Finance Act 2000
2000 c. 17
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.
[28th July 2000]

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:—
Act modified (21.2.2009) by The Banking Act 2009 (Parts 2 and 3 Consequential Amendments) Order 2009 (S.I. 2009/317), arts. 1, 3, Sch.
Act applied (with modifications) (8.2.2011) by The Investment Bank Special Administration Regulations 2011 (S.I. 2011/245), reg. 1, Sch. 6 Pt. 1 (with reg. 27(a))

Part I Excise duties

Alcoholic liquor duties

1 Rate of duty on beer.
(1) In section 36(1) of the Alcoholic Liquor Duties Act 1979 (rate of duty on beer), for “£11.50" substitute “ £11.89 ”.
1979 c. 4.
(2) This section shall be deemed to have come into force on 1st April 2000.

2 Rates of duty on cider.
(1) In section 62(1A) of the Alcoholic Liquor Duties Act 1979 (rates of duty on cider)—
(a) in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent.), for “£161.20" substitute “ £166.70 ”;
(b) in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent. which is not sparkling cider), for “£37.92" substitute “ £39.21 ”; and
(c) in paragraph (c) (rate of duty per hectolitre in any other case), for “£25.27" substitute “ £26.13 ”.
1979 c. 4.
(2) This section shall be deemed to have come into force on 1st April 2000.

3 Rates of duty on wine and made-wine.
(1) For Part I of the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (wine and made-wine) substitute—

“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 4 per cent.	47.58
Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5.5 per cent.	65.42
Wine or made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent. and not being sparkling	154.37
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but less than 8.5 per cent.	166.70
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent. or of a strength exceeding 8.5 per cent. but not exceeding 15 per cent.	220.54
Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.	205.82”

1979 c. 4.
(2) This section shall be deemed to have come into force on 1st April 2000.

Hydrocarbon oil duties

4 Rates of duty and rebate on hydrocarbon oil.
(1) In section 6(1A) of the Hydrocarbon Oil Duties Act 1979 (rates of duty on hydrocarbon oil)—
(a) in paragraph (a) (light oil), for “£0.5288" substitute “ £0.5468 ”;
(b) in paragraph (b) (ultra low sulphur diesel), for “£0.4721" substitute “ £0.4882 ”; and
(c) in paragraph (c) (heavy oil which is not ultra low sulphur diesel), for “£0.5021" substitute “ £0.5182 ”.
1979 c. 5.
(2) In section 11(1) of that Act (rebate on heavy oil)—
(a) in paragraph (a) (fuel oil), for “£0.0265" substitute “ £0.0274 ”; and
(b) in each of paragraphs (b) and (ba) (gas oil which is not ultra low sulphur diesel and ultra low sulphur diesel), for “£0.0303" substitute “ £0.0313 ”.
(3) In section 13A(1A) of that Act (rebate on unleaded petrol)—
(a) in paragraph (a) (higher octane unleaded petrol), for “£0.0367" substitute “ £0.0379 ”; and
(b) in paragraph (b) (other unleaded petrol), for “£0.0567" substitute “ £0.0586 ”.
(4) In section 14(1) of that Act (rebate on light oil for use as furnace fuel), for “£0.0265" substitute “ £0.0274 ”.
(5) This section shall be deemed to have come into force at 6 o’clock in the evening of 21st March 2000.

5 Ultra low sulphur petrol.
(1) In section 1 of the Hydrocarbon Oil Duties Act 1979 (definitions of oil), after subsection (3) insert—

“(3A) “Ultra low sulphur petrol” means unleaded petrol (other than higher octane unleaded petrol)—
(a) the sulphur content of which does not exceed 0.005 per cent. by weight or is nil, and
(b) the aromatics content of which does not exceed 35 per cent. by volume.
(3B) “Unleaded petrol” means petrol that contains not more than 0.013 grams of lead per litre of petrol; and petrol is “leaded petrol” if it is not unleaded.
(3C) “Higher octane unleaded petrol” means unleaded petrol—
(a) whose research octane number is not less than 96 and whose motor octane number is not less than 86; or
(b) which is delivered for home use as petrol that satisfies the condition in paragraph (a) above; or
(c) which is delivered for home use as petrol that is suitable to be used as fuel for engines for which leaded petrol is suitable by virtue of being leaded; or
(d) which is delivered for home use under such a description, or in such a manner, as tends, in the circumstances, to suggest that it is—
(i) petrol satisfying the condition in paragraph (a) above, or
(ii) petrol that is suitable to be used as fuel for engines for which leaded petrol is suitable by virtue of being leaded.”

.
1979 c. 5.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 5(2)(4) repealed (retrospective to 6 p.m. on 7.3.2001) by 2001 c. 9, ss. 2(5), 110(1), Sch. 33 Pt I(1) Note
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 5(3) omitted (retrospective to 1.4.2008) by virtue of Finance Act 2008 (c. 9), s. 13(11)(c), (12)
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In section 27(1) of that Act (interpretation), at the appropriate places insert—

““ultra low sulphur petrol” has the meaning given by section 1(3A) above;”

;

““unleaded petrol” and “leaded petrol” have the meaning given by section 1(3B) above.”

;
and

““higher octane unleaded petrol” has the meaning given by section 1(3C) above;”

.
(6) This section shall come into force on such day as the Commissioners of Customs and Excise may appoint by order made by statutory instrument.
S. 5(6) power exercised (29.9.2000): 1.10.2000 appointed by S.I. 2000/2674, art. 2

6 Mixing of rebated light oils.
(1) Schedule 2A to the Hydrocarbon Oil Duties Act 1979 (mixing of rebated oils) is amended in accordance with Schedule 1 to this Act.
1979 c. 5.
(2) The amendments in that Schedule come into force on the day appointed under section 5(6).

7 Power to amend definitions of types of hydrocarbon oil.
In the Hydrocarbon Oil Duties Act 1979, after section 2 insert—

“2A Power to amend definitions.
(1) The Treasury may by order made by statutory instrument amend the definitions for the purposes of this Act of—
“ultra low sulphur petrol";
“unleaded petrol" and “leaded petrol";
“higher octane unleaded petrol"; and
“ultra low sulphur diesel".
(2) An order under this section may contain such incidental, supplementary and transitional provision as appears to the Treasury to be appropriate.
(3) No order shall be made under this section unless a draft of it has been laid before and approved by a resolution of the House of Commons.”

.
1979 c. 5.

8 Penalties for misuse of rebated heavy oil.
(1) Section 13 of the Hydrocarbon Oil Duties Act 1979 (penalties for misuse of rebated heavy oil) is amended as follows.
1979 c. 5.
(2) In subsection (1)—
(a) for “or, as the case may be, his becoming so liable" substitute “ or his becoming so liable (or, where his conduct includes both, each of them) ”, and
(b) omit the words from “; and the Commissioners" to the end.
(3) After subsection (1) insert—

“(1A) Where oil is used, or is taken into a road vehicle, in contravention of section 12(2) above, the Commissioners may—
(a) assess an amount equal to the rebate on like oil at the rate in force at the time of the contravention as being excise duty due from any person who used the oil or was liable for the oil being taken into the road vehicle, and
(b) notify him or his representative accordingly.”

.
(4) This section shall have effect in relation to liability arising on or after 1st May 2000.

9 Use of rebated heavy oil as fuel.
(1) Schedule 1 to the Hydrocarbon Oil Duties Act 1979 (which sets out the categories of excepted vehicle which may use rebated heavy oil as fuel) is amended as follows.
1979 c. 5.
(2) Omit the following provisions—
(a) paragraph 2(1)(b) (which provides that off-road tractors are excepted vehicles) and the word “or" immediately preceding it, and
(b) paragraph 2(4) (which defines off-road tractors).
(3) This section shall have effect in relation to the use of rebated heavy oil as fuel on or after 1st May 2000.

10 Rebates, marking and reliefs.
(1) The Hydrocarbon Oil Duties Act 1979 is amended in accordance with subsections (2) to (4).
1979 c. 5.
(2) In section 11 (rebate on heavy oil), after subsection (2) insert—

“(3) This subsection applies in any case where—
(a) oil is delivered for home use,
(b) regulations under section 24 below require, as a condition of allowing a rebate on the oil under subsection (1) above, that a marker prescribed by regulations under that section shall have been added to the oil, and
(c) the marker is present at the time of delivery for home use but in such a proportion that its presence falls to be disregarded by virtue of provision made by regulations under that section.
(4) In any case where subsection (3) above applies, a rebate may be allowed on the oil at the time it is delivered for home use if it appears to the Commissioners to be appropriate to allow it.
(5) Where a rebate is allowed under subsection (4) above, the rate at which the rebate is allowed—
(a) shall be such rate as appears to the Commissioners to be appropriate, but
(b) shall not be less than 95 per cent. of, and shall not exceed, the rate of rebate specified in the relevant paragraph of subsection (1) above.”

.
(3) In section 20AA(2) (provision in connection with allowing reliefs)—
(a) in paragraph (a) (relief may take form of repayment or remission), after “repayment or remission" insert “ or an allowance to be set off against duty payable to the Commissioners by the person claiming relief ”; and
(b) after paragraph (g) insert—

“(ga) provide for oil on which relief is allowed to be treated for the purposes of this Act as oil on which a rebate has been allowed;”

.
(4) In section 24 (regulations controlling use of duty-free and rebated oil), after subsection (4B) insert—

“(4C) In a case where subsection (4D) below applies, the power of the Commissioners under subsection (4A) above includes power, if it appears to them to be appropriate, to assess (and notify) an amount less than the amount of the rebate concerned.
(4D) This subsection applies in any case where—
(a) the Commissioners have power to assess (and notify) an amount under subsection (4A) above by virtue of a contravention of, or failure to comply with, a requirement such as is mentioned in paragraph 5 of Schedule 4 to this Act, and
(b) the marker whose addition is required by the requirement is present at the time of the contravention or failure but in such a proportion that its presence falls to be disregarded by virtue of provision made by regulations under this section for the purpose mentioned in paragraph 7 of that Schedule.”

.
(5) In paragraph 4 of Schedule 5 to the Finance Act 1994 (decisions under the Hydrocarbon Oil Duties Act 1979 of which a review may be required), after sub-paragraph (1) insert—

“(1A) Any decision which is made under or for the purposes of any regulations made under section 20AA of the Hydrocarbon Oil Duties Act 1979 and is a decision as to whether or not relief is to be allowed.
1979 c. 5.”

.
1994 c. 9.
1979 c. 5.

11 Emulsions of water in gas oil.
(1) In section 6A of the Hydrocarbon Oil Duties Act 1979 (duty on fuel substitutes), after subsection (2) (definition of chargeable use) insert—

“(2A) But the use of water is not a chargeable use if—
(a) the water is comprised in an emulsion of water in gas oil, and
(b) the emulsion is stabilised by additives.”

.
1979 c. 5.
(2) This section shall have effect in relation to duty charged on or after the day on which this Act is passed.

Tobacco products duty

12 Rates of tobacco products duty.
(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 substitute—

“TABLE
1. Cigarettes	An amount equal to 22 per cent. of the retail price plus £90.43 per thousand cigarettes.
2. Cigars	£132.33 per kilogram.
3. Hand-rolling tobacco	£95.12 per kilogram.
4. Other smoking tobacco and chewing tobacco	£58.17 per kilogram.”

1979 c. 7.
(2) This section shall be deemed to have come into force at 6 o’clock in the evening of 21st March 2000.

13 Basis of calculation ofad valorem element of duty on cigarettes.
(1) Section 5 of the Tobacco Products Duty Act 1979 (retail price of cigarettes) is amended as follows.
1979 c. 7.
(2) In subsection (1) (meaning of retail price) for the words from “shall be taken to be" to the end substitute

“shall be taken to be—
(a) the higher of—
(i) the recommended price for the sale by retail at that time in the United Kingdom of cigarettes of that description, and
(ii) any (or, if more than one, the highest) retail price shown at that time on the packaging of the cigarettes in question,
or
(b) if there is no such price recommended or shown, the highest price at which cigarettes of that description are normally sold by retail at that time in the United Kingdom.”

.
(3) In subsection (3) (determination of price by Commissioners), for “paragraph (a) of subsection (1)" substitute “ paragraph (b) of subsection (1) ”.
(4) In subsection (4) (reference to arbitration of Commissioners’ determination), for “subsection (1)(a)" substitute “ subsection (1)(b) ”.

14 Fiscal marks on tobacco products.
After section 8 of the Tobacco Products Duty Act 1979 insert the following sections—

“8A Fiscal marks: introductory.
Fiscal marking applies to tobacco products that are—
(a) cigarettes, or
(b) hand-rolling tobacco.

8B Power to alter range of products to which fiscal marking applies.
(1) The Commissioners may by order made by statutory instrument amend section 8A above for the purpose of causing fiscal marking—
(a) to apply to any description of tobacco products to which it does not apply, or
(b) to cease to apply to any description of tobacco products to which it does apply.
(2) Where fiscal marking applies to any description of tobacco products, the Commissioners may by regulations provide that fiscal marking does not apply to such products of that description as are of a description specified in the regulations.
(3) A statutory instrument containing (whether alone or with other provisions) an order under subsection (1)(a) above shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(4) A statutory instrument that—
(a) contains (whether alone or with other provisions) an order under subsection (1) above, and
(b) is not subject to any requirement that a draft of the instrument be laid before and approved by a resolution of each House of Parliament,
shall be subject to annulment in pursuance of a resolution of either House of Parliament.

8C Fiscal mark regulations.
(1) The Commissioners may make provision by regulations—
(a) requiring the carrying of fiscal marks by tobacco products to which fiscal marking applies, and
(b) as to such matters relating to fiscal marks as appear to the Commissioners to be necessary or expedient.
(2) In this Act “fiscal mark” means a mark carried by tobacco products indicating all or any of the following—
(a) that excise duty has been paid on the products;
(b) the rate at which excise duty was paid on the products;
(c) the amount of excise duty paid on the products;
(d) when excise duty was paid on the products;
(e) that sale of the products—
(i) is only permissible on dates ascertainable from the mark;
(ii) is not permissible after (or on or after) a date so ascertainable;
(iii) is not permissible before (or before or on) a date so ascertainable.
(3) Regulations under this section may, in particular, make provision about—
(a) the contents of a fiscal mark;
(b) the appearance of a fiscal mark;
(c) in the case of tobacco products that have more than one layer of packaging, which of the layers is (or are) to carry a fiscal mark;
(d) the positioning of a fiscal mark on the packaging of any tobacco products;
(e) when tobacco products are required to carry a fiscal mark.
(4) Regulations under this section may make different provision for different cases.

8D Fiscal marks: public notices.
(1) The Commissioners may by notices published by them regulate any of the matters mentioned in paragraphs (a) to (d) of section 8C(3) above.
(2) A notice under this section may provide for provision made by regulations under section 8C above to have effect subject to provisions of the notice.
(3) A notice under this section may make different provision for different cases.

8E Failure to comply with fiscal mark regulations and public notices.
(1) This section applies if a person fails to comply with any requirement imposed by or under—
(a) regulations made under section 8C above, or
(b) a notice published under section 8D above.
(2) Any article in respect of which the person fails to comply with the requirement shall be liable to forfeiture.
(3) The person’s failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).
1994 c. 9.
(4) The Commissioners may by regulations make such provision as is mentioned in subsection (5) below about the calculation of the penalty in a case where the failure involves post-dating of any tobacco products.
For this purpose “post-dating” means that the products carry a fiscal mark (“the later period mark”) that—
(a) is not one they are required to carry by virtue of this Act, and
(b) is one they would be required to carry by virtue of this Act if the requirement to pay the duty charged on them under section 2 above took effect at a time later than that at which it in fact takes effect.
(5) The provision that may be made by regulations under subsection (4) above is for the penalty to be calculated by reference to the duty currently charged on the products.
For this purpose “the duty currently charged" on the products is the amount of the duty charged under section 2 above that would be payable on the products if the requirement to pay the duty took effect at the time of the failure.

8F Sale of marked tobacco when not permitted: penalties.
(1) This section applies if provision made by or under—
(a) regulations made under section 8C above, or
(b) a notice published under section 8D above,
provides for any tobacco products to carry a period of sale mark.
(2) In this section—
“a period of sale mark” means a fiscal mark indicating any of the matters mentioned in subsection (2)(e) of section 8C above; and
“prohibited time”, in relation to tobacco products that carry a period of sale mark, means a time when, according to the mark, sale of the products is not permissible.
(3) If—
(a) a person sells by way of retail sale, or exposes for retail sale, any tobacco products that carry a period of sale mark, and
(b) he so sells or exposes the products at a prohibited time,
his so selling or exposing the products shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) and the products are liable to forfeiture.
1994 c. 9.

8G Offences: possession and sale etc. of unmarked tobacco.
(1) In this section “unmarked products" means tobacco products that are subject to fiscal marking but do not carry a compliant duty-paid fiscal mark.
(2) For the purposes of this section “duty-paid fiscal mark” means a fiscal mark carried by tobacco products indicating that excise duty has been paid on the products.
(3) For the purposes of this section a duty-paid fiscal mark carried by tobacco products of any description is “compliant” if it complies with all relevant requirements for any duty-paid fiscal mark that by virtue of this Act is required to be carried by such tobacco products of that description as are by virtue of this Act required to carry such a mark.
For this purpose “relevant requirement” means a requirement, imposed by virtue of this Act, as to any of the matters mentioned in paragraphs (a) to (d) of section 8C(3) above (contents, appearance and positioning etc. of fiscal marks).
(4) If a person—
(a) is in possession of, transports or displays, or
(b) sells, offers for sale or otherwise deals in,
unmarked products then, except in such cases as may be prescribed in regulations made by the Commissioners, that person commits an offence and the products are liable to forfeiture.
(5) It is a defence for a person charged with an offence under subsection (4) above to prove that the unmarked products were not required by virtue of this Act to carry a duty paid fiscal mark.
(6) A person guilty of an offence under subsection (4) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

8H Offences: use of premises for sale of unmarked tobacco.
(1) A manager of premises commits an offence if he suffers the premises to be used for the sale of unmarked products.
In this section “unmarked products” has the same meaning as in section 8G above.
(2) It is a defence for a person charged with an offence under subsection (1) above to prove that the unmarked products were not required by virtue of this Act to carry a duty-paid fiscal mark.
For this purpose “duty-paid fiscal mark” has the same meaning as in section 8G above.
(3) A person guilty of an offence under subsection (1) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(4) A court by or before which a person is convicted of an offence under subsection (1) above may make an order prohibiting the use of the premises in question for the sale of tobacco products during a period specified in the order.
(5) The period specified in an order under subsection (4) above shall not exceed six months; and the first day of the period shall be the day specified as such in the order.
(6) A manager of premises commits an offence if he suffers the premises to be used in breach of an order under subsection (4) above.
(7) A person guilty of an offence under subsection (6) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(8) For the purposes of this section a person is a manager of premises if he—
(a) is entitled to control their use,
(b) is entrusted with their management, or
(c) is in charge of them.

8J Interfering with fiscal marks: penalties.
(1) This section applies where a person—
(a) alters or overprints any fiscal mark carried by any tobacco products in compliance with any provision made under this Act, or
(b) causes any such mark to be altered or overprinted.
(2) His altering or overprinting of the mark, or his causing it to be altered or overprinted, shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).
1994 c. 9.
(3) The products that carried the mark shall be liable to forfeiture.
(4) The penalty under subsection (2) above shall be calculated by reference to the duty currently charged on the products.
For this purpose “the duty currently charged" on the products is the amount of the duty charged under section 2 above that would be payable on the products if the requirement to pay the duty took effect at the time of the conduct attracting the penalty.”

.
1979 c. 7.

15 Management of excise duty on tobacco products.
(1) The Tobacco Products Duty Act 1979 has effect subject to the following amendments.
1979 c. 7.
(2) In section 2(2) (remission or repayment of duty where tobacco products exported, shipped as stores or used for research or experiment), for the words from “that" to the end of paragraph (b) substitute—

“that—
(a) the products in question have been—
(i) exported or shipped as stores, or
(ii) used solely for the purposes of research or experiment; and
(b) any fiscal marks carried by the products have been obliterated;”

.
(3) Section 7 (regulations for management of duty) is amended as follows.
(4) After paragraph (a) of subsection (1) (method of charging duty and securing and collecting duty) insert—

“(aa) for charging the duty, in such circumstances as may be specified in the regulations, by reference to the weight of the tobacco products at a time specified in the regulations or by the Commissioners (whether the time at which the products become chargeable or that at which the duty becomes payable or any other time);”

.
(5) In paragraph (b) of subsection (1) (registration of premises for storage of tobacco), after “regulating their" insert “ storage and ”.
(6) After that paragraph insert—

“(ba) for the registration of premises for the manufacture of tobacco products, for restricting or prohibiting the manufacture of tobacco products otherwise than in premises so registered and for regulating their storage and treatment in, and removal from, such premises;”

.
(7) In paragraph (c) of subsection (1), omit sub-paragraph (i) (which is superseded by the amendment made by subsection (6) above).
(8) In paragraph (d) of subsection (1), for “and the making of such returns, as may be specified in the regulations" substitute “ the notification of such information, and the making of such returns, as may be specified in the regulations or required by the Commissioners ”.
(9) After subsection (1) insert—

“(1A) Regulations under subsection (1) above may, in particular, include provision—
(a) imposing, or providing for the imposition under the regulations of, conditions and restrictions relating to any of the matters mentioned in that subsection;
(b) enabling the Commissioners to dispense with compliance with any provision contained in the regulations in such circumstances and subject to such conditions (if any) as they may determine.”

.

Gaming duty

16 Rates of gaming duty.
(1) For the table in section 11(2) of the Finance Act 1997 (rates of gaming duty) substitute—

“TABLE
Part of gross gaming yield	Rate
The first £470,500	2½ per cent.
The next £1,045,500	12½ per cent.
The next £1,045,500	20 per cent.
The next £1,830,000	30 per cent.
The remainder	40 per cent.”

1997 c. 16.
(2) This section has effect in relation to accounting periods beginning on or after 1st April 2000.

Amusement machine licence duty

17 Amusement machine licence duty.
Schedule 2 to this Act (which amends the Betting and Gaming Duties Act 1981) shall have effect.
1981 c. 63.

Air passenger duty

18 Rates of duty.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 18(1)-(5) omitted (with effect in accordance with Sch. 5 para. 7 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 5 para. 6(b)(i)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) At the end of the section add—

“(10) 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.”

.
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 18(7) omitted (with effect in accordance with Sch. 5 para. 8(2) of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 5 para. 6(b)(ii)
(8) This section applies to any carriage of a passenger on an aircraft which begins on or after 1st April 2001.

19 Changes in exemption from duty.
(1) Section 31 of the Finance Act 1994 is amended as follows.
1994 c. 9.
(2) Omit subsections (1) and (2) (exemption in relation to passengers making return journeys within the United Kingdom).
(3) After subsection (4A) insert—

“(4B) 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.”

.
(4) Omit subsection (6) (provision by regulations for subsection (1) to have effect in relation to journeys begun in the Isle of Man).
(5) In consequence of the provision made by subsection (2) above, in section 43 of the Finance Act 1994 (interpretation)—
(a) in subsection (2) (meaning of “journey” etc), omit “Subject to subsection (3) below”, and
(b) omit subsection (3) (interpretation of references to a return ticket).
1994 c. 9.
(6) This section applies to any carriage of a passenger on an aircraft which begins on or after 1st April 2001.

Vehicle excise duty

20 Threshold for reduced general rate.
(1) In paragraph 1 of Schedule 1 to the Vehicle Excise and Registration Act 1994 (rate of duty applicable where no other rate specified), in sub-paragraphs (2) and (2A) for “1,100 cubic centimetres" (the reduced rate threshold) substitute “ 1,200 cubic centimetres ”.
This amendment applies to licences issued on or after 1st March 2001.
1994 c. 22.
(2) Refunds shall be made by the Secretary of State, in accordance with the following provisions of this section, in respect of licences—
(a) issued in the period beginning with 1st March 2000 and ending with 28th February 2001, and
(b) not surrendered before the end of that period,
where the amount of vehicle excise duty chargeable on the licence would have been less if the amendment in subsection (1) had applied.
(3) The amount of the refund is—
(a) £55 for a 12 month licence, and
(b) £27.50 for a 6 month licence.
(4) The person entitled to the refund is—
(a) in the case of a licence in force on 28th February 2001, the keeper of the vehicle on that date;
(b) in the case of a licence that has ceased to be in force before that date, the keeper of the vehicle when the licence expired.
(5) For the purposes of subsection (4) the keeper of the vehicle shall be taken to be—
(a) the person registered as keeper of the vehicle on the date in question, or
(b) if the Secretary of State has received notification of a change of ownership of the vehicle as a result of which another person is on that date entitled to be registered as the new keeper of the vehicle, that person.
(6) A refund shall only be made if an application is made for it in such form, and containing such particulars and supported by such documents, as the Secretary of State may require.
(7) The Secretary of State shall give notice in writing to any person appearing to him to be entitled to a refund—
(a) informing him that he appears to be entitled to a refund,
(b) enclosing an application form, and
(c) specifying the particulars and supporting documents to be provided.
(8) An application for, or the making of, a refund under this section in respect of a licence does not affect the validity of the licence.
(9) For the purposes of section 19 of the Vehicle Excise and Registration Act 1994 (surrender of licences) as it applies to the surrender on or after 1st March 2001 of a licence in respect of which a refund under this section has been made, or applied for, the annual rate of duty chargeable on the licence shall be taken to be that which would have been chargeable if the amendment in subsection (1) above had applied.
1994 c. 22.
(10) Section 45 of that Act (offence of false or misleading declaration) applies to a declaration in connection with an application for a refund under this section as it applies to a declaration in connection with an application for a vehicle licence.
(11) In the application of this section to Northern Ireland, references to registration as the keeper of a vehicle shall be read as references to registration as the owner of the vehicle.

21 Increase in general rate.
(1) In paragraph 1 of Schedule 1 to the Vehicle Excise and Registration Act 1994 (rate of duty applicable where no other rate specified)—
(a) in sub-paragraph (2) (the standard rate), for “£155" substitute “ £160 ”; and
(b) in sub-paragraph (2A) (the reduced rate), for “£100" substitute “ £105 ”.
1994 c. 22.
(2) This section applies to licences issued on or after 1st March 2001.

22 Rates of duty for new cars and vans.
Schedule 3 to this Act has effect with respect to vehicle excise duty on light passenger vehicles and light goods vehicles first registered on or after 1st March 2001.

23 Enforcement provisions for graduated rates.
Schedule 4 to this Act has effect with respect to vehicle licences for vehicles in respect of which vehicle excise duty is chargeable at different rates.

24 Rates of duty for goods vehicles.
(1) Schedule 5 to this Act (which makes provision for new rates of vehicle excise duty for goods vehicles etc.) has effect.
(2) The provisions of that Schedule apply in relation to licences issued after 21st March 2000.

Enforcement of duties

25 Power to search premises.
In Part XII of the Customs and Excise Management Act 1979 (general supplementary provisions), for section 161 (power to search premises) substitute—

“161 Power to search premises: writ of assistance.
(1) The powers conferred by this section are exercisable by an officer having a writ of assistance if there are reasonable grounds to suspect that anything liable to forfeiture under the customs and excise Acts—
(a) is kept or concealed in any building or place, and
(b) is likely to be removed, destroyed or lost before a search warrant can be obtained and executed.
(2) The powers are—
(a) to enter the building or place at any time, whether by day or night, on any day, and search for, seize, and detain or remove any such thing, and
(b) so far as is necessary for the purpose of such entry, search, seizure, detention or removal, to break open any door, window or container and force and remove any other impediment or obstruction.
(3) An officer shall not exercise the power of entry conferred by this section by night unless accompanied by a constable.
(4) A writ of assistance shall continue in force during the reign in which it is issued and for six months thereafter.

161A Power to search premises: search warrant.
(1) If a justice of the peace is satisfied by information upon oath given by an officer that there are reasonable grounds to suspect that anything liable to forfeiture under the customs and excise Acts is kept or concealed in any building or place, he may by warrant under his hand authorise any officer, and any person accompanying an officer, to enter and search the building or place named in the warrant.
(2) An officer or other person so authorised has power—
(a) to enter the building or place at any time, whether by day or night, on any day, and search for, seize, and detain or remove any such thing, and
(b) so far as is necessary for the purpose of such entry, search, seizure, detention or removal, to break open any door, window or container and force and remove any other impediment or obstruction.
(3) Where there are reasonable grounds to suspect that any still, vessel, utensil, spirits or materials for the manufacture of spirits is or are unlawfully kept or deposited in any building or place, subsections (1) and (2) above apply in relation to any constable as they would apply in relation to an officer.
(4) The powers conferred by a warrant under this section are exercisable until the end of the period of one month beginning with the day on which the warrant is issued.
(5) A person other than a constable shall not exercise the power of entry conferred by this section by night unless accompanied by a constable.”

.
1979 c. 2.

26 Power to search articles.
In Part XII of the Customs and Excise Management Act 1979 (general supplementary provisions), after section 163 (power to search vehicles or vessels) insert—

“163A Power to search articles.
(1) Without prejudice to any other power conferred by the Customs and Excise Acts 1979, where there are reasonable grounds to suspect that a person in the United Kingdom (referred to in this section as “the suspect”) has with him, or at the place where he is, any goods to which this section applies, an officer may—
(a) require the suspect to permit a search of any article that he has with him or at that place, and
(b) if the suspect is not under arrest, detain him (and any such article) for so long as may be necessary to carry out the search.
(2) The goods to which this section applies are dutiable alcoholic liquor, or tobacco products, which are—
(a) chargeable with any duty of excise, and
(b) liable to forfeiture under the customs and excise Acts.
(3) Notwithstanding anything in subsection (4) of section 24 of the Criminal Law (Consolidation) (Scotland) Act 1995 (detention and questioning by customs officers), detention of the suspect under subsection (1) above shall not prevent his subsequent detention under subsection (1) of that section.
1995 c. 39.”

.
1979 c. 2.

27 Security for customs and excise duties.
(1) Section 157 of the Customs and Excise Management Act 1979 (bonds and security) is amended as follows.
1979 c. 2.
(2) In subsection (1) (power to require security), for “by bond" substitute “ (or further security) by bond, guarantee ”.
(3) After that subsection insert—

“(1A) For the purposes of this section “condition in connection with excise” includes a condition in connection with excise duty charged, under the law of a member State other than the United Kingdom, on—
(a) manufactured tobacco,
(b) alcohol or alcoholic beverages, or
(c) mineral oils.
The expressions used in paragraphs (a) to (c) above have the same meaning as in Council Directive 92/12/EEC.”

.
(4) In subsection (2) (bonds for the purposes of assigned matters), after “Any bond" insert “ , guarantee or other security ”.
(5) In paragraph (a) of that subsection (bonds to be taken on behalf of Her Majesty), for “on behalf of Her Majesty" substitute “ either on behalf of Her Majesty or on behalf of Her Majesty and the tax authorities of each member State other than the United Kingdom ”.
(6) At the end of that subsection add—

“In this subsection “assigned matter” includes any excise duty charged as mentioned in subsection (1A) above.”

.

28 Civil penalties for breach of excise duty requirements.
In section 9(2)(a) of the Finance Act 1994 (how to calculate the penalty in cases where provision is made by any enactment for conduct to attract a penalty calculated by reference to an amount of excise duty), for “or any other enactment" substitute “ , or by or under any other enactment, ”.
1994 c. 9.

29 Correction of reference.
In section 127 of the Finance Act 1999 (interest on repayments of customs duty), in subsection (1)(b) for “Council Regulation 2454/93" substitute “ Commission Regulation 2454/93 ”.
This amendment shall be deemed always to have had effect.
1999 c. 16.

Part II Climate change levy

30 Climate change levy.
(1) Schedule 6 to this Act (which makes provision for a new tax that is to be known as climate change levy) shall have effect.
(2) Schedule 7 to this Act (climate change levy: consequential amendments) shall have effect.
(3) Part V of Schedule 6 to this Act (registration for the purposes of climate change levy) shall not come into force until such date as the Treasury may appoint by order made by statutory instrument; and different days may be appointed under this subsection for different purposes.

Part III Income Tax, Corporation Tax and Capital Gains Tax

Chapter I Charge and rates

Income tax

31 Charge and rates for 2000-01.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 31 repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

32 Extension of starting rate to savings income of individuals.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 32 repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

33 Deduction of income tax from foreign dividends.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 33 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

34 Children’s tax credit.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 34 repealed (6.4.2003) by 2002 c. 21, ss. 60, 61, Sch. 6; S.I. 2003/962, art. 2(3)(e), Sch. 1

Corporation tax

35 Charge and main rate for financial year 2001.
Corporation tax shall be charged for the financial year 2001 at the rate of 30%.

36 Small companies’ rate for financial year 2000.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 36 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

Capital gains tax

37 Application of starting rate to capital gains tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 37 omitted (with effect in accordance with Sch. 2 para. 22 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 21(e)

Chapter II Other provisions

Giving to charity

38 Payroll deduction scheme.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 38 repealed (19.7.2011) by Finance Act 2011 (c. 11), Sch. 26 para. 3(1)

39 Gift aid payments by individuals.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 39(1)-(6) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) In subsection (12), paragraphs (b) and (e) and the word “and" immediately preceding paragraph (e) shall cease to have effect.
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 39(8)(9) omitted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 6(k)
(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10) This section has effect in relation to—
(a) gifts made on or after 6th April 2000 which are not covenanted payments; and
(b) covenanted payments falling to be made on or after that date;
and any regulations made under subsection (3) of section 25 of the Finance Act 1990 (as substituted by subsection (4) above) within three months of the passing of this Act may be so made as to apply to any payments in relation to which this section has effect.
1990 c. 29.

40 Gift aid payments by companies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 40 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

41 Covenanted payments to charities.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 41(1) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)
(2) In section 347A of that Act (annual payments and interest: general rule), subsections (2)(b), (7) and (8) shall cease to have effect.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 41(3)(4) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In subsection (6) of section 505 of that Act (charities: general), the words “and, for this purpose, all covenanted payments to charity (within the meaning of section 347A(7)) shall be treated as a single item” shall cease to have effect.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 41(6) repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)
(7) Section 59 of the Finance Act 1989 (covenanted subscriptions) shall cease to have effect.
1989 c. 26.
(8) Where a deed of covenant executed by an individual before 6th April 2000 provides for the payment of specified amounts, any amount payable under the deed on or after that date shall be determined as if the individual were entitled to deduct tax from that amount at the basic rate.
(9) This section shall have effect in relation to covenanted payments—
(a) falling to be made by individuals on or after 6th April 2000; or
(b) made by companies on or after 1st April 2000.

42 Millennium gift aid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 42 repealed (19.7.2011) by Finance Act 2011 (c. 11), Sch. 26 para. 2(2)(b)

43 Gifts of shares and securities to charities etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 43 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

44 Gifts to charity from certain trusts.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 44(1)-(3) repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 512(2), Sch. 3 (with Sch. 2)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5A) This section applies if—
(a) in a year of assessment qualifying income arises under a UK settlement,
(b) the qualifying income consists of charitable income and non-charitable income, and
(c) expenses of the trustees are to be used to reduce the charitable income for the purpose of calculating a beneficiary's liability to corporation tax.
S. 44(5A)-(5D) substituted for s. 44(4)(5) (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 391 (with Sch. 2)
(5B) The amount of those expenses which can used for that purpose is limited to the amount allocated to the charitable income.
(5C) The amount of the expenses allocated to the charitable income is determined by apportioning them rateably between the charitable income and the non-charitable income.
(5D) In this section—
“charitable income” means income within section 628(1) or 630(1) of ITTOIA 2005,
“non-charitable income” means income which is not charitable income, and
“qualifying income” and “UK settlement” have the same meaning as in section 628 of ITTOIA 2005.
(6) This section has effect in relation to qualifying income arising to a UK trust on or after 6th April 2000.

45 Loans to charities.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 45 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 513, Sch. 3 (with Sch. 2)

46 Exemption for small trades etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 46 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 309, Sch. 3 Pt. 1 (with Sch. 2)

Employee share ownership

47 Employee share ownership plans.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 47 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

48 Relief for transfers to employee share ownership plans.
(1) In the Taxation of Chargeable Gains Act 1992, after section 236 insert—

“Employee share ownership plans

236A Relief for transfers to employee share ownership plans
Schedule 7C (which makes provision for roll-over relief where shares are transferred to an approved employee share ownership plan) shall have effect.”

.
1992 c. 12.
(2) After Schedule 7B to that Act insert the Schedule 7C set out in Schedule 9 to this Act.

49 Phasing out of approved profit sharing schemes.
(1) The Board shall not approve a profit sharing scheme under Schedule 9 to the Taxes Act 1988 (approval of share option schemes and profit sharing schemes) unless the application for approval is received by the Board before 6th April 2001.
(2) For the purposes of subsection (1) an application for approval which is not accompanied by the particulars and evidence referred to in paragraph 1(2) of that Schedule is not regarded as received by the Board until the required particulars and evidence have been received by them.
(3) In section 186 of that Act (approved profit sharing schemes), in subsection (1) (under which the section applies to appropriations of shares made after 5th April 1979) after “5th April 1979" insert “ and before 1st January 2003 ”.

50 Phasing out of relief for payments to trustees of profit sharing schemes.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 50 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 464, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

51 Approved profit sharing scheme: other awards of shares.
(1) In Schedule 9 to the Taxes Act 1988 (approved share option schemes and profit sharing schemes), in paragraph 3(2) (grounds for withdrawing approval of profit sharing schemes), after “below" in paragraph (e) insert—

“; or
(f) the trustees appropriate shares to participants, one or more of whom have had free shares appropriated to them, at an earlier time in the same year of assessment, under a relevant share plan”

.
(2) After paragraph 3(3) of that Schedule insert—

“(4) For the purposes of sub-paragraph (2)(f) above the reference to persons having had free shares appropriated to them includes persons who would have had free shares appropriated to them but for their failure to obtain a performance allowance (within the meaning of paragraph 25 of Schedule 8 to the Finance Act 2000).
(5) In sub-paragraph (2)(f) and (4) above—
“free shares” has the same meaning as in Schedule 8 to the Finance Act 2000;
“relevant share plan”, in relation to a profit sharing scheme, means an employee share ownership plan that—
(a) was established by the grantor or a connected company, and
(b) is approved under Schedule 8 to that Act.
(6) For the purposes of sub-paragraph (5) above “connected company” means—
(a) a company which controls or is controlled by the grantor or which is controlled by a company which also controls the grantor, or
(b) a company which is a member of a consortium owning the grantor or which is owned in part by the grantor as a member of a consortium.”

.

52 Approved profit sharing schemes: restriction on type of shares.
(1) Schedule 9 to the Taxes Act 1988 (share option schemes and profit sharing schemes) is amended in accordance with subsections (2) to (4).
(2) In paragraph 9(1) (requirements to be satisfied by shares in share option schemes), after “below" insert “ (disregarding paragraph 11A) ”.
(3) After paragraph 11 (requirements as to listing etc.) insert—

“11A
(1) In the case of a profit sharing scheme, scheme shares must not be shares—
(a) in an employer company, or
(b) in a company that—
(i) has control of an employer company, and
(ii) is under the control of a person or persons within sub-paragraph (2)(b)(i) below in relation to an employer company.
(2) For the purposes of this paragraph a company is “an employer company” if—
(a) the business carried on by it consists substantially in the provision of the services of the persons employed by it, and
(b) the majority of those services are provided to—
(i) a person who has, or two or more persons who together have, control of the company, or
(ii) a company associated with the company.
(3) For the purposes of sub-paragraph (2)(b)(ii) above a company shall be treated as associated with another company if both companies are under the control of the same person or persons.
(4) For the purposes of sub-paragraphs (1) to (3) above—
(a) references to a person include a partnership, and
(b) where a partner, alone or together with others, has control of a company, the partnership shall be treated as having like control of that company.
(5) For the purposes of this paragraph the question whether a person controls a company shall be determined in accordance with section 416(2) to (6).”

.
(4) In paragraph 12—
(a) in sub-paragraph (1), in paragraph (c) for “other than" to the end of that paragraph there shall be substituted “ other than those permitted by sub-paragraph (1A) below. ”, and
(b) after sub-paragraph (1) insert—

“(1A) Subject to sub-paragraph (1B) below, scheme shares may be subject to—
(a) restrictions which attach to all shares of the same class, or
(b) a restriction authorised by sub-paragraph (2) below.
(1B) In the case of a profit sharing scheme, scheme shares must not be subject to any restrictions affecting the rights attaching to those shares which relate to—
(a) dividends, or
(b) assets on a winding-up of the company,
other than restrictions which attach to all other ordinary shares in the same company.”

.
(5) Subsections (1) to (4) shall be deemed to have come into force on 21st March 2000.
(6) Subsections (3) and (4) do not have effect in relation to shares acquired before 21st March 2000 by the trustees of a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988.
S. 52(1)-(4) deemed to have come into force at 21.3.2000 see s. 52(5)

53 Approved profit sharing schemes: loan arrangements.
(1) In paragraph 2 of Schedule 9 to the Taxes Act 1988 (conditions for approval of share option schemes and profit sharing schemes), after sub-paragraph (2) insert—

“(2A) The Board shall not approve a profit sharing scheme unless they are satisfied—
(a) that the arrangements for the scheme do not make any provision, and are not in any way associated with any provision made, for loans to some or all of the employees of—
(i) the company that established the scheme, or
(ii) in the case of a group scheme, any participating company, and
(b) that the operation of the scheme is not in any way associated with such loans.
(2B) For the purposes of sub-paragraph (2A) above “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.”

.
(2) In paragraph 3(2) of that Schedule (withdrawal of approval of profit sharing schemes), before paragraph (d) insert—

“(ca) the Board—
(i) cease to be satisfied of the matters mentioned in paragraph 2(2A) above, or
(ii) in the case of a scheme approved before 21st March 2000, are not satisfied of those matters; or”

.
(3) This section shall be deemed to have come into force on 21st March 2000.

54 Employee share ownership trusts.
No claim for relief under section 229(1) or (3) of the Taxation of Chargeable Gains Act 1992 (roll-over relief where disposal made to employee share ownership trust) may be made in relation to a disposal of shares, or an interest in shares, made on or after 6th April 2001.
1992 c. 12.

55 Shares transferred from employee share ownership trust.
(1) Section 69 of the Finance Act 1989 (chargeable events in relation to employee share ownership trusts) is amended in accordance with subsections (2) to (5).
1989 c. 26.
(2) In subsection (1) (definition of “chargeable event”), after paragraph (d) insert—

“(e) where—
(i) the trustees make a qualifying transfer within subsection (3AA) below for a consideration, and
(ii) they do not, during the period specified in subsection (5A) below, expend a sum of not less than the amount of that consideration for one or more qualifying purposes,
the expiry of that period.”

.
(3) After subsection (3) insert—

“(3AA) For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if—
(a) it is a transfer of relevant shares made to the trustees of the plan trust of an employee share ownership plan,
(b) the plan is approved under Schedule 8 to the Finance Act 2000 when the transfer is made, and
(c) the consideration (if any) for which the transfer is made does not exceed the market value of the shares.
(3AB) For the purpose of determining whether a transfer by the trustees is a qualifying transfer within subsection (3AA) above, where on or after 21st March 2000—
(a) the trustees transfer or dispose of part of a holding of shares (whether by way of a qualifying transfer or otherwise), and
(b) the holding includes any relevant shares,
the relevant shares shall be treated as transferred or disposed of before any other shares included in that holding.
For this purpose “holding” means any number of shares of the same class held by the trustees, growing or diminishing as shares of that class are acquired or disposed of.
(3AC) For the purposes of subsections (3AA) and (3AB) above—
“market value” has the same meaning as in Schedule 8 to the Finance Act 2000; and
“relevant shares” means—
(i) shares that are held by the trustees of the employee share ownership trust at midnight on 20th March 2000, and
(ii) shares purchased by those trustees with original funds after that time.
(3AD) For the purposes of subsection (3AC) above—
(a) “original funds” means any money held by the trustees of the employee share ownership trust in a bank or building society account at midnight on 20th March 2000, and
(b) any payment made by the trustees after that time (whether to acquire shares or otherwise) shall be treated as made out of original funds (and not out of money received after that time) until those funds are exhausted.”

.
(4) In subsection (5) after “(1)(d)" insert “ or (e) ”.
(5) After that subsection insert—

“(5A) The period referred to in paragraph (e) of subsection (1) above is the period—
(a) beginning with the qualifying transfer mentioned in that paragraph, and
(b) ending nine months after the end of the period of account in which that qualifying transfer took place.
For this purpose the period of account means the period of account of the company that established the employee share ownership trust.”

.
(6) In section 70 of the Finance Act 1989 (chargeable amounts), after subsection (3) insert—

“(4) If the chargeable event falls within section 69(1)(e) above the chargeable amount is an amount equal to—
(a) the amount of the consideration received for the qualifying transfer mentioned in section 69(1)(e) above, less
(b) the amount of any expenditure by the trustees for a qualifying purpose during the period mentioned in section 69(5A) above.”

.
1989 c. 26.

56 Further provisions about share options.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 56-60, 62 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Other provisions about employment

57 Benefits in kind: deregulatory amendments.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 56-60, 62 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

58 Education and Training.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 56-60, 62 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

59 Cars available for private use.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 56-60, 62 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

60 Provision of services through intermediary.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 56-60, 62 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Pension schemes

61 Occupational and personal pension schemes.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 61 repealed (22.7.2004) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3

Enterprise incentives

62 Enterprise management incentives.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 56-60, 62 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

63 Corporate venturing scheme.
(1) Schedule 15 to this Act (which makes provision for the corporate venturing scheme) has effect.
(2) Schedule 16 to this Act (which makes consequential amendments) has effect.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 63(3) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)
(4) Subject to that, Schedules 15 and 16 apply in relation to shares issued on or after 1st April 2000 but before 1st April 2010.

64 Enterprise investment scheme: amendments.
The provisions relating to the enterprise investment scheme are amended in accordance with Schedule 17 to this Act.
In that Schedule—
Part I makes amendments reducing various periods which apply in relation to the provisions which determine the reliefs under the scheme;
Part II makes amendments about qualifying companies;
Part III makes other minor amendments.

65 Venture capital trusts: amendments.
The provisions relating to venture capital trusts are amended in accordance with Schedule 18 to this Act.
In that Schedule—
Part I makes amendments reducing various periods which apply in relation to the provisions which determine the reliefs; ...
Words in s. 65 repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

66 Taper relief: taper for business assets.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 66 omitted (with effect in accordance with Sch. 2 para. 56(3) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 55(c)

67 Taper relief: assets qualifying as business assets.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 67 omitted (with effect in accordance with Sch. 2 para. 56(3) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 55(c)

Research and development

68 Meaning of “research and development".
(1) Schedule 19 to this Act (meaning of “research and development”) has effect.
In that Schedule—
Part I contains a new definition of “research and development” for the purposes of the Tax Acts, and
Part II contains consequential amendments.
(2) The amendments in Part II of that Schedule have effect—
(a) for the purposes of income tax and capital gains tax, in relation to the year 2000-01 and subsequent years of assessment, and
(b) for the purposes of corporation tax, for accounting periods ending on or after 1st April 2000.

69 Tax relief for expenditure on research and development.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 69(1) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 465, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)
(2) Schedule 21 to this Act (which contains consequential amendments) has effect accordingly.

Capital allowances

70 First year allowances for small or medium-sized enterprises.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 70-72 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4 (with Sch. 3)

71 First year allowances for ICT expenditure by small enterprises.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 70-72 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4 (with Sch. 3)

72 Expenditure of a small enterprise.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ss. 70-72 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4 (with Sch. 3)

73 Repeal of notification requirements.
(1) In section 118 of the Finance Act 1994 (notification requirements)—
(a) subsections (1) to (5) and (7) to (9) shall cease to have effect; and
(b) in subsection (6), for “the provisions mentioned in subsection (2) above" there shall be substituted—

“(a) section 25(1) of the Capital Allowances Act 1990 (meaning of qualifying expenditure for the purposes of writing-down allowances for expenditure on machinery or plant); and
(b) section 44(4) of the Finance Act 1971 (provision corresponding to section 25(1) applicable to earlier chargeable periods),”

.
1994 c. 9.
(2) This section has effect for chargeable periods as respects which the period specified in subsection (3A) of that section ends on or after 1st April 2000.

74 Pool for certain leased assets and inexpensive cars.
(1) In section 41 of the Capital Allowances Act 1990 (writing-down allowances etc for leased assets and inexpensive cars)—
(a) in subsection (1), paragraphs (b) and (c) and the word “ or ” at the end of paragraph (a); and
(b) in subsection (4), paragraph (a) and, in paragraph (b), the words from “or within (1)(b) or (c)" to “subsection (1)(c)" and the words “or subsection (1)(b) or (c)",
shall cease to have effect for chargeable periods ending on or after the relevant date.
1990 c. 1.
(2) Subsection (3) below applies where—
(a) immediately before the end of the relevant chargeable period, a person was treated for the purposes of sections 24, 25 and 26 of the Capital Allowances Act 1990 as having incurred expenditure on the provision of machinery or plant wholly and exclusively for the purposes of a separate trade carried on by him;
1990 c. 1.
(b) the expenditure fell within subsection (1)(b) or (c) of section 41 of that Act; and
(c) qualifying expenditure in respect of the separate trade for the relevant chargeable period exceeded any disposal value brought into account in respect of that trade for that period.
(3) The balance of the excess (after the deduction of any writing-down allowances made by reference to it) shall be treated for the purposes of sections 24, 25 and 26 of the Capital Allowances Act 1990 as capital expenditure which—
(a) was incurred by that person in the relevant chargeable period on the provision of the machinery or plant for the purposes of the trade which is the actual trade for the purposes of section 41 of that Act; and
(b) does not form part of his qualifying expenditure for that period.
1990 c. 1.
(4) In this section—
“the relevant chargeable period” means the chargeable period immediately preceding that which begins on or before and ends on or after the relevant date;
“the relevant date” means, subject to subsection (5) below, 6th April 2000 for the purposes of income tax and 1st April 2000 for the purposes of corporation tax.
(5) A person may, by a notice given to an officer of the Board, elect that this section shall have effect in relation to any trade carried on by him as if the relevant date were 6th April 2001 or, as the case may be, 1st April 2001.

75 Machinery and plant allowances for non-residents etc.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 75(1)-(3)(5)(6)(b)(c) repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4 (with Sch. 3)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 75(4) repealed (with effect in relation to periods of account (whenever beginning) which end on or after 31.12.2006) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), reg. 1, Sch. Pt. 1
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 75(6)(a) repealed (with effect in relation to periods of account (whenever beginning) which end on or after 31.12.2006) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), reg. 1, Sch. Pt. 1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Words in s. 75(6) repealed (with effect in relation to periods of account (whenever beginning) which end on or after 31.12.2006) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), reg. 1, Sch. Pt. 1

76 Production animals.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 76(1) repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2 ss. 579, 580, Sch. 4 (with Sch. 3)
(2) In paragraph 9(4) of Schedule 5 to the Taxes Act 1988 (treatment of farm animals etc for purposes of Case I of Schedule D), for the words from “in relation to animals" to the end there shall be substituted—

“(a) in relation to animals or other creatures kept singly as they apply in relation to herds; and
(b) in relation to shares in animals or other creatures as they apply in relation to animals or other creatures themselves.”

.
(3) The enactments amended by subsections (1) and (2) above shall be deemed always to have had effect with the amendments made by those subsections.

77 Sale and leaseback.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 77 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c.2, ss. 579, 580, Sch. 4 (with Sch. 3)

78 Meaning of “fixture".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 78 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 13 (with Sch. 9 paras. 1-9, 22)

79 Leased assets under the Affordable Warmth Programme.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 79 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss 579, 580, Sch 4 (with Sch. 3)

80 Fixtures and machinery and plant on hire-purchase etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 80 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 579, 580, Sch. 4 (with Sch. 3)

81 Production sharing contracts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 81 repealed (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss, 579, 580, Sch. 4 (with Sch. 3)

Tonnage tax

82 Tonnage tax.
Schedule 22 to this Act (tonnage tax) has effect.

Other relieving provisions

83 Relief for interest on loans to buy annuities.
(1) In section 365(3) of the Taxes Act 1988 (loans to buy annuities)—
(a) for the words “the qualifying maximum for the year of assessment", in the first place where they occur, there shall be substituted the words “ the sum of £30,000 ”; and
(b) for those words, in the second place where they occur, there shall be substituted the words “ that sum ”.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 83(2) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)
(3) In section 369(1A) of that Act (deductible percentage where interest payable under deduction of tax), for the words from “the percentage" to the end there shall be substituted “ 23 per cent. ”.
(4) This section has effect in relation to payments of interest made on or after 6th April 2000.

84 Exemption of payments under New Deal 50plus.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 84 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 515, Sch. 3 (with Sch. 2)

85 Exemption of payments under Employment Zones programme.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 85 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 516, Sch. 3 (with Sch. 2)

86 Loan where return bears inverse relationship to results.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 86 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

87 Tax treatment of acquisition, disposal or revaluation of certain rights.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 87 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 517, Sch. 3 (with Sch. 2)

88 Contributions to local enterprise agencies, etc.
In sections 79(11) and 79A(7) of the Taxes Act 1988 (relief for contributions to local enterprise agencies, business links and similar organisations: time limits), the words “and before 1st April 2000" shall cease to have effect.

89 Waste disposal: entitlement of successor to allowances.
In Chapter V of Part IV of the Taxes Act 1988 (provisions relating to the Schedule D charge: deductions), after section 91B (waste disposal: site preparation), insert—

“91BA Waste disposal: entitlement of successor to allowances.
(1) This section applies where—
(a) site preparation expenditure has been incurred in relation to a waste disposal site,
(b) that expenditure was incurred by a person in the course of carrying on a trade, and
(c) on or after 21st March 2000—
(i) that person (“the predecessor”) ceases to carry on that trade, or ceases to carry it on so far as it relates to that site, and
(ii) another person (“the successor”) begins to carry on that trade, or to carry on in the course of a trade the activities formerly carried on by the predecessor in relation to that site.
(2) If the conditions specified in the following provisions of this section are met, then, for the purposes of section 91B above—
(a) the trade carried on by the successor shall be treated as the same trade as that carried on by the predecessor, and
(b) allowances shall be made to the successor (and not to the predecessor) as if everything done to or by the predecessor had been done to or by the successor.
(3) The first condition is that the whole of the site in question is transferred to the successor.
Provided the successor holds an estate or interest in the whole of the site, it need not be the same as that held by the predecessor.
(4) The second condition is that the successor, at the time he first deposits waste material at the site, holds a relevant licence in respect of the site which is then in force.
(5) Expressions used in this section have the same meaning as in section 91B.”

.

Capital gains tax: gifts and trusts

90 Restriction of gifts relief.
(1) In section 165(1) of the Taxation of Chargeable Gains Act 1992 (relief for gifts of business assets), in the closing words (which list the provisions restricting relief), for “sections 166 and 167" substitute “ sections 166, 167 and 169 ”.
1992 c.12.
(2) In section 260(1) of that Act (gifts on which inheritance tax is chargeable etc.), in the closing words (which list the provisions restricting relief), for “section 261" substitute “ sections 169 and 261 ”.
(3) In section 165(2)(b)(i) of, and paragraph 2(2)(b)(i) of Schedule 7 to, that Act (shares or securities in respect of which gifts relief may be claimed), for “neither listed on a recognised stock exchange nor dealt in on the Unlisted Securities Market" substitute “ not listed on a recognised stock exchange ”.
(4) In section 165(3)(b) of that Act (disposals of shares or securities excepted from gifts relief), after “shares or securities," insert “ the transferee is a company or ”.
(5) This section has effect in relation to disposals made on or after 9th November 1999.

91 Disposal of interest in settled property: deemed disposal of underlying assets.
(1) After section 76 of the Taxation of Chargeable Gains Act 1992, insert—

“76A Disposal of interest in settled property: deemed disposal of underlying assets.
Schedule 4A to this Act has effect with respect to disposals for consideration of an interest in settled property.”

.
1992 c. 12.
(2) After Schedule 4 to that Act insert the Schedule 4A set out in Schedule 24 to this Act.
(3) This section applies to any disposal of an interest in settled property made, or the effective completion of which falls, on or after 21st March 2000.
Expressions used in this subsection have the same meaning as in Schedule 4A to the Taxation of Chargeable Gains Act 1992.
1992 c. 12.

92 Transfers of value by trustees linked with trustee borrowing.
(1) After section 76A of the Taxation of Chargeable Gains Act 1992 (inserted by section 91(1) above), insert—

“76B Transfers of value by trustees linked with trustee borrowing.
Schedule 4B to this Act has effect with respect to transfers of value by trustees that are, in accordance with the Schedule, treated as linked with trustee borrowing.”

.
1992 c. 12.
(2) After Schedule 4A to that Act (inserted by section 91(2) above), insert the Schedule 4B set out in Schedule 25 to this Act.
(3) After section 85 of that Act, insert—

“85A Transfers of value: attribution of gains to beneficiaries.
Schedule 4C to this Act has effect with respect to the attribution to beneficiaries of gains accruing under Schedule 4B.”

.
(4) After Schedule 4B to the Taxation of Chargeable Gains Act 1992 (inserted by subsection (2) above), insert the Schedule 4C set out in Part I of Schedule 26 to this Act.
The consequential amendments in Part II of Schedule 26 to this Act have effect.
1992 c. 12.
(5) The provisions of this section have effect in relation to any transfer of value in relation to which the material time is on or after 21st March 2000.
The expressions “transfer of value” and “material time” have the same meaning in this subsection as in Schedule 4B to the Taxation of Chargeable Gains Act 1992.
1992 c. 12.

93 Restriction on set-off of trust losses.
(1) After section 79 of the Taxation of Chargeable Gains Act 1992, insert—

“79A Restriction on set-off of trust losses.
(1) This section applies to a chargeable gain accruing to the trustees of a settlement where—
(a) in computing the gain, the allowable expenditure is reduced in consequence, directly or indirectly, of a claim to gifts relief in relation to an earlier disposal to the trustees;
(b) the transferor on that earlier disposal, or any person connected with the transferor, has at any time—
(i) acquired an interest in the settled property, or
(ii) entered into an arrangement to acquire such an interest; and
(c) in connection with that acquisition or arrangement any person has at any time received, or become entitled to receive, any consideration.
(2) Where this section applies to a chargeable gain, no allowable losses accruing to the trustees (in the year in which the gain accrues or any earlier year) may be set against the gain.
This applies to the whole of the chargeable gain (and not just the element deferred as a result of the claim to gifts relief).
(3) In this section—
(a) “gifts relief” means relief under section 165 or 260; and
(b) references to losses not being allowed to be set against a chargeable gain are to the losses not being allowed as a deduction against chargeable gains to the extent that they include that gain.
(4) The references in subsection (1)(b) above to an interest in settled property have the same meaning as in Schedule 4A.”

.
1992 c. 12.
(2) This section applies to gains accruing on or after 21st March 2000.

94 Attribution to trustees of gains of non-resident companies.
(1) After section 79A of the Taxation of Chargeable Gains Act 1992 (inserted by section 93 above), insert—

“79B Attribution to trustees of gains of non-resident companies.
(1) This section applies where trustees of a settlement are participators—
(a) in a close company, or
(b) in a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom.
For this purpose “participator” has the same meaning as in section 13.
(2) Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing a charge to tax arising by virtue of the attribution to the trustees under section 13, by reason of their participation in the company mentioned in subsection (1) above, of any part of a chargeable gain accruing to a company that is not resident in the United Kingdom.
(3) Where this section applies and—
(a) a chargeable gain accrues to a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom, and
(b) all or part of the chargeable gain is treated under section 13(2) as accruing to a close company which is not chargeable to corporation tax in respect of the gain by reason of double taxation relief arrangements, and
(c) had the company mentioned in paragraph (b) (and any other relevant company) not been resident in the United Kingdom, all or part of the chargeable gain would have been attributed to the trustees by reason of their participation in the company mentioned in subsection (1) above,
section 13(9) shall apply as if the company mentioned in paragraph (b) above (and any other relevant company) were not resident in the United Kingdom.
(4) The references in subsection (3) above to “any other relevant company" are to any other company which if it were not resident in the United Kingdom would be a company in relation to which section 13(9) applied with the result that all or part of the chargeable gain was attributed to the trustees as mentioned in that subsection.”

.
1992 c. 12.
(2) This section applies where a chargeable gain accrues on or after 21st March 2000 to a company that is not resident in the United Kingdom.

95 Disposal of interest in non-resident settlement.
(1) Section 85 of the Taxation of Chargeable Gains Act 1992 (disposal of interest in non-resident settlements) is amended as follows.
1992 c. 12.
(2) In subsection (2) (market value uplift for interest where trustees become non-resident) for “Subject to subsections (4) and (9) below," substitute “ Subject to subsections (4), (9) and (10) below, ”.
(3) In subsection (5) (market value uplift for interest where trustees become treaty non-resident), at the beginning insert “ Subject to subsection (10) below, ”.
(4) After subsection (9) add—

“(10) Subsection (3) or (7) above does not apply to the disposal of an interest created by or arising under a settlement which has relevant offshore gains at the material time.
The material time is—
(a) in relation to subsection (3) above, the relevant time within the meaning of section 80;
(b) in relation to subsection (7) above, the time found under subsection (8) above.
(11) For the purposes of subsection (10) above, a settlement has relevant offshore gains at any time if, were the year of assessment to end at that time, there would be an amount of trust gains which by virtue of section 89(2) or paragraph 8(3) of Schedule 4C would be available to be treated as chargeable gains accruing to any beneficiaries of the settlement receiving capital payments in the following year of assessment.”

.
(5) This section applies where the material time (within the meaning of section 85(10) of the Taxation of Chargeable Gains Act 1992, inserted by subsection (4) above) falls on or after 21st March 2000.
1992 c. 12.

96 Payments by trustees to non-resident companies.
(1) In section 96(5) of the Taxation of Chargeable Gains Act 1992 (capital payments by trustees to non-resident company), in the opening words (which refer to the persons by whom the company is controlled), omit “and each of them is then resident or ordinarily resident in the United Kingdom".
1992 c. 12.
(2) This section applies to payments received on or after 21st March 2000.

Groups and group relief

97 Group relief for non-resident companies etc.
Schedule 27 to this Act has effect.
In that Schedule—
Part I makes amendments of Chapter IV of Part X of the Taxes Act 1988 (group relief), and
Part II contains consequential amendments.

98 Recovery of tax payable by non-resident company.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 98 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 310, Sch. 3 Pt. 1 (with Sch. 2)

99 Joint arrangements for claims.
In paragraph 77 of Schedule 18 to the Finance Act 1998 (power to make provision by regulations about joint arrangements for group relief), in sub-paragraph (1)(a) (arrangements permitting claim for relief without copy of notice of consent to surrender), after “the surrendering company" insert “ , provided authority for the claim being so made is given by a company which is authorised in relation to the claimant company as mentioned in paragraph (b) ”.
1998 c. 36.

100 Limit on amount of group relief in case of consortium claim.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 100 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

101 Civil penalties: incorrect certificates
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 101 omitted (with effect in accordance with Sch. 12 para. 5 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 12 para. 4(a)
Sch. 6 para. 101 heading substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(7)

102 Chargeable gains: non-resident companies and groups etc.
Schedule 29 to this Act has effect.
In that Schedule—
Part I makes provision with respect to the application of the Taxation of Chargeable Gains Act 1992 to companies not resident in the United Kingdom and groups of companies etc,
Part II contains minor and consequential amendments, and
Part III contains transitional provisions.
1992 c. 12.

International matters

103 Double taxation relief.
Schedule 30 to this Act (double taxation relief) shall have effect.

104 Controlled foreign companies.
Schedule 31 to this Act (which makes provision in relation to controlled foreign companies) shall have effect.

105 Corporation tax: use of currencies other than sterling.
(1) For sections 92 to 95 of the Finance Act 1993 there shall be substituted—

“92 The basic rule: sterling to be used.
(1) Where a company carries on a business, the profits or losses of the business for an accounting period shall for the purposes of corporation tax be computed and expressed in sterling; but this is subject to section 93 below.
(2) In this section—
“losses” includes management expenses and any allowances falling to be made under section 28 or 61(1) of the Capital Allowances Act 1990;
“profits” includes gains, income and any charges falling to be made under section 28 or 61(1) of that Act.
1990 c. 1.

93 Use of currency other than sterling.
(1) This section applies where in an accounting period a company carries on a business and either the first condition or the second condition is fulfilled.
(2) The first condition is that—
(a) the accounts of the company as a whole are prepared in a currency other than sterling in accordance with normal accounting practice; and
(b) in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in such a currency in accordance with such practice.
(3) The second condition is that—
(a) the accounts of the company as a whole are prepared in sterling but, so far as relating to the business, they are prepared, using the closing rate/net investment method, from financial statements prepared in a currency other than sterling; or
(b) in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in sterling but, so far as relating to the business, it is prepared, using that method, from financial statements prepared in such a currency.
(4) The profits or losses of the business for an accounting period shall for the purposes of corporation tax be found by—
(a) taking the amount of all the profits and losses of the business for the period computed and expressed in the relevant foreign currency;
(b) taking account of any of the following which are so computed and expressed—
(i) any management expenses brought forward under section 75(3) of the Taxes Act 1988 from an earlier accounting period;
(ii) any losses of the business brought forward under section 392B or 393 of that Act from such a period; and
(iii) any non-trading deficits on loan relationships brought forward under section 83 of the Finance Act 1996 from the previous accounting period; and
1996 c. 8.
(c) taking the sterling equivalent of the amount found by applying paragraphs (a) and (b) above.
(5) In the application of section 22B, 34, 35, 38C, 38D or 79A of the Capital Allowances Act 1990 for the purposes of subsection (4)(a) or (b) above, it shall be assumed that any sterling amount mentioned in any of those sections is its equivalent expressed in the relevant foreign currency.
1990 c. 1.
(6) Where in an accounting period—
(a) a company carries on different parts of a business through different branches (whether within or outside the United Kingdom); and
(b) this section would apply differently in relation to different parts if they were separate businesses,
those parts shall be treated for the purposes of this section as if they were separate businesses for that period.
(7) In this section, unless the context otherwise requires—
“accounts”, in relation to a company, means—
(a) the annual accounts of the company prepared in accordance with Part VII of the Companies Act 1985 or Part VIII of the Companies (Northern Ireland) Order 1986; or
1985 c. 6.
S.I. 1986/1032 (N.I.6).
(b) if the company is not required to prepare such accounts, the accounts which it is required to keep under the law of its home State; or
(c) if the company is not so required to keep accounts, such of its accounts as most closely correspond to accounts which it would have been required to prepare if the provisions of that Part applied to it;
“branch” includes any collection of assets and liabilities;
“the closing rate/net investment method” means the method so called as described under the title “Foreign currency translation” in the Statement of Standard Accounting Practice issued in April 1983 by the Institute of Chartered Accountants in England and Wales;
“home State”, in relation to a company, means the country or territory under whose laws the company is incorporated;
“losses” has the same meaning as in section 92 above except that it does not include allowable losses within the meaning of the Taxation of Chargeable Gains Act 1992;
“profits” has the same meaning as in section 92 above except that it does not include chargeable gains within the meaning of that Act;
“the relevant foreign currency” means the currency other than sterling or, where the first condition is fulfilled and two different such currencies are involved, the currency in which the return of accounts is prepared;
“return of accounts”, in relation to a branch in the United Kingdom, means a return of such accounts of the branch as may be required by the Inland Revenue under paragraph 3 of Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters).
1992 c. 12.

94 Rules for ascertaining currency equivalents.
(1) Any receipt or expense which is to be taken into account in making a computation under subsection (1) of section 92 above for an accounting period, and is denominated in a currency other than sterling, shall be translated into its sterling equivalent—
(a) if either of the conditions mentioned in subsection (2) below is fulfilled, by reference to the rate used in the preparation of the accounts of the company as a whole for that period;
(b) if neither of those conditions is fulfilled, by reference to the London closing exchange rate for the relevant day.
(2) The conditions are—
(a) that the rate is an arm’s length exchange rate for the relevant day;
(b) that the rate is an average arm’s length exchange rate for a period ending with that day, or for a period not exceeding three months which includes that day, and the arm’s length exchange rate for any day in that period (except the first) is not significantly different from that for the preceding day.
(3) Subject to subsections (5) and (7) below, any amount found by applying paragraphs (a) and (b) of subsection (4) of section 93 above shall be translated into its sterling equivalent by reference to the London closing exchange rate for the relevant day.
(4) The following—
(a) any receipt or expense which is to be taken into account in making a calculation for the purposes of subsection (4)(a) or (b) of section 93 above, and is denominated in a currency other than the relevant foreign currency; and
(b) any such sterling amount as is referred to in subsection (5) of that section,
shall be translated into its equivalent expressed in the relevant foreign currency by reference to the London closing exchange rate for the relevant day.
(5) Where section 93 above applies by virtue of the first condition mentioned in that section, then, as regards the business or part of the business, the company—
(a) may elect, by a notice given to an officer of the Board, that as from the first day of the accounting period in which the notice is given, an average arm’s length exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned; and
(b) may withdraw such an election, by a notice so given, as from the first day of the first accounting period beginning on or after the date of the notice.
(6) Where an election under subsection (5) above is withdrawn, no further election may be made under that subsection so as to take effect before the third anniversary of the day on which the withdrawal takes effect.
(7) Where—
(a) section 93 above applies by virtue of the second condition mentioned in that section; and
(b) the accounts of the company, so far as relating to the business or part of the business, are prepared by reference to an average arm’s length exchange rate,
that exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned.
(8) In this section—
“accounts” has the same meaning as in section 93 above;
“arm’s length exchange rate” means such exchange rate as might reasonably be expected to be agreed between persons dealing at arm’s length;
“average arm’s length exchange rate”, in relation to a period, means the rate which represents an appropriate average of arm’s length exchange rates for the period;
“the relevant day” means—
(a) for the purposes of subsections (1), (2) and (4)(a) above, the day on which the company becomes entitled to the receipt or incurs (or is treated as incurring) the expense;
(b) for the purposes of subsection (3) above, the last day of the accounting period in question;
(c) for the purposes of subsection (4)(b) above, the day on which the company incurs the capital expenditure.
(9) Nothing in this section affects the operation of Chapter IV of Part VII of the Taxes Act 1988 (controlled foreign companies) or Chapter II of this Part.
(10) Nothing in paragraph 88 of Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters) shall be taken to prevent any amount which is taken to be conclusively determined for the purposes of the Corporation Tax Acts from being translated under this section by reference to an exchange rate which was not used to determine the amount which can no longer be altered.
1998 c. 36.”

.
1993 c. 34.
(2) Where any of the items referred to in section 93(4)(b) of the Finance Act 1993 (as substituted by subsection (1) above) fall to be taken into account in the first accounting period in relation to which this section has effect, the amounts of those items shall be computed and expressed in the relevant currency by reference to the London closing exchange rate for the last day of the immediately preceding accounting period.
1993 c. 34.
(3) Where any amount falls to be taken into account under Chapter 5 of Part 2 of the Capital Allowances Act as available qualifying expenditure for the first accounting period in relation to which this section has effect relate to expenditure which was incurred before the beginning of that period, the amounts of those items shall be computed and expressed in the relevant currency by reference to the London closing exchange rate for the last day of the immediately preceding accounting period.
Words substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch 2, para. 106 (with Sch. 3)
(4) Subject to subsection (5) below, this section has effect for accounting periods beginning on or after 1st January 2000 and ending on or after 21st March 2000.
(5) Any company which did not, for the accounting period immediately preceding the first accounting period falling within subsection (4) above, make an election in respect of a trade or part of a trade under the Local Currency Elections Regulations 1994 may, by notice given to an officer of the Board on or before 31st August 2000, elect that this section shall not have effect in relation to it until the first accounting period beginning on or after 1st July 2000.

106 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 106 repealed (24.7.2002 with effect as mentioned in s. 79(3) of, and Sch. 23 to, the repealing Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(10) Note 2

Insurance

107 General insurance reserves.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 107 repealed (19.7.2007 with effect in accordance with Sch. 11 para. 5(2)-(7) to the amending Act) by Finance Act 2007 (c. 11), Sch. 11 para. 4, Sch. 27 Pt. 2(11)

108 Overseas life assurance business.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 108 omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 247(j)

109 Insurance business: apportionment rules.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 109 omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 247(j)

Miscellaneous

110 Rent factoring.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 110 repealed (with effect in accordance with Sch.6 to the amending Act) by Finance Act 2006 (c. 25), Sch. 26 Pt. 3(12)

111 Payments under deduction of tax.
(1) Chapter VIIA of Part IV of the Taxes Act 1988 (paying and collecting agents) shall cease to have effect.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 111(2)-(5) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) In this section—
(a) subsections (1) and (5) apply to relevant payments or receipts in relation to which the chargeable date for the purposes of Chapter VIIA of Part IV is on or after 1st April 2001;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 111(6)(b)(c) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

112 UK public revenue dividends: deduction of tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 112 repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

113 Tax treatment of expenditure on production or acquisition of films.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S.113 repealed (22.3.2001 with effect as mentioned in s. 579(1)) by 2001 c. 2, ss 579, 580, Sch 4

Part IV Stamp duty and Stamp duty reserve tax

Stamp duty

114 Rates: conveyance or transfer on sale.
(1) In Schedule 13 to the Finance Act 1999 (instruments chargeable and rates of duty), in Part I (conveyance or transfer on sale), in the third column of the table in paragraph 4—
(a) in the third entry, for “2.5%" substitute “ 3% ”; and
(b) in the fourth entry, for “3.5%" substitute “ 4% ”.
1999 c. 16.
(2) This section applies to instruments executed on or after 28th March 2000.
(3) But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—
(a) the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or
(b) the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.
(4) This section shall be deemed to have come into force on 28th March 2000.

115 Rates: duty on lease chargeable by reference to rent.
(1) In Schedule 13 to the Finance Act 1999 (instruments chargeable and rates of duty), in Part II (lease)—
(a) in paragraph 11, in paragraph 1 of the table, and
(b) in paragraph 12(3), in paragraph 1(a) and (b) of the table,
for “£500" substitute “ £5,000 ”.
1999 c. 16.
(2) This section has effect in relation to instruments executed on or after 28th March 2000.
(3) This section shall be deemed to have come into force on 28th March 2000.

116 Rate of duty on seven year leases.
(1) In paragraph 12(3) of Schedule 13 to the Finance Act 1999 (rates of stamp duty on leases where part of consideration is rent), in paragraph 1 of the table, for “less than 7 years" substitute “ not more than 7 years ”.
1999 c. 16.
(2) This section applies to instruments executed on or after 1st October 1999, subject to Schedule 32 to this Act (which makes transitional provision for instruments executed on or after 1st October 1999 but before 28th March 2000).
(3) This section shall be deemed to have come into force on 28th March 2000.

117 Power to vary stamp duties.
Schedule 33 to this Act (power to vary stamp duties) has effect.

118 Land transferred etc for other property.
(1) Subsection (2) applies where—
(a) an instrument transferring or vesting an estate or interest in land would not, apart from this section, be or fall to be treated as a conveyance or transfer on sale for the purposes of stamp duty; but
(b) the transfer or vesting of the estate or interest is for consideration; and
(c) the consideration is or includes any property (“the other property”).
(2) For the purposes of Part I of Schedule 13 to the Finance Act 1999 (stamp duty on conveyance or transfer on sale) the instrument transferring or vesting the estate or interest shall be taken to be a transfer on sale of the estate or interest.
(3) If—
(a) the other property is or includes one or more estates or interests in land, and
(b) ad valorem duty is chargeable on the conveyance or transfer of all or any of those estates or interests,
the amount of duty that would (apart from this subsection) be chargeable in consequence of subsection (2) on the transfer on sale there mentioned shall be reduced (but not below nil) by the total of thead valorem duty chargeable as mentioned in paragraph (b).
(4) If, for the purposes of Part I of Schedule 13 to the Finance Act 1999, the amount or value of the consideration for the transfer on sale mentioned in subsection (2) would (apart from this subsection) exceed the market value of the estate or interest immediately before the execution of the instrument transferring or vesting it, the amount or value of the consideration shall be taken for those purposes to be equal to that market value.
(5) 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.
(6) Subsection (2) has effect even though—
(a) the transfer or vesting of the estate or interest is the whole or part of the consideration for a sale of the other property; or
(b) the transaction is by way of exchange.
(7) Subsection (2) does not affect any charge to stamp duty in respect of the same or any other instrument so far as it relates to the transfer of the other property.
(8) This section is subject to subsection (5) of section 119.
(9) This section shall be construed as one with the Stamp Act 1891.
1891 c. 39.
(10) This section applies to instruments executed on or after 28th March 2000.
(11) But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—
(a) the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or
(b) the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.
(12) This section shall be deemed to have come into force on 28th March 2000.

119 Transfer of land to connected company.
(1) This section applies where an estate or interest in land is transferred to or vested in a company (“A”) and—
(a) the person transferring or vesting the estate or interest (“B”) is connected with A; or
(b) some or all of the consideration for the transfer or vesting consists of the issue or transfer of shares in a company with which B is connected.
(2) For the purposes of Part I of Schedule 13 to the Finance Act 1999 (stamp duty on conveyance or transfer on sale) an instrument transferring or vesting the estate or interest shall be taken to be a transfer on sale of the estate or interest.
(3) If for those purposes the amount or value of the consideration for the transfer on sale of the estate or interest would, apart from this subsection, be less than the value determined under subsection (4), the consideration shall be taken for those purposes to be the value determined under subsection (4).
(4) That value is—
(a) the market value of the estate or interest immediately before the execution of the instrument transferring or vesting it; but
(b) reduced by the value of so much of any actual consideration as does not consist of property.
(5) Where—
(a) apart from this section, an instrument would be chargeable to stamp duty in accordance with section 118, and
(b) apart from that section, the instrument would be chargeable to stamp duty in accordance with this section,
the stamp duty chargeable on the instrument shall be determined in accordance with this section (instead of that section).
(6) This section applies only if, in consequence of its application, the instrument transferring or vesting the estate or interest is chargeable with a greater amount of stamp duty than it would be apart from this section and section 118.
(7) 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.
(8) In this section—
“company” means any body corporate;
“shares” includes stock and the reference to shares in a company includes a reference to securities issued by a company.
(9) For the purposes of this section, the question whether any person is connected with another shall be determined in accordance with the provisions of section 1122 of the Corporation Tax Act 2010.
Words in s. 119(9) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 311 (with Sch. 2)
(10) This section shall be construed as one with the Stamp Act 1891.
1891 c. 39.
(11) This section applies to instruments executed on or after 28th March 2000.
(12) But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—
(a) the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or
(b) the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.
(13) This section shall be deemed to have come into force on 28th March 2000.

120 Exceptions from section 119.
(1) Section 119 does not apply by virtue of paragraph (a) of subsection (1) of that section in any of the following cases (any reference in this section to A or B being taken as a reference to the person referred to as A or B, as the case may be, in that subsection).
(2) Case 1 is where B holds the estate or interest as nominee or bare trustee for A.
(3) Case 2 is where A is to hold the estate or interest as nominee or bare trustee for B.
(4) Case 3 is where B holds the estate or interest as nominee or bare trustee for some other person and A is to hold it as nominee or bare trustee for that other person.
(5) Case 4 is where (in a case not falling within subsection (2) or (4) above)—
(a) the transfer or vesting is a conveyance or transfer out of a settlement in or towards satisfaction of a beneficiary’s interest;
(b) the beneficiary’s interest is not an interest acquired for money or money’s worth; and
(c) the conveyance or transfer is a distribution of property in accordance with the provisions of the settlement.
(6) Case 5 is where (in a case not falling within subsection (3) above) A—
(a) is a person carrying on a business which consists of or includes the management of trusts; and
(b) is to hold the estate or interest as trustee acting in the course of that business.
(7) Case 6 is where (in a case not falling within subsection (3) above) A is to hold the estate or interest as trustee and, apart from section 1122(6) of the Corporation Tax Act 2010 (trustees as connected persons), would not be connected with B.
Words in s. 120(7) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 312 (with Sch. 2)
(8) Case 7 is where—
(a) B is a company;
(b) the transfer or vesting is, or is part of, a distribution of assets (whether or not in connection with the winding up of the company); and
(c) the estate or interest was acquired by B by virtue of an instrument which is duly stamped.
(9) This section shall be construed as one with the Stamp Act 1891.
1891 c. 39.
(10) This section applies to instruments executed after the day on which this Act is passed.

121 Grant of lease to connected company.
(1) This section applies where a lease is granted to a company (“A”) and—
(a) the person granting the lease (“B”) is connected with A; or
(b) some or all of the consideration for the grant of the lease consists of the issue or transfer of shares in a company with which B is connected.
(2) Subsection (3) has effect for the purposes of stamp duty chargeable under Part II of Schedule 13 to the Finance Act 1999 (stamp duty on a lease) by reference to Part I of that Schedule (conveyance or transfer on sale).
1999 c. 16.
(3) If, apart from this subsection, the amount or value of the consideration for the grant would be less than the value determined under subsection (4), the consideration shall be taken to be the value determined under subsection (4).
(4) That value is—
(a) the market value, immediately before the instrument granting the lease is executed, of the lease granted; but
(b) reduced by the value of so much of any actual consideration as does not consist of property.
(5) This section applies only if, in consequence of its application, the lease is chargeable with a greater amount of stamp duty than it would be apart from this section.
(6) 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.
(7) In this section—
“company” means any body corporate;
“shares” includes stock and the reference to shares in a company includes a reference to securities issued by a company.
(8) For the purposes of this section, the question whether any person is connected with another shall be determined in accordance with the provisions of section 1122 of the Corporation Tax Act 2010.
Words in s. 121(8) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 313 (with Sch. 2)
(9) This section shall be construed as one with the Stamp Act 1891.
1891 c. 39.
(10) This section applies to instruments executed on or after 28th March 2000.
(11) But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—
(a) the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or
(b) the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.
(12) This section shall be deemed to have come into force on 28th March 2000.

122 Marketable securities transferred etc for exempt property.
(1) Subsection (2) applies where—
(a) an instrument transferring marketable securities would not, apart from this section, be or fall to be treated as a transfer on sale for the purposes of stamp duty; but
(b) the transfer of the marketable securities is for consideration; and
(c) the consideration is or includes any qualifying property (“the other property”).
(2) For the purposes of Part I of Schedule 13 to the Finance Act 1999 (stamp duty on conveyance or transfer on sale) the instrument transferring the marketable securities shall be taken to be a transfer on sale of those securities.
(3) If the amount or value of the consideration for that transfer on sale would (apart from this subsection) exceed the market value of the marketable securities immediately before the execution of the instrument transferring them, the amount or value of the consideration shall be taken to be equal to that market value.
For this purpose 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.
(4) Subsection (2) has effect even though—
(a) the transfer of the marketable securities is the whole or part of the consideration for a sale of the other property; or
(b) the transaction is by way of exchange.
(5) Subsection (2) does not affect any charge to stamp duty in respect of the same or any other instrument so far as it relates to the transfer of the other property.
(6) In this section “qualifying property” means any debt due, stock or securities, to the extent that the debt, stock or securities are not chargeable securities, within the meaning of Part IV of the Finance Act 1986 (stamp duty reserve tax).
1986 c. 41.
(7) This section shall be construed as one with the Stamp Act 1891.
1891 c. 39.
(8) This section applies to instruments executed on or after 28th March 2000.
(9) But this section does not apply to an instrument giving effect to a contract made on or before 21st March 2000, unless—
(a) the instrument is made in consequence of the exercise after that date of any option, right of pre-emption or similar right; or
(b) the instrument transfers the property in question to, or vests it in, a person other than the purchaser under the contract, because of an assignment (or, in Scotland, assignation) or further contract made after that date.
(10) This section shall be deemed to have come into force on 28th March 2000.

123 Transfer of property between associated companies: Great Britain.
(1) Amend section 42 of the Finance Act 1930 as follows.
1930 c. 28.
(2) In subsection (2) (instruments on which stamp duty not chargeable) in paragraph (a) for “to another" substitute “ (“the transferor”) to another (“the transferee”) ”.
(3) In that subsection, after paragraph (b) insert— “ unless at the time the instrument is executed arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the transferee but not of the transferor. ”.
(4) In subsection (2B) (body to be parent of another if beneficial owner of 75% of ordinary share capital) after “if at that time the first body" insert “ (a) ” and at the end of the subsection add—

“(b) is beneficially entitled to not less than 75 per cent of any profits available for distribution to equity holders of the second body; and
(c) would be beneficially entitled to not less than 75 per cent of any assets of the second body available for distribution to its equity holders on a winding-up.”

.
(5) In subsection (3)—
(a) after “The ownership referred to in" insert “ paragraph (a) of ”; and
(b) for “this section" substitute “ that paragraph ”.
(6) At the end of the section add—

“(5) Schedule 18 to the Income and Corporation Taxes Act 1988 shall apply for the purposes of paragraphs (b) and (c) of subsection (2B) as it applies for the purposes of paragraphs (a) and (b) of section 413(7) of that Act; but this is subject to subsection (6).
1988 c. 1.
(6) In determining for the purposes of this section whether a body corporate is the parent of the transferor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (2B).
(7) In this section, “control” shall be construed in accordance with section 840 of the Income and Corporation Taxes Act 1988.
1988 c. 1.”

.
(7) This section has effect in relation to instruments executed after the day on which this Act is passed.

124 Transfer of property between associated companies: Northern Ireland.
(1) Amend section 11 of the Finance Act (Northern Ireland) 1954 as follows.
1954 c. 23 (N.I.).
(2) After subsection (2) (instruments on which stamp duty not chargeable) insert—

“(2A) But this section does not apply to an instrument by virtue of subsection (2)(a) if, at the time the instrument is executed, arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the transferee but not of the transferor.”

.
(3) In subsection (3AA) (body to be parent of another if beneficial owner of 75% of ordinary share capital) after “if at that time the first body" insert “ (a) ” and at the end of the subsection add—

“(b) is beneficially entitled to not less than 75 per cent of any profits available for distribution to equity holders of the second body; and
(c) would be beneficially entitled to not less than 75 per cent of any assets of the second body available for distribution to its equity holders on a winding-up.”

.
(4) In subsection (3A)—
(a) after “The ownership referred to in" insert “ paragraph (a) of ”; and
(b) for “this section" substitute “ that paragraph ”.
(5) At the end of the section add—

“(6) Schedule 18 to the Income and Corporation Taxes Act 1988 shall apply for the purposes of paragraphs (b) and (c) of subsection (3AA) as it applies for the purposes of paragraphs (a) and (b) of section 413(7) of that Act; but this is subject to subsection (7).
1988 c. 1.
(7) In determining for the purposes of this section whether a body corporate is the parent of the transferor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (3AA).
(8) In this section, “control” shall be construed in accordance with section 840 of the Income and Corporation Taxes Act 1988.
1988 c. 1.”

.
(6) This section has effect in relation to instruments executed after the day on which this Act is passed.

125 Grant of leases etc between associated companies.
(1) Amend section 151 of the Finance Act 1995 as follows.
1995 c. 4.
(2) In subsection (1) (stamp duty not chargeable on leases etc) at the end insert the following paragraph—

“This subsection is subject to subsection (4A) below.”

.
(3) After subsection (4) insert—

“(4A) An instrument shall not be exempt from stamp duty by virtue of subsection (1) above if at the time the instrument is executed arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the lessee but not of the lessor.”

.
(4) In subsection (8) (body to be parent of another if beneficial owner of 75% of ordinary share capital) after “if at that time the first body" insert “ (a) ” and at the end of the subsection add—

“(b) is beneficially entitled to not less than 75 per cent of any profits available for distribution to equity holders of the second body; and
(c) would be beneficially entitled to not less than 75 per cent of any assets of the second body available for distribution to its equity holders on a winding-up.”

.
(5) In subsection (10)—
(a) after “The ownership referred to in" insert “ paragraph (a) of ”; and
(b) for “this section" substitute “ that paragraph ”.
(6) After subsection (10) insert—

“(10A) Schedule 18 to the Income and Corporation Taxes Act 1988 shall apply for the purposes of paragraphs (b) and (c) of subsection (8) as it applies for the purposes of paragraphs (a) and (b) of section 413(7) of that Act; but this is subject to subsection (10B).
1988 c. 1.
(10B) In determining for the purposes of this section whether a body corporate is the parent of the lessor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (8) above.
(10C) In this section, “control” shall be construed in accordance with section 840 of the Income and Corporation Taxes Act 1988.
1988 c. 1.”

.
(7) This section has effect in relation to instruments executed after the day on which this Act is passed.

126 Future issues of stock.
(1) Amend section 55 of the Stamp Act 1891 (calculation of ad valorem duty in respect of stock and securities) as follows.
1891 c. 39.
(2) After subsection (1) insert—

“(1A) For the purposes of subsection (1), it is immaterial—
(a) whether, at the time of the execution of the conveyance on sale, the stock or marketable security is or has been issued or is to be issued; and
(b) in a case where the stock or marketable security is to be issued, when it is to be, or is, issued and whether the issue is certain or contingent.”

.
(3) This section has effect in relation to instruments executed after the day on which this Act is passed.

127 Company acquisition reliefs: redeemable shares.
(1) Amend section 75 of the Finance Act 1986 (acquisitions: reliefs) in accordance with subsections (2) and (3).
1986 c. 41.
(2) In subsection (4), in paragraph (a) (which requires that the consideration for the acquisition consists of or includes the issue of shares) after “the issue of" insert “ non-redeemable ”.
(3) In subsection (4), after paragraph (b) add—

“In paragraph (a) above, “non-redeemable shares” means shares which are not redeemable shares.”

.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 127(4) omitted (with effect in accordance with Sch. 39 para. 10(1) of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 5(2)(c) (with Sch. 39 paras. 11-13)
(5) This section has effect in relation to instruments executed after the day on which this Act is passed.

128 Surrender of leases.
(1) Where a lease is or has been surrendered or, in Scotland, renounced at any time, a document evidencing the surrender or renunciation shall be treated for the purposes of stamp duty as if it were a deed executed at that time effecting the surrender or renunciation.
(2) Stamp duty shall be chargeable by virtue of subsection (1) on a document containing a statutory declaration, notwithstanding anything in land registration rules under the Land Registration Act 2002.
Words in s. 128(2) substituted (13.10.2003) by Land Registration Act 2002 (c. 9), s. 136(2), Sch. 11 para. 39(a) (with s. 129); S.I. 2003/1725, art. 2(1)
(3) Stamp duty shall not be chargeable by virtue of subsection (1) on any lease or agreement for a lease or with respect to any letting if the lease or agreement—
(a) is made in consideration of the surrender or renunciation; and
(b) relates to the same subject matter as the lease surrendered or renounced.
(4) Stamp duty shall not be chargeable by virtue of subsection (1) on any document if a document falling within subsection (5) has been duly stamped.
(5) The documents that fall within this subsection are—
(a) a deed effecting the surrender or renunciation;
(b) an agreement which falls to be treated for the purposes of stamp duty as if it were such a deed;
(c) any document which falls to be so treated by virtue of subsection (1); and
(d) any lease or agreement falling within subsection (3).
(6) A land registrar shall regard a document which by virtue of subsection (4) is not chargeable to stamp duty by virtue of subsection (1) as not duly stamped unless—
(a) it is stamped as if it were a deed effecting the surrender or renunciation; or
(b) it appears by some stamp impressed on it that the full and proper duty chargeable on such a deed has been paid on another document; or
(c) it appears by some stamp impressed on it that a lease or agreement falling within subsection (3) has been duly stamped; or
(d) the land registrar is aware of a document falling within subsection (5) which has been duly stamped.
(7) The documents which evidence the surrender or renunciation of a lease shall be taken to include an application, in consequence of the surrender or renunciation of the lease, for—
(a) the making in a land register, or
(b) the removal from a land register,
of an entry relating to the lease.
(8) In this section—
“land register"—
(a) in relation to England and Wales, means the register kept under section 1 of the Land Registration Act 2002;
Words in s. 128(8)(a) substituted (13.10.2003) by Land Registration Act 2002 (c. 9), s. 136(2), Sch. 11 para. 39(b) (with s. 129); S.I. 2003/1725, art. 2(1)
(b) in relation to Scotland, means the Land Register of Scotland or the General Register of Sasines;
(c) in relation to Northern Ireland, means the register maintained under section 10 of the Land Registration Act (Northern Ireland) 1970;
“land registrar"—
1970 c. 18 (N.I.)
(a) in relation to England and Wales, means the Chief Land Registrar or any other officer of Her Majesty’s Land Registry exercising functions of the Chief Land Registrar;
(b) in relation to Scotland, means the Keeper of the Registers of Scotland;
(c) in relation to Northern Ireland, means the Registrar of Titles or any other official of the Land Registry exercising functions of the Registrar of Titles.
(9) This section shall be construed as one with the Stamp Act 1891.
1891 c. 39.
(10) This section applies to documents relating to the surrender or renunciation of a lease after the day on which this Act is passed.

129 Abolition of duty on instruments relating to intellectual property.
(1) No stamp duty is chargeable on an instrument for the sale, transfer or other disposition of intellectual property.
(2) In subsection (1) “intellectual property” means—
(a) any patent, trade mark, registered design, copyright or design right,
(b) any plant breeders’ rights and rights under section 7 of the Plant Varieties Act 1997,
1997 c. 66.
(c) any licence or other right in respect of anything within paragraph (a) or (b), and
(d) any rights under the law of a country or territory outside the United Kingdom that correspond or are similar to those within paragraph (a), (b) or (c).
(3) Schedule 34 to this Act (which contains provisions supplementing this section) has effect.
(4) This section and Schedule 34 shall be construed as one with the Stamp Act 1891.
1891 c. 39.
(5) This section applies to instruments executed on or after 28th March 2000.
(6) This section shall be deemed to have come into force on that date.

130 Transfers to registered social landlords etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 130 repealed (with effect in accordance with Sch. 39 para. 10(1) of the amending Act) by Finance Act 2012 (c. 14), Sch. 39 para. 6(1) (with Sch. 39 paras. 11-13)

131 Relief for certain instruments executed before this Act has effect.
(1) This section applies to an instrument of any of the following descriptions executed in the period beginning with 22nd March 2000 and ending with the day on which this Act is passed—
(a) an instrument transferring or vesting an estate or interest in land in such circumstances as are mentioned in section 119 (transfer of land to connected company), in a case specified in section 120 (excepted cases);
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 131(1)(b) omitted (with effect in accordance with Sch. 39 para. 10(2) of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 6(2) (with Sch. 39 paras. 11-13)
(2) If the instrument is not stamped until after the day on which this Act is passed, the law in force at the time of its execution shall be deemed for stamp duty purposes to be that which would have applied if it had been executed after that day.
(3) If the Commissioners are satisfied that—
(a) the instrument was stamped on or before the day on which this Act is passed,
(b) stamp duty was chargeable in respect of it, and
(c) had it been stamped after that day no stamp duty, or less stamp duty, would have been chargeable,
they shall pay to such person as they consider appropriate an amount equal to the duty (and any interest or penalty) that would not have been payable if the law in force at the time of execution of the instrument had been that which would have applied had it been executed after that day.
(4) Any such payment must be claimed before 1st April 2001.
(5) Entitlement to a payment is subject to compliance with such conditions as the Commissioners may determine with respect to the production of the instrument, to its being stamped so as to indicate that it has been produced under this section or to other matters.
(6) For the purposes of section 10 of the Exchequer and Audit Departments Act 1866 (Commissioners to deduct repayments from gross revenues) any amount paid under this section shall be treated as a repayment.
1866 c. 39.
(7) This section shall be construed as one with the Stamp Act 1891.
1891 c. 39.

132 The Northern Ireland Assembly Commission.
(1) Amend section 55 of the Finance Act 1987 (Crown exemption from stamp duty) as follows.
1987 c. 16.
(2) In subsection (1) (which specifies the bodies relieved from stamp duty)—
(a) after “agreed to be made" insert “ (a) ”;
(b) after “Minister of the Crown or" insert “ (b) ”; and
(c) after “Treasury, or" insert “ (c) ”.
(3) In subsection (1), after “National Assembly for Wales," insert

“or
(d) to the Northern Ireland Assembly Commission,”

.
(4) Subsection (3) has effect in relation to instruments executed on or after 28th March 2000.
(5) This section shall be deemed to have come into force on 28th March 2000.

Stamp duty and Stamp duty reserve tax

133 Loan capital where return bears inverse relationship to results.
(1) In section 79 of the Finance Act 1986 (loan capital), after subsection (7) insert—

“(7A) Subsection (4) above shall not be prevented from applying to an instrument by virtue of subsection (6)(b) above by reason only that the loan capital concerned carries a right to interest which—
(a) reduces in the event of the results of a business or part of a business improving, or the value of any property increasing, or
(b) increases in the event of the results of a business or part of a business deteriorating, or the value of any property diminishing.”

.
1986 c. 41.
(2) For the purposes of stamp duty, subsection (1) above has effect where the instrument is executed on or after 21st March 2000.
(3) For the purposes of stamp duty reserve tax, subsection (1) above has effect—
(a) in relation to the charge to tax under section 87 of the Finance Act 1986, where—
(i) the agreement to transfer is conditional and the condition is satisfied on or after 21st March 2000, or
(ii) the agreement is not conditional and is made on or after that date;
(b) in relation to the charge to tax under section 93(1) of that Act, where securities are transferred, issued or appropriated on or after 21st March 2000 (whenever the arrangement was made);
(c) in relation to the charge to tax under section 96(1) of that Act, where securities are transferred or issued on or after 21st March 2000 (whenever the arrangement was made);
(d) in relation to the charge to tax under section 93(10) of that Act, where securities are issued or transferred on sale, under terms there mentioned, on or after 21st March 2000;
(e) in relation to the charge to tax under section 96(8) of that Act, where securities are issued or transferred on sale, under terms there mentioned, on or after 21st March 2000.
S. 133 repealed (with effect as mentioned in Sch. 40 Pt. III Note 3 of the amending Act) by 2000 c. 17, s. 156, Sch. 40 Pt. III

134 Transfers between depositary receipt systems and clearance systems.
(1) In Part III of the Finance Act 1986 (stamp duty), after section 72 insert—

“Transfers between depositary receipt system and clearance system

72A Transfers between depositary receipt system and clearance system.
(1) Where an instrument transfers relevant securities of a company incorporated in the United Kingdom between a depositary receipt system and a clearance system—
(a) the provisions of section 67(2) to (5) or, as the case may be, section 70(2) to (5) above shall not apply, and
(b) the stamp duty chargeable on the instrument is £5.
(2) A transfer between a depositary receipt system and a clearance system means a transfer—
(a) from (or to) a company that at the time of the transfer falls within section 67(6) above, and
(b) to (or from) a company that at that time falls within section 70(6) above.
(3) This section does not apply to a transfer from a clearance system (that is, from such a company as is mentioned in subsection (2)(b) above) if at the time of the transfer an election is in force under section 97A below in relation to the clearance services for the purposes of which the securities are held immediately before the transfer.”

.
1986 c. 41.
(2) In Part IV of the Finance Act 1986 (stamp duty reserve tax), after section 97A insert—

“97B Transfer between depositary receipt system and clearance system.
(1) There shall be no charge to tax under section 93 or 96 above where securities are transferred between a depositary receipt system and a clearance system.
(2) A transfer between a depositary receipt system and a clearance system means a transfer—
(a) from (or to) a company which at the time of the transfer falls within section 67(6) above, and
(b) to (or from) a company which at that time falls within section 70(6) above.
(3) This section does not apply to a transfer from a clearance system (that is, from such a company as is mentioned in subsection (2)(b) above) if at the time of the transfer an election is in force under section 97A above in relation to the clearance services for the purposes of which the securities are held immediately before the transfer.”

.
1986 c. 41.
(3) In sections 67(9), 70(9), 95(1) and 97(1) of the Finance Act 1986 (transfers between depositary receipt systems or between clearance systems), the words “and is resident in the United Kingdom" and “and is so resident" shall cease to have effect.
1986 c. 41.
(4) In section 97A of that Act (clearance services: election for alternative system of charge), after subsection (12) add—

“(13) Nothing in section 70(9) or 97(1) above has effect to prevent a charge to stamp duty or stamp duty reserve tax arising—
(a) on a transfer to which subsection (5) above applies, or
(b) on a deemed transfer under subsection (11) above.”

.
(5) The amendments in this section have effect as follows—
(a) subsection (1), and subsections (3) and (4) as they apply for stamp duty purposes, apply in relation to instruments executed after the day on which this Act is passed;
(b) subsection (2), and subsections (3) and (4) as they apply for the purposes of stamp duty reserve tax, apply where the securities are transferred after that day.
S. 134 repealed (with effect as mentioned in Sch. 40 Pt. III Note 3 of the amending Act) by 2000 c. 17, s. 156, Sch. 40 Pt. III

Part V Other taxes

Value added tax

135 Supplies to which reduced rate applies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 135 repealed (11.5.2001 with effect as mentioned in s. 99(7) of the amending Act) by 2001 c.9, ss. 99(7), 110, Sch. 33 Pt. III(1) Note 2

136 Disposals of assets for which a VAT repayment is claimed.
(1) In section 3(2) of the Value Added Tax Act 1994 (taxable persons and registration), for “Schedules 1 to 3" there shall be substituted “ Schedules 1 to 3A ”.
1994 c. 23.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 136(2) omitted (with effect in accordance with art. 3 of the commencing S.I.) by virtue of Finance Act 2008 (c. 9), s. 123(2), Sch. 41 para. 25(k)(i); S.I. 2009/511, art. 2 (with art. 4)
(3) In section 69(1)(a) of that Act (breaches of regulatory provisions), for “or paragraph 5 of Schedule 3" there shall be substituted “ , paragraph 5 of Schedule 3 or paragraph 5 of Schedule 3A ”.
(4) In section 73(3)(b) of that Act (failure to make returns etc.), for “or paragraph 6(2) or (3) of Schedule 3" there shall be substituted “ , paragraph 6(2) or (3) of Schedule 3 or paragraph 6(1) or (2) of Schedule 3A ”.
(5) In section 74(1)(c) of that Act (interest on VAT recovered or recoverable by assessment), for “under paragraph 8 of Schedule 3" there shall be substituted “ , under paragraph 8 of Schedule 3 or under paragraph 7 of Schedule 3A ”.
(6) In the following provisions of that Act—
(a) paragraph 1(4)(a) and (5) of Schedule 1 (registration in respect of taxable supplies); and
(b) paragraph 1(4) of Schedule 2 (registration in respect of supplies from other member States),
for “or paragraph 6(3) of Schedule 3" there shall be substituted “ , paragraph 6(3) of Schedule 3 or paragraph 6(2) of Schedule 3A ”.
(7) In paragraph 1(3) of Schedule 3 to that Act (registration in respect of acquisitions from other member States), for “or paragraph 6(2) of Schedule 2" there shall be substituted “ , paragraph 6(2) of Schedule 2 or paragraph 6(2) of Schedule 3A ”.
(8) After Schedule 3 to that Act there shall be inserted the Schedule 3A set out in Schedule 36 to this Act.
(9) In paragraph 5(5) of Schedule 4 to that Act (matters to be treated as a supply of goods or services), for the words from “under sections 25 and 26" to the end there shall be substituted—

“(a) under sections 25 and 26, to credit for the whole or any part of the VAT on the supply, acquisition or importation of those goods or of anything comprised in them; or
(b) under a scheme embodied in regulations made under section 39, to a repayment of VAT on the supply or importation of those goods or of anything comprised in them.”

.
(10) Subsections (1) to (7) and (9) above have effect in relation to supplies made on or after 21st March 2000; and subsection (8) above and Schedule 36 to this Act have effect in relation to relevant supplies (within the meaning of Schedule 3A to that Act) made on or after that date.

137 Gold: penalty for failure to comply with record-keeping requirements etc.
(1) Part IV of the Value Added Tax Act 1994 (administration, collection and enforcement) is amended as follows.
1994 c. 23.
(2) After section 69 (breaches of regulatory provisions) insert—

“69A Breach of record-keeping requirements etc. in relation to transactions in gold.
(1) This section applies where a person fails to comply with a requirement of regulations under section 13(5)(a) or (b) of the Finance Act 1999 (gold: duties to keep records or provide information).
Where this section applies, the provisions of section 69 do not apply.
1999 c. 16.
(2) A person who fails to comply with any such requirement is liable to a penalty not exceeding 17.5% of the value of the transactions to which the failure relates.
(3) For the purposes of assessing the amount of any such penalty, the value of the transactions to which the failure relates shall be determined by the Commissioners to the best of their judgement and notified by them to the person liable.
(4) No assessment of a penalty under this section shall be made more than 2 years after evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to their knowledge.
(5) The reference in subsection (4) above to facts sufficient to justify the making of the assessment is to facts sufficient—
(a) to indicate that there had been a failure to comply with any such requirement as is referred to in subsection (1) above, and
(b) to determine the value of the transactions to which the failure relates.
(6) A failure by any person to comply with any such requirement as is mentioned in subsection (1) above shall not give rise to a liability to a penalty under this section if the person concerned satisfies the Commissioners or, on appeal, a tribunal, that there is a reasonable excuse for the failure.
(7) Where by reason of conduct falling within subsection (1) above a person—
(a) is assessed to a penalty under section 60, or
(b) is convicted of an offence (whether under this Act or otherwise),
that conduct shall not also give rise to a penalty under this section.”

.
(3) In section 70(1) of that Act (mitigation of penalties), for “or 67" substitute “ , 67 or 69A ”.
(4) In section 76(1) of that Act (assessment of amount due by way of penalty etc.), for “to 69" (in both places) substitute “ to 69A ”.
(5) In section 83 of that Act (appeals), in paragraph (n) for “59 to 69" substitute “ 59 to 69A ”.

Inheritance tax

138 Treatment of employee share ownership trusts.
(1) The Inheritance Tax Act 1984 is amended as follows.
1984 c. 51.
(2) In section 13 (dispositions by close companies for benefit of employees), in subsection (4), after paragraph (b) insert

“; or
(c) if the trusts are those of an employee share ownership plan approved under Schedule 8 to the Finance Act 2000, of any power to appropriate shares to, or acquire shares on behalf of, individuals under the plan.”

.
(3) In section 72 (property leaving employee trusts and newspaper trusts)—
(a) in subsection (2) after “subsection (4)" insert “ , (4A) ”, and
(b) after subsection (4) insert—

“(4A) If the trusts are those of an employee share ownership plan approved under Schedule 8 to the Finance Act 2000, tax shall not be chargeable under this section by virtue of subsection (3)(b) above on an appropriation of shares to, or acquisition of shares on behalf of, an individual under the plan.”

.
(4) In section 86 (trusts for benefit of employees), in subsection (3), after paragraph (b) insert

“; or
(c) the trusts on which the settled property is held are those of an employee share ownership plan approved under Schedule 8 to the Finance Act 2000.”

.

Petroleum revenue tax

139 Operating expenditure incurred while safeguard relief applies.
(1) After section 9 of the Oil Taxation Act 1975 insert—

“9A Operating expenditure incurred while section 9 applies.
(1) Subsections (2) and (3) below apply where—
(a) operating expenditure is incurred by a participator in an oil field during a chargeable period to which section 9(1) of this Act applies (“the relevant chargeable period”);
(b) a claim for the allowance of the expenditure is made under Schedule 5 or 6 for the claim period which coincides with the relevant chargeable period (“the relevant claim period”); and
(c) the claim is made more than four months after the end of the relevant claim period.
(2) The Board shall not allow the expenditure except to such extent (if any) as they consider necessary to secure that the participator’s overall liability to tax is no greater than it would have been if the claim had been allowed before the Board had made an assessment to tax or a determination on or in relation to the participator in respect of the field for the relevant chargeable period.
(3) Any amounts of oil allowance which, if the claim had been allowed before the Board had made an assessment to tax or a determination on or in relation to the participator in respect of the field for the relevant chargeable period, would not have been utilised by him in that period, or any subsequent chargeable period, shall be disregarded for the purposes of section 8(6) of this Act.
(4) Where—
(a) the participator transfers the whole or part of his interest in the oil field to another person; and
(b) Parts II and III of Schedule 17 to the Finance Act 1980 apply to the transfer,
1980 c. 48.
subsections (2) and (3) above shall have effect as if references to the participator included references to that other person.
(5) In this section—
“acquisition”, in relation to an asset, includes acquisition of an interest in the asset;
“capital expenditure” means expenditure on the acquisition or construction of an asset which is to be used for any of the following purposes—
(a) for ascertaining the extent or characteristics of any oil-bearing area wholly or partly included in the field, or what the reserves of oil of any such oil-bearing area are;
(b) for winning oil from the field;
(c) for transporting oil won from the field, whether to a place in the United Kingdom or to a place in another country; or
(d) for the initial treatment or initial storage of oil won from the field;
“operating expenditure” means any expenditure other than capital expenditure.
(6) Where a claim period is a period of twelve months, this section shall have effect as if—
(a) that period were two separate claim periods of six months each;
(b) any claim for that period under Schedule 5 or 6 were two separate claims, one for each of those separate periods; and
(c) the operating expenditure to which that claim relates were apportioned between those separate periods and those separate claims in such manner as may be just and reasonable.”

.
1975 c. 22.
(2) This section has effect in relation to expenditure incurred on or after 21st March 2000.

Landfill tax

140 Rate.
(1) In section 42 of the Finance Act 1996 (amount of landfill tax), in subsections (1)(a) and (2) for “£10" substitute “ £11 ”.
1996 c. 8.
(2) This section has effect in relation to taxable disposals made, or treated as made, on or after 1st April 2000.

141 Disposals which are not taxable.
(1) In section 62 of the Finance Act 1996 (regulations about taxable disposals) amend subsection (7) (limit on power to make regulations providing that a disposal is not taxable) as follows.
1996 c. 8.
(2) For paragraph (a) substitute—

“(a) the material comprised in the disposal is held temporarily pending one or more of the following—
(i) the incineration or recycling of the material, or
(ii) the removal of the material for use elsewhere, or
(iii) the use of the material, if it is qualifying material within the meaning of section 42(3) above, for the restoration to use of the site at which the disposal takes place, or any part of that site, upon completion of waste disposal operations at the site, or as the case may be, that part of the site, or
(iv) the sorting of the material with a view to its removal elsewhere or its eventual disposal, and”

.
(3) In paragraph (b) for “the temporary disposal is made" substitute “ the material in question is held temporarily ”.

142 Secondary liability.
(1) In section 60 of the Finance Act 1996 (which gives effect to Schedule 5 to the Act), after “penalties" insert “ , secondary liability ”.
1996 c. 8.
(2) Accordingly the sidenote to that section becomes “Information, powers, penalties, secondary liability, etc".
(3) At the end of Schedule 5 to that Act (supplementary provisions relating to landfill tax) add the Part VIII set out in Schedule 37 to this Act.
(4) Subsection (3) has effect in relation to taxable disposals made on or after the day on which this Act is passed.

Part VI Miscellaneous and supplementary provisions

Incentives for electronic communications

143 Power to provide incentives to use electronic communications.
(1) Regulations may be made in accordance with Schedule 38 to this Act for providing incentives to use electronic communications.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 143(2) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 466, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

Compliance

144 Offence of fraudulent evasion of income tax
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 144 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 7 para. 97, Sch. 10 Pt. 12 (with Sch. 9 paras. 1-9, 22)

145 Information about interest etc paid, credited or received.
(1) In section 17 of the Taxes Management Act 1970 (interest paid or credited by banks etc without or after deduction of tax), subsections (4B) and (4C) shall cease to have effect.
1970 c. 9.
(2) In subsection (5) of that section—
(a) for paragraph (c) there shall be substituted—

“(c) that if a person is required—
(i) to make and deliver a return under subsection (1) above;
(ii) to include information in such a return under any provision made under paragraph (a) above; or
(iii) to furnish information under any provision made under paragraph (b) above,
and the notice under subsection (1) above specifies the form in which the return is to be made and delivered, or the information is to be included or furnished, the person shall make and deliver the return, or include or furnish the information, in that form;”

;
and
(b) at the end there shall be inserted—

“The further information required as mentioned in paragraph (a) or (b) above may include, in prescribed cases, the name and address of the person beneficially entitled to the interest paid or credited.”

.
(3) After paragraph (a) of subsection (6) of that section there shall be inserted—

“(aa) may make provision with respect to the furnishing of information by persons required—
(i) to make and deliver a return under subsection (1) above;
(ii) to include information in such a return under any provision made under subsection (5)(a) above; or
(iii) to furnish information under any provision made under subsection (5)(b) above,
including the inspection of books, documents and other records on behalf of the Board;”

.
(4) In subsection (1) of section 18 of that Act (interest paid without or after deduction of tax)—
(a) for “by whom" there shall be substituted “ by or through whom ”; and
(b) for “who receives any such interest" there shall be substituted “ by whom any such interest is received ”.
(5) Subsections (3) and (3AA) of that section shall cease to have effect.
(6) In subsection (3A) of that section, after “interest paid" there shall be inserted “ or received ”.
(7) At the end of subsection (3B) of that section there shall be inserted—

“The further information required as mentioned in paragraph (a) above may include, in prescribed cases, the name and address of the person beneficially entitled to the interest paid or received.”

.
(8) After paragraph (a) of subsection (3C) of that section there shall be inserted—

“(aa) may make provision with respect to the furnishing of information by persons required to furnish information under subsection (1) above, or under any provision made under subsection (3B)(a) above, including the inspection of books, documents and other records on behalf of the Board;”

.
(9) For subsection (3D) of that section there shall be substituted—

“(3D) For the purposes of this section interest shall be treated as received by any person if it is received by another person at his direction or with his consent.
(3E) For the purposes of this section the following shall be treated as interest—
(a) any dividend in respect of a share in a building society;
(b) any amount to which a person holding a relevant discounted security is entitled on the redemption of that security; and
(c) any foreign dividend.
(3F) In subsection (3E)(b) above “relevant discounted security” has the meaning given by paragraph 3 of Schedule 13 to the Finance Act 1996.
1996 c. 8.
(3G) In subsection (3E)(c) above “foreign dividend” means any annual payment, interest or dividend payable out of, or in respect of the stocks, funds, shares or securities of—
(a) a body of persons that is not resident in the United Kingdom, or
(b) a government or public or local authority in a country outside the United Kingdom.”

.
(10) Section 482A of Taxes Act 1988 (audit powers in relation to non-residents) shall cease to have effect.
(11) This section has effect in relation to amounts paid, credited or received on or after 6th April 2001.

146 International exchange of information: general.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 146 repealed (19.7.2006) by Finance Act 2006 (c. 25), Sch. 26 Pt. 8(2)

147 International exchange of information: inheritance tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 147 repealed (19.7.2006) by Finance Act 2006 (c. 25), Sch. 26 Pt. 8(2)

148 Use of minimum wage information.
(1) Information obtained by an officer acting for the purposes of the National Minimum Wage Act 1998 (“the 1998 Act”) by virtue of section 13(1)(a) or (b) of that Act (officers) may be supplied by or with the authority of the Secretary of State to the Board for the purpose of any of its functions.
1998 c. 39.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 148(2) repealed (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 80, Sch. 5; S.I. 2005/1126, art. 2(2)(h)(i)
(3) Information supplied to the Secretary of State under section 16(2) of the 1998 Act (information obtained by agricultural wages officers) may be supplied by the Secretary of State to the Board for the purpose of any of its functions.
(4) For section 15(6) of the 1998 Act (restrictions on use of information) there shall be substituted—

“(6) This section—
(a) does not limit the circumstances in which information may be supplied or used apart from this section; and
(b) is subject to section 148 of the Finance Act 2000 (use of minimum wage information).”

.

149 Orders for the delivery of documents.
(1) After section 20B of the Taxes Management Act 1970 insert—

“20BA Orders for the delivery of documents.
(1) The appropriate judicial authority may make an order under this section if satisfied on information on oath given by an authorised officer of the Board—
(a) that there is reasonable ground for suspecting that an offence involving serious fraud in connection with, or in relation to, tax is being, has been or is about to be committed, and
(b) that documents which may be required as evidence for the purposes of any proceedings in respect of such an offence are or may be in the power or possession of any person.
(2) An order under this section is an order requiring the person who appears to the authority to have in his possession or power the documents specified or described in the order to deliver them to an officer of the Board within—
(a) ten working days after the day on which notice of the order is served on him, or
(b) such shorter or longer period as may be specified in the order.
For this purpose a “working day” means any day other than a Saturday, Sunday or public holiday.
(3) Where in Scotland the information mentioned in subsection (1) above relates to persons residing or having places of business at addresses situated in different sheriffdoms—
(a) an application for an order may be made to the sheriff for the sheriffdom in which any of the addresses is situated, and
(b) where the sheriff makes an order in respect of a person residing or having a place of business in his own sheriffdom, he may also make orders in respect of all or any of the other persons to whom the information relates (whether or not they have an address within the sheriffdom).
(4) Schedule 1AA to this Act contains provisions supplementing this section.”

.
1970 c. 9.
(2) After Schedule 1 to the Taxes Management Act 1970, insert the Schedule 1AA set out in Schedule 39 to this Act.
1970 c. 9.
(3) In section 20BB of that Act (falsification etc. of documents)—
(a) in subsection (1)(a), after “above" insert “ or an order under section 20BA above ”;
(b) in subsection (3), after “notice is given" insert “ or the order is made ”; and
(c) after “notice", in the second place where it occurs in that subsection, insert “ or order ”.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 149(4) repealed (8.11.2007) by Finance Act 2007 (c. 11), s. 84(5), Sch. 27 Pt. 5(1); S.I. 2007/3166, art. 2(c)

150 Search warrants: miscellaneous amendments.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 150 repealed (8.11.2007) by Finance Act 2007 (c. 11), s. 84(5), Sch. 27 Pt. 5(1); S.I. 2007/3166, art. 2(c)

Provisions relating to government finance

151 Debt Management Account.
In Schedule 5A to the National Loans Act 1968 (the Debt Management Account), in paragraph 11, after sub-paragraph (1) (excess of Account’s liabilities over its assets to be liability of National Loans Fund) insert—

“(1A) The Treasury may pay from the National Loans Fund to the Debt Management Account an amount representing all or any of any excess mentioned in sub-paragraph (1) above, and if they do the liability there mentioned shall be extinguished or reduced accordingly.”

.
1968 c. 13.

152 National Savings Bank.
(1) In section 4 of the National Savings Bank Act 1971 (deposits: limits and minimum balances), after subsection (3) insert—

“(4) Regulations under section 2 of this Act may include any provision that may be included in an order under this section.”

.
1971 c. 29.
(2) In section 26 of that Act (regulations and orders etc.), for subsections (2) and (3) (parliamentary control of regulations under section 2 and orders under section 4) substitute—

“(2) A statutory instrument containing—
(a) regulations under section 2 of this Act, or
(b) an order under section 4 of this Act,
shall be subject to annulment in pursuance of a resolution of either House of Parliament.”

.
(3) If a draft of a statutory instrument containing an order under section 4 of that Act has been laid before Parliament, but the instrument has not been made, before the day on which this Act is passed, the instrument may be made either—
(a) as if section 26 of that Act had not been amended by this section, or
(b) in reliance on section 26(2) as substituted by this section.
The instrument shall be taken to be made as mentioned in paragraph (a) unless it states that it is made in reliance on section 26(2) as substituted by this section.

153 National savings certificates.
(1) This section applies to a national savings certificate issued under section 12 of the National Loans Act 1968 if—
(a) it was purchased on or before 7th October 1999, and
(b) the fifth anniversary of its purchase falls after the day on which this Act is passed.
1968 c. 13.
(2) The power of the Treasury (under the prospectus under which the certificate was issued) to alter or end the extension terms for the certificate shall have effect as if it included power for the Treasury to decide before the fifth anniversary of the certificate’s purchase that the extension terms for the certificate are to involve it (so far as not cashed in) undergoing automatic roll-over on that anniversary.
(3) Where a certificate undergoes automatic roll-over on any occasion, the Treasury has power to decide before the fifth anniversary of that occasion that the extension terms for the certificate are to involve it (so far as not cashed in) undergoing automatic roll-over on that anniversary.
(4) For the purposes of this section a certificate undergoes “automatic roll-over” on an occasion if during the period of 5 years beginning with that occasion the certificate (so far as not cashed in) will earn interest as though it were a national savings certificate—
(a) purchased on that occasion for a term of 5 years at a price equal to the value (rounded, if necessary, to the nearest penny) of the certificate on that occasion, and
(b) earning such interest (whether at fixed rates or at rates that give effect to index-linking or partly one and partly the other) as has been decided by the Treasury before that occasion.
(5) Subject to subsections (2) and (3), a certificate to which this section applies continues (so far as not cashed in) to be held on the terms of the prospectus under which it was issued.
However, any obligation of the Director of Savings to take steps to inform the holder of the certificate before the fifth anniversary of its purchase of what is to happen to the certificate after that anniversary extends to taking the corresponding steps in relation to the fifth anniversary of each occasion on which the certificate has undergone automatic roll-over.
(6) Nothing in this section shall be taken as prejudicing the rights of the holder of a certificate to which this section applies to apply at any time to cash in the certificate.
(7) References in this section to cashing in a certificate include reinvesting it.

154 Exchange Equalisation Account.
(1) For section 4 of the Exchange Equalisation Account Act 1979 (examination and certification of the Account) substitute—

“4 Annual accounts.
(1) For each financial year in which the Account operates the Treasury shall prepare, in such form and on such basis as they may prescribe, accounts in relation to the transactions, assets and liabilities of the Account.
(2) The Treasury shall send the accounts to the Comptroller and Auditor General not later than 30th November of the financial year following that to which the accounts relate.
(3) The Comptroller and Auditor General shall examine and certify the accounts, issue a report on them and send the certified accounts and the report to the Treasury not later than 15th January of that year.
(4) The Treasury shall lay the certified accounts and the report before each House of Parliament not later than 31st January of that year.
(5) In certifying accounts under subsection (3) above the Comptroller and Auditor General shall state whether or not it is his opinion, having regard to his examination of the accounts, that—
(a) the resources of the Account have been used in accordance with the provisions of this Act;
(b) the transactions of the Account are in accordance with any relevant authority; and
(c) the accounts have been prepared in the form, and on the basis, prescribed under subsection (1) above.
(6) The Treasury may by order made by statutory instrument amend the date for the time being specified in any of subsections (2) to (4) above.
(7) Before making an order under subsection (6) above the Treasury shall consult the Comptroller and Auditor General.
(8) A statutory instrument containing an order under subsection (6) above shall be subject to annulment in pursuance of a resolution of the House of Commons.
(9) In this section a reference to the use of resources is a reference to their expenditure, consumption or reduction in value.”

.
1979 c. 30.
(2) This section applies in relation to the operation of the Exchange Equalisation Account in the financial year ending 31st March 2001 and subsequent financial years.

Supplementary provisions

155 Interpretation.
In this Act “the Taxes Act 1988” means the Income and Corporation Taxes Act 1988 and “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005and “ITA 2007” means the Income Tax Act 2007.
1988 c. 1.
Words in s. 155 inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 519 (with Sch. 2)
Words in s. 155 inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 393 (with Sch. 2)

156 Repeals.
(1) The enactments mentioned in Schedule 40 to this Act (which include provisions that are spent or of no practical utility) are repealed to the extent specified in the third column of that Schedule.
(2) The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.

157 Short title.
This Act may be cited as the Finance Act 2000.

SCHEDULES

SCHEDULE 1 Mixing of rebated light oils
Section 6.

Converting unleaded petrol into leaded petrol
1 (1) In paragraph 1(1) of Schedule 2A to the Hydrocarbon Oil Duties Act 1979 (converting unleaded petrol into leaded petrol), before paragraph (a) insert—

“(aa) adding lead to unleaded petrol in respect of which duty has been charged at the rate specified in section 6(1A)(a);”

.
1979 c. 5.
(2) In paragraph 8 of that Schedule (rate for mixtures of light oil), for sub-paragraph (2) substitute—

“(2) In the case of a mixture produced in contravention of paragraph 1 above, the rate is the rate in force under section 6(1A)(b) at the time the mixture is produced.”

.

Converting unleaded petrol into higher octane unleaded petrol
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 1 para. 2 repealed (retrospective to 6 p.m. on 7.3.2001) by 2001 c. 9, ss. 2(5), 110(1), Sch. 33 Pt. I(1) Note

Mixing different kinds of unleaded petrol
3 (1) After paragraph 2 of that Schedule insert—

“Mixing different kinds of unleaded petrol
2A (1) A mixture which is unleaded petrol is produced in contravention of this paragraph if the mixture is produced by mixing unleaded petrol of any two or more of the following descriptions—
(a) petrol on which duty has been paid at the rate specified in section 6(1A)(a),
(b) petrol in respect of which a rebate has been allowed under section 13A(1A)(b),
(c) petrol in respect of which a rebate has been allowed under section 13A(1A)(a),
where the mixture produced is petrol of a description subject to a higher effective rate of duty than one or more of the ingredients of the mixture.
(2) The comparison required by sub-paragraph (1) shall be made by reference to the effective rates of duty in force at the time the mixture is produced.
(3) This paragraph is subject to any direction given under paragraph 3.”

.
(2) In paragraph 3 of that Schedule, for “paragraph 1 above or (as the case may be) paragraph 2 above" substitute “ paragraph 1, 2 or 2A above ”.
(3) In paragraph 8 of that Schedule, after sub-paragraph (3) insert—

“(3A) In the case of a mixture produced in contravention of paragraph 2A above, the rate is—
(a) in the case of a mixture that is higher octane unleaded petrol, the rate produced by deducting from the rate in force under section 6(1A)(b) at the time the mixture is produced the rebate which at that time is in force under section 13A(1A)(a);
(b) in the case of a mixture that is neither higher octane unleaded petrol nor ultra low sulphur petrol, the rate produced by deducting from the rate in force under section 6(1A)(b) at the time the mixture is produced the rebate which at that time is in force under section 13A(1A)(b).”

.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 1 para. 3(4) repealed (retrospective to 6 p.m. on 7.3.2001) by 2001 c. 9, ss. 2(5), 110(1), Sch. 33 Pt I(1) Note

Interpretation
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 1 para. 4 repealed (retrospectiveto 6 p.m. on 7.3.2001) by 2001 c. 9, ss. 2(5), 110(1), Sch. 33 Pt I(1) Note

SCHEDULE 2 Amusement machine licence duty
Section 17.

Introduction
1 The Betting and Gaming Duties Act 1981 is amended as follows.
1981 c. 63.

Exceptions from requirement to be licensed
2 In section 21(3A) (types of amusement machine excepted from requirement to be licensed) in paragraph (b) (five-penny machine which is a small-prize machine) for “five-penny machine" substitute “ ten-penny machine ”.

Amusement machine licence duty
3 (1) In section 22(2) (definition of small-prize machines)—
(a) after “Act" insert “ (a) ”;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 2 para. 3(1)(b) omitted (retrospective to 1.6.2009) by virtue of Finance Act 2009 (c. 10), s. 22(11)(a)(12)
(c) at the end insert—

“(b) an amusement machine is a medium-prize machine if it is a prize machine and the value or aggregate value of the benefits in money or money’s worth, which any player who is successful in a single game played by means of the machine may receive, can exceed £8 but cannot exceed £15.”

.
(2) In section 22(3) (power of Commissioners to amend the sum mentioned in the definition of prize machines), for “the sum" substitute “ a sum ”.

Amount of duty
4 (1) In section 23(2) (amount of duty)—
(a) in paragraph (b) for “column 2, column 3 or column 4 of the Table" substitute “ Category A, Category B, Category C, Category D or Category E ”;
(b) for “the rate in column 2, the rate in column 3, or the rate in column 4" substitute “ the rate for the category of machine in question in column 2, 3, 4, 5 or 6 of the Table ”;
(c) for the Table substitute—

“TABLE
(1)	(2)	(3)	(4)	(5)	(6)
Period (in months) for which licence granted	Category A	Category B	Category C	Category D	Category E
	£	£	£	£	£
1	30	80	80	165	220
2	50	150	160	320	425
3	75	220	230	470	615
4	95	285	300	605	800
5	120	345	360	735	970
6	140	400	420	855	1,125
7	160	450	475	965	1,270
8	185	500	525	1,065	1,405
9	205	540	570	1,155	1,525
10	225	580	610	1,240	1,635
11	240	615	650	1,310	1,730
12	250	645	680	1,375	1,815”

(2) At the end of section 23 insert—

“(3) The machines comprised in each category referred to in this section are as follows—
Category A: any machine which is not a gaming machine;
Category B: any gaming machine which is a small-prize machine or five-penny machine;
Category C: any gaming machine which is a medium-prize machine, unless it is also a five-penny machine;
Category D: any gaming machine which is a ten-penny machine, unless it is also—
(a) a five-penny machine,
(b) a small-prize machine, or
(c) a medium-prize machine;
Category E: any machine which is not in any other category.”

.

Meaning of amusement machine
5 (1) In section 25 (meaning of amusement machine), in paragraph (b) of subsection (1B) (meaning of video machine) omit “, other than one consisting only in a blank surface onto which light is projected”.
(2) In that section, in subsection (7) (application of provisions to a machine that falls to be treated as more than one machine) omit the word “or" at the end of paragraph (c) and after that paragraph insert—

“(cc) medium-prize machines,
(cd) ten-penny machines, or”

.

Supplementary provisions
6 In section 26(2) (definitions), after the definition of “five-penny machine" insert—

““ten-penny machine" means an amusement machine which can only be played by the insertion into the machine of coins of a denomination, or aggregate denomination, not exceeding 10p;”

.

Paragraphs 2 to 6: commencement
7 (1) Paragraphs 2 to 4, 5(2) and 6 shall have effect in relation to any amusement machine licence for which an application is received by the Commissioners of Customs and Excise after 4th August 2000.
(2) Paragraph 5(1) shall have effect on and after the day on which this Act is passed.

Seasonal licences: duration
8 (1) Amend paragraph 4 of Schedule 4 as follows.
(2) In sub-paragraph (2) (which provides for a seasonal licence to remain in force during October of the year for which it is granted) for the words from “during October of that year" to the end substitute

“the provision of that number of relevant machines on the premises during the period in that year—
(a) beginning with 1st October; and
(b) ending with the Sunday before the first Monday in November.”

.
(3) In sub-paragraph (8) (meaning of “winter period”) for “November to February" substitute “ the period beginning with the first Monday in November and ending with the last day of February ”.
(4) Sub-paragraph (2) applies in relation to any licence expressed to be granted for a period beginning with 1st April in 2000 or any subsequent year.
(5) Sub-paragraph (3) has effect for determining what was comprised in the winter period beginning in 1999, and for determining what is comprised in any subsequent winter period.

Unlicensed amusement machines: duty chargeable
9 After section 24 insert—

“24A Unlicensed machines: duty chargeable.
Schedule 4A to this Act (which provides for the recovery of amusement machine licence duty in relation to unlawfully unlicensed machines) shall have effect.”

.
10 (1) After Schedule 4 insert—

“Schedule 4A Unlicensed amusement machines

Application
1 This Schedule applies where it appears to the Commissioners that an amusement machine is or was provided for play on premises in contravention of section 21(1) or 24(3) or (4) of this Act.

Default notice requesting production of licence
2 (1) The Commissioners may give a notice which complies with the requirements of sub-paragraphs (3) and (4) below.
(2) In this Schedule such a notice is referred to as a “default notice".
(3) The notice shall state that one or more amusement machines appear to have been provided for play on specified premises (“relevant premises”) during a specified period (the “alleged default period”)—
(a) the first day of which falls not more than three years before the date of the notice, and
(b) the last day of which falls on or before the date of the notice.
(4) The notice shall request the production to the Commissioners on or before a specified date (the “due date”) of every relevant amusement machine licence.
(5) For the purposes of sub-paragraph (4) above an amusement machine licence is a relevant licence if, at any time during the alleged default period, it was in force in relation to an amusement machine provided for play on the relevant premises at that time.
(6) A single default notice may relate to—
(a) different alleged default periods, or
(b) different relevant premises.
(7) A default notice shall be deemed to have been given if it is—
(a) left at, or posted to, the relevant premises, or
(b) given to, or posted to or left at the proper address of one or more persons falling within sub-paragraph (8) below.
(8) Those persons are—
(a) one or more of the persons who are or appear to be, or who at any time during the alleged default period were or appear to have been, responsible persons in relation to the relevant premises or an amusement machine provided for play on those premises, or
(b) any person who is the representative of such a person.

Failure to produce a licence: grant of default licence
3 (1) In any case where—
(a) the Commissioners give a default notice,
(b) the due date specified in the notice passes, and
(c) it appears to the Commissioners that at some time during the alleged default period specified in the notice one or more amusement machines were provided for play on the relevant premises so specified without an amusement machine licence being in force in relation to the machines,
the Commissioners may grant, in accordance with this paragraph, one or more licences in relation to each of the machines.
(2) In this Schedule—
“default licence” means a licence granted by the Commissioners under sub-paragraph (1) above;
“unlicensed machine” means a machine in relation to which a default licence is granted by the Commissioners.
(3) The Commissioners may grant a separate default licence for each period of consecutive days—
(a) which falls within the alleged default period, and
(b) for which no amusement machine licence in force in relation to the unlicensed machine was produced.
(4) The Commissioners may grant a default licence in relation to an unlicensed machine even though the period of that licence would include a day or days when the unlicensed machine was provided for play in contravention of section 21(1) or 24(3) or (4) of this Act on premises other than the relevant premises specified in the applicable default notice.
(5) In a case where the Commissioners grant a default licence in accordance with sub-paragraph (4) above, references in this Schedule to the relevant premises shall be construed in relation to any particular time as references to the premises on which the machine was provided for play at that time.
(6) The Commissioners may grant a default licence even though no application has been made for it.
(7) A default licence may be granted for a period of any length (whether or not a licence under Schedule 4 to this Act could be granted for a period of that length).

Assessment of amount equivalent to duty
4 (1) This paragraph applies where a default licence is granted in relation to an unlicensed machine.
(2) The Commissioners may, subject to the following provisions of this paragraph, assess to the best of their judgement the amount which would have been payable under this Act as amusement machine licence duty if the default licence had been an amusement machine licence granted under Schedule 4 to this Act.
(3) The Commissioners shall make the assessment using the rates of amusement machine licence duty which apply in relation to amusement machine licences granted in consequence of applications received by the Commissioners on the due date.
(4) If the period of the licence is 12 months or less, the assessment shall be made as if an amusement machine licence had been granted in relation to the unlicensed machine for that period.
(5) If the period of the licence is longer than 12 months, the assessment shall be made as if—
(a) a separate amusement machine licence had been granted in relation to the unlicensed machine for each complete period of 12 months falling wholly within the period of the licence, and
(b) a further amusement machine licence had been granted in relation to the unlicensed machine for any remaining part of the period of the licence.
(6) Sub-paragraphs (7) and (8) below shall apply in relation to an assessment to be made in any case where—
(a) the period of a licence mentioned in sub-paragraph (4) above, or
(b) the part of the period mentioned in sub-paragraph (5)(b) above,
is not a period of complete months.
(7) Any period of less than a month comprised in the period or the part of the period shall be treated as a complete month; and accordingly the period or the part of the period in question shall be treated as if it consisted of a complete month or, as the case may be, complete months.
(8) The amusement machine licence treated as granted for such a period, or for such a part of a period, shall be treated as having been—
(a) granted for that period, or that part of the period, as extended in accordance with sub-paragraph (7) above, and
(b) surrendered at the end of the last day of the period mentioned in sub-paragraph (4) above or, as the case may be, of the part of the period mentioned in sub-paragraph (5)(b) above.

Liability to pay
5 (1) Where an amount has been assessed under paragraph 4 above and notified to a responsible person or his representative, that amount—
(a) shall be deemed to be an amount of duty charged in accordance with section 22 of this Act on an amusement machine licence within the meaning of section 21 of this Act,
(b) shall be due from the responsible person, and
(c) may be recovered accordingly unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.
(2) The responsible persons to whom an assessment may be notified are any one or more of the persons who are or appear to be, or at any time during the period to which the assessment relates were or appear to have been, responsible persons in relation to the unlicensed machine or the relevant premises.
(3) An assessment shall be deemed to have been notified to a person if it is—
(a) given to him, or
(b) left at or posted to his proper address.
(4) But an assessment shall not be deemed to have been notified to a person unless and until—
(a) the default licence in relation to which the assessment has been made, or
(b) a copy of that licence,
has been given to him, or left at or posted to his proper address.
(5) Where an amount has been assessed and notified to more than one responsible person (or his representative), that amount shall be recoverable jointly and severally from any or all of the responsible persons.
(6) Arrangements made in accordance with paragraph 7A of Schedule 4 to this Act do not apply in relation to an amount assessed and notified in accordance with this paragraph.

Reviews and time limits on recovery
6 (1) Section 14 of the Finance Act 1994 (reviews of decisions) shall apply to so much of any decision by the Commissioners as is of any of the kinds mentioned in sub-paragraph (2) below, as it applies to the decisions mentioned in subsection (1) of that section.
1994 c. 9.
(2) Those decisions are—
(a) any decision that a default licence should be granted,
(b) any decision contained in an assessment under paragraph 4 above that a person is liable to pay an amount of duty, and
(c) any decision contained in an assessment under paragraph 4 above as to the amount of a person’s liability.
(3) Sub-paragraph (4) below applies where the Commissioners—
(a) have given a default notice, and
(b) in consequence of so doing have granted a default licence.
(4) An assessment made under paragraph 4 above in relation to the default licence may not be notified to a responsible person (or his representative) at any time after the end of the period of one year beginning with the due date specified in the default notice.
(5) The reference to three years in paragraph 2(3)(a) above shall have effect as if it were a reference to twenty years in any case where sub-paragraph (6) or (7) below applies.
(6) This sub-paragraph applies where an amusement machine has been provided for play in circumstances where a person—
(a) has, by virtue of conduct engaged in for the purpose of evading any amount of amusement machine licence duty, become liable to a penalty under section 8 of the Finance Act 1994, or
(b) has been convicted of an offence under section 24(6) of this Act.
(7) This sub-paragraph applies where an amusement machine has been provided for play in circumstances where proceedings for an offence under section 24(6) of this Act would have been commenced or continued against a person (whether or not the person assessed), but for their having been compounded under section 152(a) of the Customs and Excise Management Act 1979.
1979 c. 2.

General interpretation
7 (1) The following provisions of this paragraph apply for the purposes of this Schedule.
(2) A person is a responsible person in relation to an amusement machine at a particular time if, at that time, he is or was—
(a) the owner or hirer of the machine, or
(b) a party to any contract under which the machine may be, or may have been, or is or was required to be, on the relevant premises at that time.
(3) A person is a responsible person in relation to relevant premises at a particular time if, at that time, he is or was—
(a) the owner, lessee or occupier of the premises, or
(b) responsible to the owner, lessee or occupier for the management of the premises, or
(c) responsible for issuing or exchanging coins or tokens for use in playing any amusement machine on the premises, or otherwise for controlling the use of any such machine, or
(d) responsible for controlling the admission of persons to the premises or for providing persons resorting to the premises with any goods or services.
(4) A person’s representative is—
(a) his personal representative,
(b) his trustee in bankruptcy,
(c) any receiver or liquidator appointed in relation to him or any of his property, or
(d) any other person acting in a representative capacity in relation to him.
(5) The proper address of a person is—
(a) in the case of a body corporate, its registered office or principal office, and
(b) in any other case—
(i) his last known place of abode or business, or
(ii) any vessel or aircraft to which he may belong or have lately belonged.
(6) An item is only to be treated as posted to an address or place if it has been sent there by registered post or the recorded delivery service.

Saving for liability
8 The grant of a default licence in relation to an unlicensed machine shall be without prejudice to any liability arising under section 24 of this Act in relation to the machine.”

.
(2) This paragraph has effect in relation to amusement machines which appear to the Commissioners of Customs and Excise to have been provided for play on premises in contravention of section 21(1) or 24(3) or (4) of the Betting and Gaming Duties Act 1981 on or after the day falling three years before the day on which this Act is passed.
1981 c. 63.

SCHEDULE 3 Vehicle excise duty on new cars and vans
Section 22.

After Part I of Schedule 1 to the Vehicle Excise and Registration Act 1994, insert—

“Part IA Light passenger vehicles: graduated rates of duty

Vehicles to which this Part applies
1A (1) This Part of this Schedule applies to a vehicle which—
(a) is first registered on or after 1st March 2001, and
(b) is so registered on the basis of an EC certificate of conformity or UK approval certificate that—
(i) identifies the vehicle as having been approved as a light passenger vehicle, and
(ii) specifies a CO2 emissions figure in terms of grams per kilometre driven.
(2) In sub-paragraph (1)(b)(i) a “light passenger vehicle” means a vehicle within Category M1 of Annex II to Council Directive 70/156/EEC (vehicle with at least four wheels used for carriage of passengers and comprising no more than 8 seats in addition to the driver’s seat).
(3) For the purposes of this Part of this Schedule “the applicable CO2 emissions figure” is—
(a) where the EC certificate of conformity or UK approval certificate specifies only one CO2 emissions figure, that figure, and
(b) where it specifies more than one, the figure specified as the CO2 emissions (combined) figure.
(4) Where the car is registered on the basis of an EC certificate of conformity, or UK approval certificate, that specifies separate CO2 emissions figures in terms of grams per kilometre driven for different fuels, “the applicable CO2 emissions figure" is the lowest figure specified or, in a case within sub-paragraph (3)(b), the lowest CO2 emissions (combined) figure specified.
(5) If a vehicle is on first registration a vehicle to which this Part of this Schedule applies—
(a) its status as such a vehicle, and
(b) the applicable CO2 emissions figure,
are not affected by any subsequent modification of the vehicle.

Graduated rates of duty
1B The annual rate of vehicle excise duty applicable to a vehicle to which this Part of this Schedule applies shall be determined in accordance with the following table by reference to—
(a) the applicable CO2 emissions figure, and
(b) whether the vehicle qualifies for the reduced rate of duty, or is liable to the standard rate or the premium rate of duty.
CO2 emissions figure		Rate		
(1)	(2)	(3)	(4)	(5)
Exceeding	Not Exceeding	Reduced rate	Standard rate	Premium rate
g/km	g/km	£	£	£
	150	90	100	110
150	165	110	120	130
165	185	130	140	150
185		150	155	160

The reduced rate
1C (1) A vehicle qualifies for the reduced rate of duty if condition A, B or C below is met.
(2) Condition A is that the vehicle is constructed or modified—
(a) so as to be propelled by a prescribed type of fuel, or
(b) so as to be capable of being propelled by any of a number of prescribed types of fuel,
and complies with any other requirements prescribed for the purposes of this condition.
(3) Condition B is that the vehicle—
(a) incorporates before its first registration equipment enabling it to meet such vehicle emission standards as may be prescribed for the purposes of this condition, and
(b) has incorporated such equipment since its first registration.
(4) Condition C is that the vehicle is of a description certified by the Secretary of State, before the vehicle’s first registration, as meeting such vehicle emission standards as may be prescribed for the purposes of this condition.
(5) The Secretary of State may make provision by regulations—
(a) for the making of an application to the Secretary of State for the issue of a certificate under sub-paragraph (4);
(b) for the manner in which any determination of whether to issue such a certificate on such an application is to be made;
(c) for the examination of one or more vehicles of the description to which the application relates, for the purposes of the determination mentioned in paragraph (b), by such persons, and in such manner, as may be prescribed;
(d) for a fee to be paid for such an examination;
(e) for the form and content of such a certificate;
(f) for the revocation, cancellation or surrender of such a certificate;
(g) for the fact that such a certificate is, or is not, in force in respect of a description of vehicle to be treated as having conclusive effect for the purposes of this Act as to such matters as may be prescribed; and
(h) for appeals against any determination not to issue such a certificate.

The standard rate
1D A vehicle is liable to the standard rate of duty if it does not qualify for the reduced rate and is not liable to the premium rate.

The premium rate
1E (1) A vehicle is liable to the premium rate of duty if—
(a) it is constructed or modified so as to be propelled solely by diesel, and
(b) it is not of a prescribed description.
(2) In sub-paragraph (1)(a) “diesel” means any diesel fuel within the definition in Article 2 of Directive 98/70/EC of the European Parliament and of the Council.

Meaning of “prescribed"
1F In this Part of this Schedule “prescribed” means prescribed by regulations made by the Secretary of State with the consent of the Treasury.

Meaning of “EC certificate of conformity" and “UK approval certificate"
1G (1) References in this Part of this Schedule to an “EC certificate of conformity" are to a certificate of conformity issued by a manufacturer under any provision of the law of a Member State implementing Article 6 of Council Directive 70/156/EEC, as amended.
(2) References in this Part of this Schedule to a “UK approval certificate" are to a certificate issued under—
(a) section 58(1) or (4) of the Road Traffic Act 1988, or
1988 c. 52.
(b) Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981.
S.I. 1981/154 (N.I. 1).

Part IB Light goods vehicles

Vehicles to which this Part applies
1H (1) This Part of this Schedule applies to a vehicle which—
(a) is first registered on or after 1st March 2001, and
(b) is so registered on the basis of an EC certificate of conformity or UK approval certificate that identifies the vehicle as having been approved as a light goods vehicle.
(2) In sub-paragraph (1)(b) a “light goods vehicle” means a vehicle within Category N1 of Annex II to Council Directive 70/156/EEC (vehicle with four or more wheels used for carriage of goods and having a maximum mass not exceeding 3.5 tonnes).
(3) If a vehicle is on first registration a vehicle to which this Part of this Schedule applies its status as such a vehicle is not affected by a subsequent modification of the vehicle.
(4) In this paragraph “EC certificate of conformity” and “UK approval certificate” have the same meaning as in Part IA of this Schedule.

Annual rate of duty
1J The annual rate of vehicle excise duty applicable to a vehicle to which this Part of this Schedule applies is £160.”

.
1994 c. 22.

SCHEDULE 4 Vehicle excise duty: enforcement provisions for graduated rates
Section 23.

Introduction
1 (1) This Schedule applies to vehicles in respect of which different rates of vehicle excise duty are, under the provisions listed below, chargeable in respect of vehicles by reference to characteristics of the vehicle.
(2) The provisions referred to in sub-paragraph (1) are—
Part I of Schedule 1 to the Vehicle Excise and Registration Act 1994 (the general rate),
Part IA of that Schedule (graduated rates for light passenger vehicles first registered on or after 1st March 2001), or
Part II of that Schedule (motorcycles).
1994 c. 22.

Particulars to be furnished on application for licence
2 (1) The Secretary of State may make provision by regulations as to the particulars to be furnished on an application for a vehicle licence in respect of a vehicle to which this Schedule applies.
(2) The regulations may make different provision for different descriptions of vehicle and different descriptions of licence.
(3) The prescribed particulars may include—
(a) particulars other than those required for the purposes of vehicle excise duty, and
(b) particulars other than with respect to the vehicle in respect of which the licence is to be taken out.
(4) Every person making an application with respect to which regulations under this paragraph are in force shall—
(a) furnish such particulars as may be prescribed by the regulations, and
(b) make such a declaration as may be specified by the Secretary of State.
(5) A person applying for a licence need not make the declaration specified for the purposes of sub-paragraph (4)(b) if he agrees to comply with such conditions as may be specified in relation to him by the Secretary of State.
The conditions which may be specified include—
(a) a condition that the prescribed particulars are furnished by being transmitted to the Secretary of State by such electronic means as he may specify; and
(b) a condition requiring such payments as may be specified by the Secretary of State to be made to him in respect of—
(i) steps taken by him for facilitating compliance by any person with any condition falling within paragraph (a); and
(ii) in such circumstances as may be so specified, the processing of applications for vehicle licences where particulars are transmitted in accordance with that paragraph.
(6) In relation to applications with respect to which regulations under this paragraph are in force, the preceding provisions of this paragraph have effect in place of the provisions of subsections (1) to (3B) of section 7 of the Vehicle Excise and Registration Act 1994.
1994 c. 22.

Power to require evidence in support of application
3 The Secretary of State may make provision by regulations—
(a) requiring an application for a vehicle licence in respect of a vehicle to which this Schedule applies to be supported by such documentary or other evidence as may be specified in the regulations, and
(b) authorising him to refuse to issue the licence applied for if such evidence is not provided.

Powers exercisable where licence issued on basis of incorrect application
4 The powers conferred by paragraphs 5 to 11 below are exercisable in a case where—
(a) a vehicle licence is issued to a person on the basis of an application stating that the vehicle—
(i) is a vehicle to which this Schedule applies, or
(ii) is a vehicle to which this Schedule applies in respect of which a particular amount of vehicle excise duty falls to be paid, and
(b) the vehicle is not such a vehicle or, as the case may be, is one in respect of which duty falls to be paid at a higher rate.

Power to declare licence void
5 The Secretary of State may by notice sent by post to the person inform him that the licence is void as from the time when it was granted.
If he does so, the licence shall be void as from the time when it was granted.

Power to require payment of balance of duty
6 (1) The Secretary of State may by notice sent by post to the person require him to secure that the additional duty payable is paid within such reasonable period as is specified in the notice.
(2) If that requirement is not complied with, the Secretary of State may by notice sent by post to the person inform him that the licence is void as from the time when it was granted.
If he does so, the licence shall be void as from the time when it was granted.

Power to require delivery up of licence
7 The Secretary of State may in a notice under paragraph 5 or 6(2) require the person to whom it is sent to deliver up the licence within such reasonable period as is specified in the notice.

Power to require delivery up of licence and payment in respect of duty
8 (1) The Secretary of State may in a notice under paragraph 5 or 6(2) require the person to whom it is sent—
(a) to deliver up the licence within such reasonable period as is specified in the notice, and
(b) on doing so to pay an amount equal to the monthly duty shortfall for each month, or part of a month, in the relevant period.
(2) The “monthly duty shortfall” means one-twelfth of the difference between—
(a) the duty that would have been payable for a licence for a period of twelve months if the vehicle had been correctly described in the application, and
(b) that duty payable in respect of such a licence on the basis of the description in the application as made.
For this purpose the amount of the duty payable shall be ascertained by reference to the rates in force at the beginning of the relevant period.

Failure to deliver up licence
9 (1) A person who—
(a) is required by notice under paragraph 7 or 8(1)(a) above to deliver up a licence, and
(b) fails to comply with the requirement contained in the notice,
commits an offence.
(2) A person committing such an offence is liable on summary conviction to a penalty not exceeding whichever is the greater of—
(a) level 3 on the standard scale, and
(b) five times the annual duty shortfall.
(3) The “annual duty shortfall” means the difference between—
(a) the duty that would have been payable for a licence for a period of twelve months if the vehicle had been correctly described in the application, and
(b) that duty payable in respect of a licence for a period of twelve months in respect of the vehicle as described in the application.
For this purpose the amount of the duty payable shall be ascertained by reference to the rates in force at the beginning of the relevant period.

Failure to deliver up licence: additional liability
10 (1) Where a person has been convicted of an offence under paragraph 9, the court shall (in addition to any penalty which it may impose under that paragraph) order him to pay an amount equal to the monthly duty shortfall for each month, or part of a month, in the relevant period (or so much of the relevant period as falls before the making of the order).
(2) In sub-paragraph (1) the “monthly duty shortfall” has the meaning given by paragraph 8(2).
(3) Where—
(a) a person has been convicted of an offence under paragraph 9, and
(b) a requirement to pay an amount with respect to that licence has been imposed on that person by virtue of paragraph 8(1)(b),
the order to pay an amount under this paragraph has effect instead of that requirement and the amount to be paid under the order shall be reduced by any amount actually paid in pursuance of the requirement.

Meaning of the “relevant period"
11 References in this Schedule to the “relevant period" are to the period—
(a) beginning with the first day of the period for which the licence was applied for or, if later, the day on which the licence first was to have effect, and
(b) ending with whichever is the earliest of the following times—
(i) the end of the month during which the licence was required to be delivered up;
(ii) the end of the month during which the licence was actually delivered up;
(iii) the date on which the licence was due to expire;
(iv) the end of the month preceding that in which there first had effect a new vehicle licence for the vehicle in question.

Construction and effect
12 (1) This Schedule and the Vehicle and Excise Registration Act 1994 shall be construed and have effect as if this Schedule were contained in that Act.
1994 c. 22.
(2) References in any other enactment to that Act shall be construed and have effect accordingly as including references to this Schedule.

SCHEDULE 5 Rates of vehicle excise duty on goods vehicles
Section 24.
1 Part VIII of Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of vehicle excise duty: goods vehicles) is amended as follows.
2 For the Table in paragraph 9(1) (rigid goods vehicles not satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

“Revenue weight of vehicle		Rate		
(1)	(2)	(3)	(4)	(5)
Exceeding	Not Exceeding	Two axle vehicle	Three axle vehicle	Four or more axle vehicle
kgs	kgs	£	£	£
3,500	7,500	165	165	165
7,500	12,000	300	300	300
12,000	13,000	470	490	350
13,000	14,000	650	490	350
14,000	15,000	840	490	350
15,000	17,000	1,320	490	350
17,000	19,000	1,600	850	350
19,000	21,000	1,600	1,020	350
21,000	23,000	1,600	1,470	510
23,000	25,000	1,600	2,230	830
25,000	27,000	1,600	2,340	1,470
27,000	29,000	1,600	2,340	2,320
29,000	31,000	1,600	2,340	3,360
31,000	44,000	1,600	2,340	4,400”

3 For the Table in paragraph 9B (rigid goods vehicles satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

“Revenue weight of vehicle		Rate		
(1)	(2)	(3)	(4)	(5)
Exceeding	Not Exceeding	Two axle vehicle	Three axle vehicle	Four or more axle vehicle
kgs	kgs	£	£	£
3,500	7,500	160	160	160
7,500	12,000	160	160	160
12,000	13,000	160	160	160
13,000	14,000	160	160	160
14,000	15,000	160	160	160
15,000	17,000	320	160	160
17,000	19,000	600	160	160
19,000	21,000	600	160	160
21,000	23,000	600	470	160
23,000	25,000	600	1,230	160
25,000	27,000	600	1,340	470
27,000	29,000	600	1,340	1,320
29,000	31,000	600	1,340	2,360
31,000	44,000	600	1,340	3,400”

4 For the Table in paragraph 11(1) (tractive units not satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

“Revenue weight of tractive unit		Rate for tractive unit with two axles			Rate for tractive unit with three or more axles		
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Exceeding	Not exceeding	Any no. of semi-trailer axles	2 or more semi-trailer axles	3 or more semi-trailer axles	Any no. of semi-trailer axles	2 or more semi-trailer axles	3 or more semi-trailer axles
kgs	kgs	£	£	£	£	£	£
3,500	7,500	165	165	165	165	165	165
7,500	12,000	300	300	300	300	300	300
12,000	16,000	460	460	460	460	460	460
16,000	20,000	520	460	460	460	460	460
20,000	23,000	810	460	460	460	460	460
23,000	26,000	1,190	590	460	590	460	460
26,000	28,000	1,190	1,130	460	1,130	460	460
28,000	31,000	1,740	1,740	1,090	1,740	660	460
31,000	33,000	2,530	2,530	1,740	2,530	1,000	460
33,000	34,000	5,170	5,170	1,740	2,530	1,470	570
34,000	35,000	5,170	5,170	2,340	2,530	2,100	860
35,000	36,000	6,750	6,750	2,340	2,530	2,100	860
36,000	38,000	9,250	9,250	2,710	2,820	2,820	1,280
38,000	41,000	9,250	9,250	3,950	3,750	4,250	2,500
41,000	44,000	9,250	9,250	3,950	7,250	7,250	2,950”

5 For the Table in paragraph 11B (tractive units satisfying reduced pollution requirements and with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms) substitute—

“Revenue weight of tractive unit		Rate for tractive unit with two axles			Rate for tractive unit with three or more axles		
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Exceeding	Not exceeding	Any no. of semi-trailer axles	2 or more semi-trailer axles	3 or more semi-trailer axles	Any no. of semi-trailer axles	2 or more semi-trailer axles	3 or more semi-trailer axles
kgs	kgs	£	£	£	£	£	£
3,500	7,500	160	160	160	160	160	160
7,500	12,000	160	160	160	160	160	160
12,000	16,000	160	160	160	160	160	160
16,000	20,000	160	160	160	160	160	160
20,000	23,000	160	160	160	160	160	160
23,000	26,000	190	160	160	160	160	160
26,000	28,000	190	160	160	160	160	160
28,000	31,000	740	740	160	740	160	160
31,000	33,000	1,530	1,530	740	1,530	160	160
33,000	34,000	4,170	4,170	740	1,530	470	160
34,000	35,000	4,170	4,170	1,340	1,530	1,100	160
35,000	36,000	5,750	5,750	1,340	1,530	1,100	160
36,000	38,000	8,250	8,250	1,710	1,820	1,820	280
38,000	41,000	8,250	8,250	2,950	2,750	3,250	1,500
41,000	44,000	8,250	8,250	2,950	6,250	6,250	1,950”

6 (1) In the following provisions—
(a) in paragraph 11(1), after “Subject to sub-paragraphs (2) and (3)", and
(b) in paragraph 11A(2), after “Subject to sub-paragraph (3)",
insert “ and paragraph 11C ”.
(2) After paragraph 11B insert—

“11C (1) This paragraph applies to a tractive unit that—
(a) has a revenue weight exceeding 41,000 kilograms but not exceeding 44,000 kilograms,
(b) has 3 or more axles and is used exclusively for the conveyance of semi-trailers with 3 or more axles,
(c) is of a type that could lawfully be used on a public road immediately before 21st March 2000, and
(d) complies with the requirements in force immediately before that date for use on a public road.
(2) The annual rate of vehicle excise duty applicable to a vehicle to which this paragraph applies is—
(a) in the case of a vehicle with respect to which the reduced pollution requirements are not satisfied, £1,280;
(b) in the case of a vehicle with respect to which those requirements are satisfied, £280.”

.

SCHEDULE 6 Climate change levy
Section 30.

Part I The levy

Climate change levy
1 (1) A tax to be known as climate change levy (“the levy”) shall be charged in accordance with this Schedule.
(2) The levy is under the care and management of the Commissioners of Customs and Excise.

Levy charged on taxable supplies
2 (1) The levy is charged on taxable supplies.
(2) Any supply of a taxable commodity is a taxable supply, subject to the provisions of Part II of this Schedule.

Meaning of “taxable commodity"
3 (1) The following are taxable commodities for the purposes of this Schedule, subject to sub-paragraph (2) and to any regulations under sub-paragraph (3)—
(a) electricity;
(b) any gas in a gaseous state that is of a kind supplied by a gas utility;
(c) any petroleum gas, or other gaseous hydrocarbon, in a liquid state;
(d) coal and lignite;
(e) coke, and semi-coke, of coal or lignite;
(f) petroleum coke.
(2) The following are not taxable commodities—
(a) hydrocarbon oil or road fuel gas within the meaning of the Hydrocarbon Oil Duties Act 1979;
1979 c. 5.
(b) waste within the meaning of Part II of the Environmental Protection Act 1990 or the meaning given by Article 2(2) of the Waste and Contaminated Land (Northern Ireland) Order 1997.
1990 c. 5.
S.I. 1997/2778 (N.I. 19).
(3) The Treasury may by regulations provide that a commodity of a description specified in the regulations is, or is not, a taxable commodity for the purposes of this Schedule.

Part II Taxable supplies

Introduction
4 (1) A supply of a taxable commodity (or part of such a supply) is a taxable supply for the purposes of the levy if levy is chargeable on the supply under—
paragraph 5 (supplies of electricity),
paragraph 6 (supplies of gas), or
paragraph 7 (other supplies in course or furtherance of business),
and the supply (or part) is not excluded under paragraphs 8 to 10 or exempt under paragraphs 11 to 22.
(2) In this Schedule—
(a) references to a supply of a taxable commodity include a supply that is deemed to be made under paragraph 23, and
(b) references to a taxable supply include a supply that is deemed to be made under paragraph 24 , 24A, 24B, 24C, 42Dor 43B,
Words in Sch. 6 para. 4(2)(b) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 3, 21
Words in Sch. 6 para. 4(2)(b) inserted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 2, 13(1); S.I. 2007/2902, art. 2(1)
Word in Sch. 6 para. 4(2)(b) substituted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 3
but paragraphs 23 and 24 have effect subject to any exceptions provided for under paragraph 21.

Supplies of electricity
5 (1) Levy is chargeable on a supply of electricity if—
(a) the supply is made by an electricity utility, and
(b) the person to whom the supply is made—
(i) is not an electricity utility, or
(ii) is the utility itself.
(2) Levy is chargeable on a supply made from a combined heat and power station of electricity produced in the station if—
(a) the station is a partly exempt combined heat and power station,
(b) the supply is not one that is deemed to be made under paragraph 23(3) (self-supply by producer), and
(c) the person to whom the supply is made is not an electricity utility.
(2A) Levy is chargeable on a supply of electricity if—
(a) the supply is made by an exempt unlicensed electricity supplier who is an auto-generator or who is of a description prescribed by regulations made by the Treasury,
(b) the electricity was produced in a generating station owned by the supplier using commodities which were the subject of a deemed supply under paragraph 24A or which would have been the subject of such a supply had the reference in paragraph 24A(1)(a) to Great Britain been a reference to the United Kingdom instead,
(c) the supply is not a deemed supply under paragraph 23(3), and
(d) the person to whom the supply is made is not an electricity utility.
Sch. 6 para. 5(2A) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 4, 21
(3) Levy is chargeable on a supply of electricity that is deemed to be made under paragraph 20(6)(a), 20B(6)(a), 23(3) , 24 or 43B.
Words in Sch. 6 para. 5(3) substituted (10.7.2003) (with effect in accordance with s. 191(4) of the amending Act) by Finance Act 2003 (c. 14), s. 191(2)
Words in Sch. 6 para. 5(3) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 3, 13(1); S.I. 2007/2902, art. 2(1)
Word in Sch. 6 para. 5(3) substituted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 4
(4) Except as provided by sub-paragraphs (1) to (3), levy is not chargeable on a supply of electricity.

Supplies of gas
6 (1) Levy is chargeable on a supply of any gas if—
(a) the supply is made by a gas utility, and
(b) the person to whom the supply is made—
(i) is not a gas utility, or
(ii) is the utility itself.
(2) Levy is chargeable on a supply of gas that is deemed to be made under paragraph 23(3) (self-supply by producer) if the gas—
(a) is held in a gaseous state immediately prior to being released for burning, and
(b) is of a kind supplied by a gas utility.
(2A) Levy is chargeable on a supply of gas that is deemed to be made under paragraph 24 , 24A, 24B, 24C, 42Dor 43B.
Sch. 6 para. 6(2A) inserted (10.7.2003) (with effect in accordance with s. 191(4) of the amending Act) by Finance Act 2003 (c. 14), s. 191(3)(a)
Words in Sch. 6 para. 6(2A) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 5, 21
Words in Sch. 6 para. 6(2A) inserted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 4, 13(1); S.I. 2007/2902, art. 2(1)
Word in Sch. 6 para. 6(2A) substituted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 5
(3) Except as provided by sub-paragraph (1), (2) or (2A), levy is not chargeable on a supply of any gas that is supplied in a gaseous state.
Words in Sch. 6 para. 6(3) substituted (10.7.2003) (with effect in accordance with s. 191(4) of the amending Act) by Finance Act 2003 (c. 14), s. 191(3)(b)

Other supplies made in course or furtherance of business
7 (1) This paragraph applies to a supply of a taxable commodity other than—
(a) electricity, or
(b) gas in a gaseous state.
(2) Levy is chargeable on any such supply if the supply is made in the course or furtherance of a business.

Excluded supplies: supply for domestic or charity use
8 (1) A supply is excluded from the levy if it is—
(a) for domestic use (see paragraph 9), or
(b) for charity use.
(2) For the purposes of this paragraph, a supply is for charity use if the commodity supplied is for use by a charity otherwise than in the course or furtherance of a business.
(3) If a supply is partly for domestic or charity use and partly not, the part of the supply that is for domestic or charity use is excluded from the levy.
(4) Where a supply of a commodity is partly for domestic or charity use and partly not—
(a) if at least 60 per cent. of the commodity is supplied for domestic or charity use, the whole supply is treated as a supply for domestic or charity use, and
(b) in any other case, an apportionment shall be made to determine the extent to which the supply is for domestic or charity use.

Excluded supplies: meaning of “for domestic use"
9 (1) For the purposes of paragraph 8 the following supplies are always for domestic use—
(a) a supply of not more than one tonne of coal or coke held out for sale as domestic fuel;
(b) a supply to a person at any premises of—
(i) any gas in a gaseous state that is provided through pipes and is of a kind supplied by a gas utility, or
(ii) petroleum gas in a gaseous state provided through pipes,
where the gas or petroleum gas (together with any other gas or petroleum gas provided through pipes to him at the premises by the same supplier) was not provided at a rate exceeding 4397 kilowatt hours a month;
(c) a supply of petroleum gas in a liquid state where the petroleum gas is supplied in cylinders the net weight of each of which is less than 50 kilogrammes and either the number of cylinders supplied is 20 or fewer or the petroleum gas is not intended for sale by the recipient;
(d) a supply of petroleum gas in a liquid state, otherwise than in cylinders, to a person at any premises at which he is not able to store more than two tonnes of such petroleum gas;
(e) a metered supply of electricity to a person at any premises where the electricity (together with any other electricity provided to him at the premises by the same supplier) was not provided at a rate exceeding 1000 kilowatt hours a month;
(f) an unmetered supply of electricity to a person where the electricity (together with any other unmetered electricity provided to him by the same supplier) was not provided at a rate exceeding 1000 kilowatt hours a month.
(2) For the purposes of paragraph 8, supplies not within sub-paragraph (1) are for domestic use if and only if the commodity supplied is for use in—
(a) a building, or part of a building, which consists of a dwelling or number of dwellings,
(b) a building, or part of a building, used for a relevant residential purpose,
(c) self-catering holiday accommodation (including any accommodation advertised or held out as such),
(d) a caravan,
(e) a houseboat (that is to say, a boat or other floating decked structure designed or adapted for use solely as a place of permanent habitation and not having means of, or capable of being readily adapted for, self-propulsion), or
(f) an appliance that—
(i) is not part of a combined heat and power station,
(ii) is located otherwise than in premises of a description mentioned in any of paragraphs (a) to (e), and
(iii) is used to heat air or water that, when heated, is supplied to premises of, or each of, such a description.
(3) For the purposes of this paragraph use for a relevant residential purpose means use as—
(a) a home or other institution providing residential accommodation for children,
(b) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder,
(c) a hospice,
(d) residential accommodation for students or school pupils,
(e) residential accommodation for members of any of the armed forces,
(f) a monastery, nunnery or similar establishment, or
(g) an institution which is the sole or main residence of at least 90 per cent. of its residents,
except use as a hospital, a prison or similar institution or an hotel or inn or similar establishment.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 9(4) repealed (1.11.2001) by 2001 c. 9, s. 110, Sch. 33 Pt. 3(1)
(5) The power to make provision under section 29A(3) of the Value Added Tax Act 1994 varying Schedule 7A to that Act (charge at reduced rate) includes power to make provision for any appropriate corresponding variation of this paragraph.
Sch. 6 para. 9(5) inserted (1.11.2001) by 2001 c. 9, s. 99, Sch. 31 Pt. 2 para. 7

Excluded supplies: supply before 1st April 2001
10 Any supply made before 1st April 2001 is excluded from the levy.

Exemption: supply not for burning in the UK
11 (1) A supply of a taxable commodity to which this sub-paragraph applies is exempt from the levy if the person to whom the supply is made ...—
(a) ... intends to use the commodity in making supplies of it to any other person, or
Words in Sch. 6 para. 11(1) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 11(2)(b), Sch. 27 Pt. 1(2)
(b) ... intends to cause the commodity to be exported from the United Kingdom and has no intention to cause it to be thereafter brought back into the United Kingdom.
Words in Sch. 6 para. 11(1) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 11(2)(a), Sch. 27 Pt. 1(2)
(2) Sub-paragraph (1) applies to supplies of a taxable commodity other than—
(a) electricity, or
(b) any gas in a gaseous state.
(3) A supply of electricity, or of gas in a gaseous state, is exempt from the levy if the person to whom the supply is made ...—
(a) ... intends to cause the commodity to be exported from the United Kingdom, and
Word in Sch. 6 para. 11(3) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 11(3)(b), Sch. 27 Pt. 1(2)
(b) has no intention to cause it to be thereafter brought back into the United Kingdom.
Words in Sch. 6 para. 11(3) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 11(3)(a), Sch. 27 Pt. 1(2)
(4) Regulations under paragraph 22 may, in particular, include provision as to the application of sub-paragraph (3) in cases where a person who is both an exporter and an importer of a commodity intends to be a net exporter of the commodity.

Exemption: Northern Ireland gas supplies
11A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 11A omitted (with effect in accordance with s. 79(5) of the amending Act) by virtue of Finance Act 2011 (c. 11), s. 79(1)
Sch. 6 para. 11A and cross-heading inserted (11.5.2001 with effect as mentioned in S. 105(7)) by 2001 c. 9, s. 105(2)(7)

Exemption: supply used in transport
12 (1) A supply of a taxable commodity is exempt from levy if the commodity is to be burned (or, in the case of electricity, consumed)—
(a) in order to propel a train,
(b) in order to propel a non-railway vehicle while it is being used for, or for purposes connected with, transporting passengers,
(c) in a railway vehicle, or a non-railway vehicle, while it is being used for, or for purposes connected with, transporting passengers,
(d) in a railway vehicle while it is being used for, or for purposes connected with, transporting goods, or
(e) in a ship while it is engaged on a journey any part of which is beyond the seaward limit of the territorial sea.
Paragraphs (a) to (c) are subject to the exception in sub-paragraph (3).
(2) In this paragraph—
“railway vehicle” and “train” have the meaning given by section 83 of the Railways Act 1993;
“non-railway vehicle” means—
(a) any vehicle other than a railway vehicle, or
(b) any ship,
that is designed or adapted to carry not less than 12 passengers.
1993 c. 43.
(3) Sub-paragraph (1)(a) to (c) does not apply in relation to the transporting of passengers to, from or within—
(a) a place of entertainment, recreation or amusement, or
(b) a place of cultural, scientific, historical or similar interest,
that is a place to which rights of admission, or where rights to use facilities at it, are supplied by the person to whom the commodity is supplied or by a person connected with him within the meaning of section 1122 of the Corporation Tax Act 2010.
Words in Sch. 6 para. 12(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 314(2) (with Sch. 2)
Sch. 6 para. 12 excluded (1.4.2011) by The Climate Change Levy (Suspension of Transport Exemption) Order 2011 (S.I. 2011/1025), arts. 1, 2

Exemption: mineralogical and metallurgical processes
12A (1) A supply of a taxable commodity to a person is exempt from the levy if the commodity is to be used by the person in a mineralogical or metallurgical process.
(2) “Mineralogical process” has the same meaning as in Article 2(4)(b) of Council Directive 2003/96/EC of 27 October 2003 (which relates to the taxation of energy products and electricity).
(3) “Metallurgical process” means a process of any of the following descriptions.
(4) The descriptions are—
(a) a process falling within Division 24 of NACE Rev 2, excluding Class 24.46;
(b) a process falling within Group 25.5 of NACE Rev 2;
(c) a process falling within Class 25.61 of NACE Rev 2 which is—
(i) plating, anodising etc of metals;
(ii) heat treatment of metals;
(iii) deburring, sandblasting, tumbling and cleaning of metals where carried out in conjunction with a process mentioned in paragraph (a) or (b).
In this sub-paragraph “NACE Rev 2” is as set out in Annex I to Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 (relating to the statistical classification of economic activities).
(5) The Treasury may by regulations amend this paragraph so as to amend the definition of “mineralogical process”.
Sch. 6 para. 12A(5)(6) inserted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 20 para. 12
(6) The Treasury may by regulations amend sub-paragraph (4) so as to add, remove or modify a description.
Sch. 6 para. 12A and cross-heading inserted (with effect in accordance with Sch. 20 para. 10(2)(3) of the amending Act) by Finance Act 2014 (c. 26), Sch. 20 paras. 2, 10(1)

Exemption: supplies to producers of commodities other than electricity
13 A supply of a taxable commodity to a person is exempt from the levy if—
(a) the supply is not a supply of electricity that is deemed to be made under paragraph 23(3), and
(b) the commodity is to be used by that person—
(i) in producing taxable commodities other than electricity,
(ii) in producing hydrocarbon oil or road fuel gas,
(iia) in producing biodiesel for chargeable use within the meaning of section 6AA of the Hydrocarbon Oil Duties Act 1979 (excise duty on biodiesel),
Sch. 6 paras. 13(b)(iia)-(iid) inserted (22.7.2004) (with effect in accordance with s. 289(6) of the amending Act) by Finance Act 2004 (c. 12), s. 289(2)
(iib) in producing bioblend for delivery for home use from any place mentioned in section 6AB(1)(b) of that Act (excise duty on bioblend),
(iic) in producing bioethanol for chargeable use within the meaning of section 6AD of that Act (excise duty on bioethanol),
(iid) in producing bioethanol blend for delivery for home use from any place mentioned in section 6AE(1)(b) of that Act (excise duty on bioethanol blend),
(iii) in producing, for chargeable use within the meaning of section 6A of the Hydrocarbon Oil Duties Act 1979 (fuel substitutes), liquids (within the meaning of that section) in respect of which a charge is capable of arising under that section, or
1979 c. 5.
Words in Sch. 6 para. 13(b)(iii) substituted (22.7.2004) (with effect in accordance with s. 289(6) of the amending Act) by Finance Act 2004 (c. 12), s. 289(3)
(iv) in producing uranium for use in an electricity generating station.
Expressions which are used in this paragraph and the Hydrocarbon Oil Duties Act 1979 have the same meaning in this paragraph as they have in that Act.
Words in Sch. 6 para. 13 substituted (22.7.2004) (with effect in accordance with s. 289(6) of the amending Act) by Finance Act 2004 (c. 12), s. 289(4)
13A (1) The Commissioners may by regulations make provision amending paragraph 13 for the purpose of—
(a) extending the circumstances in which a supply of a taxable commodity is exempt from the levy, or
(b) restricting the circumstances in which a supply of a taxable commodity is exempt from the levy.
(2) Regulations under this paragraph that include provision made for the purpose mentioned in sub-paragraph (1)(a) may provide for the provision to have retrospective effect.
(3) A statutory instrument that contains (whether alone or with other provisions) regulations under this paragraph made for the purpose mentioned in sub-paragraph (1)(b) shall not be made unless a draft of the instrument has been laid before ... and approved by a resolution of the House of Commons.
Word in Sch. 6 para. 13A(3) omitted (17.7.2014) by virtue of Finance Act 2014 (c. 26), Sch. 20 para. 13
Sch. 6 para. 13A inserted (22.7.2004) (with effect in accordance with s. 289(6) of the amending Act) by Finance Act 2004 (c. 12), s. 289(5)

Exemption: supplies (other than self-supplies) to electricity producers
14 (1) A supply of a taxable commodity to a person is exempt from the levy if—(a) the commodity is to be used by that person in producing electricity in a generating station that is neither—
(i) a fully exempt combined heat and power station, nor
(ii) a partly exempt combined heat and power station,
and
(b) the supply is not a supply of electricity that is deemed to be made under paragraph 23(3).
(2) Sub-paragraph (1) does not exempt a supply where the person to whom the supply is made—
(a) is an exempt unlicensed electricity supplier of a description prescribed by regulations made by the Treasury, ...
Word in Sch. 6 para. 14(2)(a) repealed (11.5.2001) by 2001 c. 9, s. 110, Sch. 33 Pt. 3(3)
(b) uses the commodity supplied in producing electricity in a small generating station, and
Words in Sch. 6 para. 14(2)(b) inserted (retrospective and with effect in accordance with Sch. 42 para. 22(1)(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 42 paras. 6(2), 21
Sch. 6 para 14(2)(c) and preceding word inserted (11.5.2001 with effect as mentioned in s. 105(7) of the amending Act) by 2001 c. 9, s. 105(3)(7)
(c) uses the electricity produced otherwise than in exemption-retaining ways.
(3) Sub-paragraph (1) does not exempt a supply where the person to whom the supply is made—
(a) is an auto-generator,
(b) uses the commodity supplied in producing electricity in a small generating station, and
Words in Sch. 6 para. 14(3)(b) inserted (retrospective and with effect in accordance with Sch. 42 para. 22(1)(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 42 paras. 6(2), 21
(c) uses the electricity produced otherwise than in exemption-retaining ways.
Sch. 6 para. 14(3)(c) substituted (11.5.2001 with effect as mentioned in s. 105(7) of the amending Act) by 2001 c. 9, s. 105(4)(7)
(3ZA) Sub-paragraph (1) does not exempt a supply where the person to whom the supply is made—
(a) uses the commodity supplied in producing electricity in a stand-by generator, and
(b) uses the electricity produced otherwise than in exemption-retaining ways.
Sch. 6 para. 14(3ZA) inserted (retrospective and with effect in accordance with Sch. 42 para. 22(1)(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 42 paras. 6(3), 21
(3A) For the purposes of this paragraph, electricity is used in an “exemption-retaining” way if it is used—
(a) in making supplies that are excluded under paragraphs 8 to 10 or exempt under any of paragraphs 11, 12 and 18, or
Words in Sch. 6 para. 14(3A)(a) substituted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 6
(b) in any of the ways mentioned in sub-paragraphs (i) to (iv) of paragraph 13(b).
Sch. 6 para. 14(3A) inserted (11.5.2001) with effect as mentioned in s. 105(7) of the amending Act) by 2001 c. 9, s. 105(5)(7)
(3B) Paragraph 24A makes provision under which carbon price support rate commodities intended to be used in a generating station may be the subject of a deemed taxable supply (and, accordingly, this paragraph needs to be read subject to that paragraph).
Sch. 6 para. 14(3B) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 6(4), 21
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 14(4)(5) omitted (retrospective to 26.3.2013 ) by virtue of Finance Act 2013 (c. 29), Sch. 42 paras. 6(5), 21
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exemption: supplies (other than self-supplies) to combined heat and power stations
15 (1) A supply of a taxable commodity to a person is exempt from the levy if—
(a) that person intends to cause the commodity to be used in—
(i) a fully exempt combined heat and power station, or
(ii) a partly exempt combined heat and power station,
in producing any outputs of the station, and
Words in Sch. 6 para. 15(1)(a) substituted (11.5.2001 with effect as mentioned in s. 105(7) of the amending Act) by 2001 c. 9, s. 105(6)
(b) the supply is not a supply of electricity that is deemed to be made under paragraph 23(3).
For this purpose “outputs” has the meaning given by paragraph 148(9).
(2) Where—
(a) a supply of a taxable commodity to a person would (apart from this sub-paragraph) be exempted in full by sub-paragraph (1), and
(b) at the time the supply is made, the efficiency percentage for the combined heat and power station in which the commodity is to be used ... is less than the threshold efficiency percentage for the station,
Words in Sch. 6 para. 15(2)(b) repealed (11.5.2001 with effect as mentioned in s. 105(7) of the amending Act) by 2001 c. 9, ss. 105(7), 110, Sch. 33 Pt. 3(3) Note
sub-paragraph (1) only exempts the relevant fraction of the supply.
(3) For the purposes of sub-paragraph (2), the “relevant fraction” of a supply of a taxable commodity that is to be used in a combined heat and power station is the fraction—
(a) whose numerator is the efficiency percentage for the station at the time the supply is made, and
(b) whose denominator is the threshold efficiency percentage for the station at that time.
(4) For the purposes of this paragraph—
(a) the “threshold efficiency percentage" for a combined heat and power station is the percentage set as the threshold efficiency percentage for the station by regulations made by the Treasury;
(b) the “efficiency percentage” for a combined heat and power station shall be determined in accordance with regulations under paragraph 149.
Sch. 6 para. 15(4)(b) substituted (22.7.2005) (with effect in accordance with s. 189(5) of the amending Act) by Finance Act 2003 (c. 14), s. 189(2)(a); S.I. 2005/1713
(4A) Paragraph 24B makes provision under which carbon price support rate commodities intended to be used in a combined heat and power station may be the subject of a deemed taxable supply (and, accordingly, this paragraph needs to be read subject to that paragraph).
Sch. 6 para. 15(4A) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 7, 21
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 15(5) repealed (22.7.2005) (with effect in accordance with s. 189(5) of the amending Act) by Finance Act 2003 (c. 14), s. 189(2)(b), Sch. 43 Pt. 4(2); S.I. 2005/1713

Exemption: supplies (other than self-supplies) of electricity from partly exempt combined heat and power stations
16 (1) This paragraph applies to a supply that—
(a) is a supply made from a partly exempt combined heat and power station of electricity produced in the station, and
(b) is not a supply that is deemed to be made under paragraph 23(3).
(2) The supply is exempt from the levy if the quantity of electricity supplied by the supply is not such as causes the exceeding of any specified limit that, by virtue of regulations made by the Treasury, applies in relation to the station for any specified period.
(3) In this paragraph “specified” means prescribed by, or determined in accordance with, regulations made by the Treasury.

Exemption: self-supplies by electricity producers
17 (1) This paragraph applies to a supply of electricity that is deemed to be made under paragraph 23(3) by a person (“the producer”) to himself.
(1A) The supply is exempt from levy if it is a supply of electricity produced in—
(a) a fully exempt combined heat and power station,
(b) a partly exempt combined heat and power station,
(c) a stand-by generator, or
(d) a small generating station.
Sch. 6 para. 17(1A)(1B) inserted (retrospective and with effect in accordance with Sch. 42 para. 22(3) of the amending Act) by Finance Act 2013 (c. 29), Sch. 42 paras. 8(2), 21
(1B) Sub-paragraph (1A)(d) applies only if the producer is—
(a) an auto-generator, or
(b) an exempt unlicensed electricity supplier of a description prescribed by regulations made by the Treasury.
(2) This paragraph does not exempt the supply if—
(a) it is a supply from a partly-exempt combined heat and power station of electricity produced in the station, and
(b) the quantity of electricity supplied by the supply is such as causes the exceeding of any such limit as is mentioned in paragraph 16(2) that applies in relation to the station.
Words in Sch. 6 para. 17(2) substituted (retrospective and with effect in accordance with Sch. 42 para. 22(3) of the amending Act) by Finance Act 2013 (c. 29), Sch. 42 paras. 8(3), 21
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 17(3)(4) omitted (retrospective and with effect in accordance with Sch. 42 para. 22(3) of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 42 paras. 8(4), 21
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exemption: supply not used as fuel
18 (1) A supply of a taxable commodity is exempt from the levy if the person to whom the supply is made intends to cause the commodity to be used otherwise than as fuel.
(2) The Treasury may by regulations specify, in relation to any commodity, uses of that commodity that, for the purposes of sub-paragraph (1), are to be taken as being, or as not being, uses of that commodity as fuel.
(3) The uses of a commodity that may be specified under sub-paragraph (2) as being uses of that commodity as, or otherwise than as, fuel include uses (“mixed uses”) of the commodity that involve it being used partly as fuel and partly not; but the Treasury must have regard to the object of securing that a mixed use is not specified as being a use of the commodity otherwise than as fuel if it involves the use of the commodity otherwise than as fuel in a way that is merely incidental to its use as fuel.

Exemption: supply for use in recycling processes
18A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 18A omitted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 30 para. 7
Sch. 6 para. 18A and cross-heading inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 188(1)

Exemption: electricity from renewable sources
19 (1) A supply of electricity is exempt from the levy if—
(a) the supply is not one that is deemed to be made under paragraph 23(3),
(b) the supply is made under a contract that contains a renewable source declaration given by the supplier,
(c) prescribed conditions are fulfilled, ...
Word in Sch. 6 para. 19(1)(c) omitted (15.9.2016) by virtue of Finance Act 2016 (c. 24), s. 144(1)(a)
(d) the supplier, and each other person (if any) who is a generator of any renewable source electricity allocated by the supplier to supplies under the contract, has in a written notice given to the Commissioners agreed that he will fulfil those conditions so far as they may apply to him , and
Sch. 6 para. 19(1)(e) and word inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 144(1)(b)
(e) the electricity is actually supplied before 1 April 2018.
(2) In this paragraph “renewable source declaration” means a declaration that, in each averaging period, the amount of electricity supplied by exempt renewable supplies made by the supplier in the period will not exceed the difference between—
(a) the total amount of renewable source electricity that during that period is either acquired or generated by the supplier, and
(b) so much of that total amount as is allocated by the supplier otherwise than to exempt renewable supplies made by him in the period.
In this sub-paragraph “averaging period” has the same meaning as in paragraph 20 and “exempt renewable supplies” means supplies made on the basis that they are exempt under this paragraph.
(3) For the purposes of this paragraph and paragraph 20, electricity is “renewable source electricity” if—
(za) it is generated before 1 August 2015,
Sch. 6 para. 19(3)(za) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), s. 49
(a) it is generated in a prescribed manner, and
(b) prescribed conditions are fulfilled.
A manner of generating electricity may be prescribed by reference to the means by which the electricity is generated or the materials from which it is generated (or both).
(4) In prescribing a manner of generating electricity under sub-paragraph (3), the Commissioners must have regard to the object of securing that exemption under this paragraph is only available for supplies of electricity that has a renewable source.
(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 19(4A) omitted (with effect in accordance with s. 149(3) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 149(1)
(5) The conditions that may be prescribed under sub-paragraph (1)(c) include, in particular, conditions in connection with—
(a) the giving of effect to renewable source declarations;
(b) the supply of information;
(c) the inspection of records and, for that purpose, the production of records in legible form and entry into premises;
(d) monitoring by the Gas and Electricity Markets Authority, or the Director General of Electricity Supply for Northern Ireland, of the application of provisions of, or made under, this paragraph;
(e) the doing of things to or by a person authorised by the Authority or the Director General (as well as to or by the Authority or the Director General);
(f) things being done at times or in ways specified by the Authority, the Director General or such an authorised person.
(6) A condition prescribed under sub-paragraph (1)(c) may be one that is required to be fulfilled throughout a period, including a period ending after the time when a supply whose exemption turns on the fulfilment of the condition is treated as being made.
(7) The conditions that may be prescribed under sub-paragraph (3)(b) include, in particular, conditions in connection with—
(a) the generation of the electricity;
(b) the materials from which the electricity is generated;
(c) any of the matters mentioned in paragraphs (b) to (f) of sub-paragraph (5).
(8) Each of—
(a) the Gas and Electricity Markets Authority, and
(b) the Director General of Electricity Supply for Northern Ireland,
shall supply the Commissioners with such information (whether or not obtained under this paragraph), and otherwise give the Commissioners such co-operation, as the Commissioners may require in connection with the application (whether generally or in relation to any particular case) of any relevant provisions.
(9) In sub-paragraph (8) “relevant provisions” means provisions of or made under—
(a) this paragraph or paragraph 20, or
(b) paragraph 23(3) so far as relating to electricity, or paragraph 23(4).
(10) None of—
(a) section 57(1) of the Electricity Act 1989,
1989 c. 29.
(b) section 42(1) of the Gas Act 1986, and
1986 c. 44.
(c) Article 61(1) of the Electricity (Northern Ireland) Order 1992,
S.I. 1992/231 (N.I. 1).
(provisions restricting disclosure of information) applies to any disclosure of information made in pursuance of sub-paragraph (8).

Exemption under paragraph 19: averaging periods
20 (1) This paragraph applies where a person (“the supplier”) makes supplies of electricity on the basis that they are exempt under paragraph 19 (“exempt renewable supplies”).
(2) The rules about balancing and averaging periods are—
(a) a balancing period is a period of 3 months;
(b) when a balancing period ends, a new one begins;
(c) the first balancing period and the first averaging period begin at the same time;
(d) unless the supplier specifies an earlier time, that time is the time when he is treated as making the first of the exempt renewable supplies;
(e) when an averaging period ends, a new one begins;
(f) an averaging period ends once it has run for 2 years (but may end sooner under paragraph (g) or sub-paragraph (4)(a) or (5)(a));
(g) if the supplier stops making exempt renewable supplies, the end of the balancing period in which he makes the last exempt renewable supply is also the end of the averaging period in which that balancing period falls.
(3) At the end of each balancing period calculate—
(a) the total of—
(i) the quantity of renewable source electricity that the supplier acquired or generated in that period, and
(ii) any balancing credit carried forward to that balancing period; and
(b) the total of—
(i) the quantity of electricity supplied by exempt renewable supplies made by him in that period, and
(ii) any balancing debit carried forward to that balancing period.
(4) If the total mentioned in sub-paragraph (3)(a) exceeds that mentioned in sub-paragraph (3)(b)—
(a) the averaging period within which the balancing period fell ends at the end of the balancing period, and
(b) a balancing credit equal to the difference between the two totals is carried forward to the next balancing period.
(5) If the totals mentioned in paragraphs (a) and (b) of sub-paragraph (3) are the same—
(a) the averaging period within which the balancing period fell ends at the end of the balancing period, and
(b) no balancing credit or debit is carried forward to the next balancing period.
(6) If the total mentioned in sub-paragraph (3)(b) exceeds that mentioned in sub-paragraph (3)(a), then—
(a) in a case where, at the time when the balancing period ends, an averaging period also ends because of sub-paragraph (2)(f) or (g), the supplier is for the purposes of this Schedule deemed to make at that time a taxable supply of a quantity of electricity equal to the excess;
(b) in any other case, a balancing debit equal to the excess is carried forward to the next balancing period.
Sch. 6 para. 20(6) substituted (10.7.2003) for Sch. 6 paras. 20(6)-(8) (with effect in accordance with s.193(4) of the amending Act) by Finance Act 2003 (c. 14), s. 193(2)

Exemption: electricity produced in combined heat and power stations
20A (1) A supply of electricity is exempt from the levy chargeable under paragraph 5(1) if—
(a) the supply is not one that is deemed to be made under paragraph 23(3),
(b) the supply is made under a contract that contains a CHP declaration given by the supplier,
(c) prescribed conditions are fulfilled, ...
Word in Sch. 6 para. 20A(1) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 32 para. 21(2)(a)
(d) the supplier, and each other person (if any) who is a generator of any CHP electricity allocated by the supplier to supplies under the contract, has in a written notice given to the Commissioners agreed that he will fulfil those conditions so far as they may apply to him ; and
Sch. 6 para. 20A(1)(e) and word inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 32 para. 21(2)(b)
(e) the electricity is actually supplied before 1 April 2018.
(2) Sub-paragraph (1) does not apply in relation to a supply to a person of electricity produced in a wholly or partly exempt combined heat and power station where the supply is made to that person from the station.
(3) In this paragraph “CHP declaration” means a declaration that, in each averaging period, the amount of electricity supplied by exempt CHP supplies made by the supplier in the period will not exceed the difference between—
(a) the total amount of CHP electricity that during that period is either acquired or generated by the supplier, and
(b) so much of that total amount as is allocated by the supplier otherwise than to exempt CHP supplies made by him in the period.
In this sub-paragraph “averaging period” has the same meaning as in paragraph 20B; and “exempt CHP supplies” means supplies made on the basis that they are exempt under this paragraph.
(4) For the purposes of this paragraph and paragraph 20B, electricity is “CHP electricity” if—
(a) the electricity was—
(i) produced in a fully exempt combined heat and power station before 1 April 2013, or
Words in Sch. 6 para. 20A(4)(a)(i) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 32 para. 21(3)(a)
(ii) produced in a partly exempt combined heat and power station before 1 April 2013 and originally supplied from the station without causing the limit referred to in paragraph 16(2) to be exceeded,
Words in Sch. 6 para. 20A(4)(a)(ii) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 32 para. 21(3)(b)
(b) the electricity is not renewable source electricity (within the meaning of paragraph 19), and
(c) prescribed conditions are fulfilled.
(5) The conditions that may be prescribed under sub-paragraph (1)(c) include, in particular, conditions in connection with—
(a) the giving of effect to CHP declarations;
(b) the supply of information;
(c) the inspection of records and, for that purpose, the production of records in legible form and entry into premises;
(d) monitoring by the Gas and Electricity Markets Authority, or the Director General of Electricity Supply for Northern Ireland, of the application of provisions of, or made under, this paragraph;
(e) the doing of things to or by a person authorised by the Authority or the Director General (as well as the doing of things to or by the Authority or the Director General);
(f) things being done at times or in ways specified by the Authority, the Director General or such an authorised person.
(6) A condition prescribed under sub-paragraph (1)(c) may be one that is required to be fulfilled throughout a period, including a period ending after the time when a supply whose exemption turns on the fulfilment of the condition is treated as being made.
(7) The conditions that may be prescribed under sub-paragraph (4)(c) include in particular conditions in connection with any of the matters mentioned in paragraphs (b) to (f) of sub-paragraph (5).
(8) Each of—
(a) the Gas and Electricity Markets Authority, and
(b) the Director General of Electricity Supply for Northern Ireland,
shall supply the Commissioners with such information (whether or not obtained under this paragraph), and otherwise give the Commissioners such co-operation, as the Commissioners may require in connection with the application of this paragraph (whether generally or in relation to any particular case).
(9) Paragraph 19(10) (disclosure of information) applies in relation to sub-paragraph (8) above as it applies in relation to paragraph 19(8).
Sch. 6 para. 20A and cross-heading inserted (24.7.2002 with effect as mentioned in s. 123(2) of the amending Act) by 2002 c. 23, s. 123; S.I. 2003/603, art. 2

Exemption under paragraph 20A: averaging periods
20B (1) This paragraph applies where a person (“the supplier”) makes supplies of electricity on the basis that they are exempt under paragraph 20A (“exempt CHP supplies”).
(2) The rules about balancing and averaging periods are—
(a) a balancing period is a period of three months;
(b) when a balancing period ends, a new one begins;
(c) the first balancing period and the first averaging period begin at the same time;
(d) unless the supplier specifies an earlier time, that time is the time when he is treated as making the first of the exempt CHP supplies;
(e) when an averaging period ends, a new one begins;
(f) an averaging period ends once it has run for two years (but may end sooner under paragraph (g) or sub-paragraph (4)(a) or (5)(a));
(g) if the supplier stops making exempt CHP supplies, the end of the balancing period in which he makes the last exempt CHP supply is also the end of the averaging period in which the balancing period falls.
(3) At the end of each balancing period calculate—
(a) the total of—
(i) the quantity of CHP electricity that the supplier acquired or generated in that period, and
(ii) any balancing credit carried forward to that balancing period; and
(b) the total of—
(i) the quantity of electricity supplied by exempt CHP supplies made by him in that period, and
(ii) any balancing debit carried forward to that balancing period.
(4) If the total mentioned in sub-paragraph (3)(a) exceeds that mentioned in sub-paragraph (3)(b)—
(a) the averaging period within which the balancing period fell ends at the end of the balancing period, and
(b) a balancing credit equal to the difference between the two totals is carried forward to the next balancing period.
(5) If the totals mentioned in paragraphs (a) and (b) of sub-paragraph (3) are the same—
(a) the averaging period within which the balancing period fell ends at the end of the balancing period, and
(b) no balancing credit or debit is carried forward to the next balancing period.
(6) If the total mentioned in sub-paragraph (3)(b) exceeds that mentioned in sub-paragraph (3)(a), then—
(a) in a case where, at the time when the balancing period ends, an averaging period also ends because of sub-paragraph (2)(f) or (g), the supplier is for the purposes of this Schedule deemed to make at that time a taxable supply of a quantity of electricity equal to the excess;
(b) in any other case, a balancing debit equal to the excess is carried forward to the next balancing period.
Sch. 6 para. 20B(6) substituted (10.7.2003) for Sch. 6 paras. 20B(6)-(8) (with effect in accordance with s.193(5) of the amending Act) by Finance Act 2003 (c. 14), s. 193(3)
Sch. 6 para. 20B and cross-heading inserted (24.7.2002 with effect as mentioned in s. 123(2) of the amending Act) by 2002 c. 23, s. 123; S.I. 2003/603, art. 2

Regulations to avoid double charges to levy
21 (1) The Commissioners may by regulations make provision for avoiding, counteracting or mitigating double charges to levy.
(2) For the purposes of this paragraph there is a double charge to levy where—
(a) a supply of a taxable commodity (“the produced commodity”) is a taxable supply, and
(b) a taxable commodity used directly or indirectly in producing the produced commodity has been the subject of a taxable supply.
(2A) In sub-paragraph (2)(b) “taxable supply” does not include a deemed supply under paragraph 24A, 24B, 24C or 42D.
Sch. 6 para. 21(2A) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 9, 21
(3) Regulations under this paragraph may, in particular, make provision for a supply of a taxable commodity to be wholly or to any extent—
(a) exempt from the levy, or
(b) deemed not a supply of the commodity.
(4) The provision mentioned in sub-paragraph (3) includes provision for exceptions to any of sub-paragraphs (1) to (3) of paragraph 23 or paragraph 24(3).
(5) The powers conferred by this paragraph are in addition to the powers to make provision by tax credit regulations in relation to any such case as is mentioned in paragraph 62(1)(g).

Regulations giving effect to exemptions
22 (1) The Commissioners may by regulations make provision for giving effect to the exclusions and exemptions provided for by paragraphs 8 to 21.
(2) Regulations under this paragraph may, in particular, include provision for—
(a) determining the extent to which a supply of a taxable commodity is, or is to be treated as being, a taxable supply;
(b) authorising a person making supplies of a taxable commodity to another person to treat the supplies to that other person as being taxable supplies only to an extent certified by the Commissioners.

Deemed supply: use of commodities by utilities and producers
23 (1) Where an electricity utility—
(a) has electricity available to it, and
(b) as regards a quantity of the electricity, makes no supply of that quantity to another person but causes it to be consumed in the United Kingdom,
the utility is for the purposes of this Schedule deemed to make a supply to itself of that quantity of the electricity.
(2) Where a gas utility—
(a) holds gas in a gaseous state, and
(b) as regards a quantity of the gas, makes no supply of that quantity to another person but causes it to be burned in the United Kingdom,
the utility is for the purposes of this Schedule deemed to make a supply to itself of that quantity of the gas.
(3) Where—
(a) a person has produced a taxable commodity,
(b) the commodity is either—
(i) a taxable commodity other than electricity, or
(ii) electricity that has been produced from taxable commodities, and
(c) as regards a quantity of the commodity, the person makes no supply of that quantity to another person but causes it to be burned (or, in the case of electricity, consumed) in the United Kingdom,
the person is for the purposes of this Schedule deemed to make a supply to himself of that quantity of the commodity.
(4) The Commissioners may by regulations make provision for electricity to be treated for the purposes of sub-paragraph (3)(b)(ii)—
(a) as produced from taxable commodities unless prescribed conditions are fulfilled, or
(b) as produced otherwise than from taxable commodities only where prescribed conditions are fulfilled.
(5) The conditions that may be prescribed under sub-paragraph (4) include, in particular, conditions in connection with the materials from which the electricity is produced.

Deemed supply: change of circumstances etc
24 (1) This paragraph applies in the following cases.
Sch. 6 para. 24(1) (1A) (1B) (2) substituted (22.7.2005) for Sch. 6 para. 24(1) para. 24(2) (with effect in accordance with s. 190(8) of the amending Act) by Finance Act 2003 (c. 14), s. 190(3); S.I. 2005/1713
(1A) The first case is where—
(a) a supply of a taxable commodity has been made,
(b) the supply was not a taxable supply, and
(c) there is such a change in circumstances or any person’s intentions that, if the changed circumstances or intentions had existed at the time the supply was made, the supply would have been a taxable supply.
(1B) The second case is where—
(a) a supply of a taxable commodity has been made,
(b) the supply was made on the basis that it was not a taxable supply, and
(c) it is later determined that the supply was (to any extent) a taxable supply.
(2) This paragraph does not apply where the reason that—
(a) the supply was not a taxable supply, or
(b) the supply was made on the basis that it was not a taxable supply,
is that it was, or was thought to be, exempt from the levy under paragraph 19 or 20A (exemption for supply of electricity produced from renewable sources or in combined heat and power stations) (but see paragraph 20 or 20B).
(3) Where this paragraph applies, The person to whom the supply was made is for the purposes of this Schedule deemed to make a taxable supply of the commodity to himself.
Words in Sch. 6 para. 24(3) inserted (22.7.2005) (with effect in accordance with s. 190(8) of the amending Act) by Finance Act 2003 (c. 14), s. 190(4); S.I. 2005/1713
(3A) Where—
(a) had matters been as mentioned in sub-paragraph (1A)(c), only part of the supply would have been a taxable supply, or
(b) the determination referred to in sub-paragraph (1B)(c) is that only part of the supply was a taxable supply,
the reference in sub-paragraph (3) to the commodity shall be read as a reference to a corresponding part of it.
Sch. 6 para. 24(3A) inserted (22.7.2005) (with effect in accordance with s. 190(8) of the amending Act) by Finance Act 2003 (c. 14), s. 190(5); S.I. 2005/1713
(4) Where—
(a) a supply of a taxable commodity was not a taxable supply by virtue of being supplied for use in premises of a description mentioned in any of paragraphs (a) to (f) of paragraph 9(2), and
(b) those premises cease to be premises of any of those descriptions,
sub-paragraph (3) only applies to so much (if any) of the commodity supplied as was not used in the premises before they ceased to be premises of any of those descriptions.
(5) The Commissioners may by regulations make provision specifying descriptions of occurrences and non-occurrences that are to be taken as being, or as not being, changes of circumstances or intentions for the purposes of sub-paragraph (1A)(c).
Words in Sch. 6 para. 24(5) substituted (22.7.2005) (with effect in accordance with s. 190(8) of the amending Act) by Finance Act 2003 (c. 14), s. 190(6); S.I. 2005/1713
Words in Sch. 6 para. 24 cross-heading substituted (22.7.2005) (with effect in accordance with s. 190(8) of the amending Act) by Finance Act 2003 (c. 14), s. 190(2); S.I. 2005/1713

Deemed taxable supply: commodities to be used in producing electricity
24A (1) Sub-paragraph (2) applies if—
(a) a quantity of a carbon price support rate commodity is brought onto, or arrives at, a site in Great Britain at which a generating station is situated,
(b) that quantity of the commodity is intended to be used for producing electricity in the station,
(c) the station is neither a fully exempt combined heat and power station nor a partly exempt combined heat and power station, and
(d) the station is neither a small generating station nor a stand-by generator.
(2) For the purposes of this Schedule the owner of the station is deemed to make a taxable supply to himself of that quantity of the commodity.
(3) In sub-paragraph (1)(a) the reference to a commodity being brought onto, or arriving at, a site covers (in particular) gas in a gaseous state arriving at the site through a pipe.
(4) For the purposes of sub-paragraph (1) it does not matter—
(a) if the quantity of the commodity is not the subject of an actual supply made to the owner of the station, or
(b) if the commodity's availability for use in the station is subject to any condition.
Sch. 6 paras. 24A-24D and cross-headings inserted (retrospective and with effect in accordance with Sch. 42 para. 22(4) of the amending Act) by Finance Act 2013 (c. 29), Sch. 42 paras. 10, 21

Deemed taxable supply: commodities to be used in combined heat and power station
24B (1) Sub-paragraph (2) applies if—
(a) a quantity of a carbon price support rate commodity is brought onto, or arrives at, the CHPQA site of a fully exempt combined heat and power station or a partly exempt combined heat and power station in Great Britain,
(b) that quantity of the commodity is intended to be used in the station for producing outputs of the station, and
(c) the station is not a small generating station.
(2) For the purposes of this Schedule the operator of the station is deemed to make a taxable supply to himself of that quantity of the commodity so far as that quantity is referable to the production of electricity to which sub-paragraph (2A) does not apply.
Words in Sch. 6 para. 24B(2) inserted (with effect in accordance with s. 63(5) of the amending Act) by Finance Act 2015 (c. 11), s. 63(2)(a)
(2A) This sub-paragraph applies to electricity so far as—
(a) it is included in the CHP Qualifying Power Output of the combined heat and power station's CHPQA scheme, and
(b) either condition A or B is met.
Sch. 6 paras. 24B(2A)-(2C) inserted (with effect in accordance with s. 63(5) of the amending Act) by Finance Act 2015 (c. 11), s. 63(2)(b)
(2B) Condition A is that the producer of the electricity makes no supply of it to another person, but causes it to be consumed in the United Kingdom.
(2C) Condition B is that the electricity is supplied (within the meaning of Part 1 of the Electricity Act 1989 (see section 64 of that Act)) by a person who is an exempt unlicensed electricity supplier.
(3) For the purposes of sub-paragraph (2) the extent to which a quantity of a commodity is referable to the production of electricity to which sub-paragraph (2A) does not apply is to be determined in accordance with regulations under paragraph 24D(1).
Words in Sch. 6 para. 24B(3) inserted (with effect in accordance with s. 63(5) of the amending Act) by Finance Act 2015 (c. 11), s. 63(2)(c)
(4) In sub-paragraph (1)(a) the reference to a commodity being brought onto, or arriving at, the CHPQA site of a station covers (in particular) gas in a gaseous state arriving at the CHPQA site through a pipe.
(5) In sub-paragraph (1)(b) “outputs” has the meaning given by paragraph 148(9).
(6) For the purposes of sub-paragraph (1) it does not matter—
(a) if the quantity of the commodity is not the subject of an actual supply made to the operator of the station, or
(b) if the commodity's availability for use in the station is subject to any condition.
(7) For the purposes of this paragraph—
“CHP Qualifying Power Output” has the meaning given by section 4 of the Combined Heat and Power Quality Assurance Standard, Issue 5 (November 2013), prepared by the Department of Energy and Climate Change or, if that issue of the Standard has been replaced by another issue, by the current issue of the Standard (taking account, in either case, of any amendment which has been made to the issue);
“CHPQA scheme”, in relation to a combined heat and power station, means the scheme in relation to which the station's CHPQA certificate was issued;
“CHPQA site”, in relation to a fully exempt combined heat and power station or a partly exempt combined heat and power station, means the site of the CHPQA scheme.
Sch. 6 para. 24B(7) substituted (with effect in accordance with s. 63(5) of the amending Act) by Finance Act 2015 (c. 11), s. 63(2)(d)
24C (1) This paragraph applies if—
(a) a determination (“the initial determination”) is made under regulations falling within paragraph 24B(3) that—
(i) none of a quantity of a carbon price support rate commodity is, or
(ii) a proportion of such a quantity is not,
referable to the production of electricity to which paragraph 24B(2A) does not apply,
Words in Sch. 6 para. 24C(1)(a) inserted (with effect in accordance with s. 63(5) of the amending Act) by Finance Act 2015 (c. 11), s. 63(3)(a)
(b) as a result of the initial determination, the quantity or proportion of a quantity is determined not to be the subject of a deemed supply under paragraph 24B, and
(c) it is later determined that, contrary to the initial determination, the quantity or proportion of a quantity—
(i) was referable to the production of electricity to which paragraph 24B(2A) does not apply, and
Words in Sch. 6 para. 24C(1)(c)(i) inserted (with effect in accordance with s. 63(5) of the amending Act) by Finance Act 2015 (c. 11), s. 63(3)(b)
(ii) accordingly, should have been determined to be the subject of a deemed supply under paragraph 24B.
(2) For the purposes of this Schedule—
(a) the operator of the station in question is deemed to make a taxable supply to himself of the quantity or proportion of a quantity, and
(b) the amount payable by way of levy on the deemed supply is the amount which would have been payable in relation to the quantity or proportion of a quantity had it been determined to be the subject of a deemed supply as mentioned in sub-paragraph (1)(c)(ii).

Power to make regulations giving effect to paragraphs 24A to 24C etc
24D (1) The Commissioners may by regulations make provision for giving effect to paragraphs 24A to 24C and 42A to 42D.
(2) Regulations under sub-paragraph (1) may, in particular, include provision—
(a) for determining whether a deemed supply under paragraph 24A or 24B is made;
(b) for determining the quantity of any commodity which is the subject of such a deemed supply;
(c) for determining whether paragraph 42C(2) applies in relation to a deemed supply under paragraph 24A or 24B and, if it does, the reduction in the relevant carbon price support rate.
(3) Regulations under sub-paragraph (1) may include—
(a) provision in respect of calculations, measurements, data and procedures to be made or used;
(b) provision that, so far as framed by reference to any document, is framed by reference to that document as from time to time in force.

Part III Time of supply

Introduction
25 This Part of this Schedule applies to determine when a supply of a taxable commodity is treated as taking place.

Electricity or gas: supply when climate change levy accounting document issued
26 (1) This paragraph applies—
(a) to supplies of electricity, and
(b) to supplies of gas where the gas is supplied in a gaseous state and is of a kind supplied by a gas utility.
(2) Where this paragraph applies, a supply is treated as taking place each time a climate change levy accounting document in respect of a supply is issued by the person making the supply.
(3) A supply that is treated as taking place under this paragraph is a supply of the electricity or gas covered by the accounting document.
(4) Nothing in this paragraph applies to any electricity or gas that is covered by a special utility scheme (see paragraph 29).

Electricity or gas: duty to issue climate change levy accounting document
27 (1) This paragraph applies where on any day—
(a) electricity, or gas that is in a gaseous state and is of a kind supplied by a gas utility, is actually supplied to a person (“the consumer”),
(b) the supply by which the electricity or gas is supplied is a taxable supply, and
(c) the person liable to account for the levy on that supply is the person making the supply (“the supplier”).
(2) A climate change levy accounting document covering the electricity or gas actually supplied on that day must be issued by the supplier no later than—
(a) the end of the period of 15 weeks beginning with that day, if on that day the consumer is a small-scale user of the commodity supplied;
(b) the end of the period of 6 weeks beginning with that day, if on that day the consumer is not a small-scale user of the commodity supplied.
(3) A climate change levy accounting document issued under this paragraph that covers the electricity, or the gas of any kind, actually supplied on any day must also cover any electricity or (as the case may be) any gas of that kind that—
(a) has been actually supplied by the supplier to the consumer on any earlier day, and
(b) has not been covered by a previous climate change levy accounting document.
(4) For the purposes of this paragraph—
(a) an accounting document shall be taken to cover the electricity or gas actually supplied on a day if it covers the electricity or gas actually supplied during a period that includes that day; and
(b) an accounting document shall be taken to cover the electricity or gas actually supplied on a day or during a period if it is an accounting document for a quantity of electricity or gas that is a reasonable estimate of the quantity actually supplied.
(5) A climate change levy accounting document issued under this paragraph must contain a statement of—
(a) the quantity of electricity or gas that it covers,
(b) the period during which, or during which it is estimated that, that quantity was actually supplied,
(c) the supplier’s name and address,
(d) the customer’s name and address, and
(e) the reference number used by the supplier for the customer.
(6) For the purposes of this paragraph a person is, on any day, a small-scale user of a commodity if the rate at which he is taken to be supplied with that commodity on that day does not exceed the prescribed rate.
(7) The Commissioners may make provision by regulations as to the rate at which a person is, for the purposes of sub-paragraph (6), taken to be supplied with a commodity on any day.
(8) Regulations under sub-paragraph (7) may, in particular, include provision for—
(a) rates to be determined or estimated in accordance with the regulations;
(b) rates to be so determined or estimated by reference to the quantity of a commodity actually supplied, or estimated to have been actually supplied, during a period ending with, or at any time before or after, the day in question;
(c) cases where a person is supplied with a commodity of any kind by two or more suppliers.
(9) Nothing in this paragraph applies to any electricity or gas—
(a) that is covered by a special utility scheme (see paragraph 29), or
(b) that is actually supplied before 1st April 2001.
(10) This paragraph applies subject to paragraph 36(5).

Electricity or gas: actual supply not followed by climate change levy accounting document
28 (1) This paragraph applies where on any day—
(a) electricity, or gas that is in a gaseous state and is of a kind supplied by a gas utility, is actually supplied to a person (“the consumer”),
(b) the supply by which the electricity or gas is supplied is a taxable supply,
(c) the person liable to account for the levy on that supply is the person making the supply (“the supplier”), and
(d) the supplier does not within the period applicable under sub-paragraph (2) of paragraph 27 issue a climate change levy accounting document under that paragraph covering the electricity or gas.
(2) Where this paragraph applies, a supply is treated as taking place at the end of that period.
(3) A supply that is treated as taking place under this paragraph is a supply of all the electricity or (as the case may be) gas of the same kind that—
(a) has been actually supplied by the supplier to the consumer before the end of that period, and
(b) has not been covered by a climate change levy accounting document.
(4) Sub-paragraph (4) of paragraph 27 (interpretation of “covered by an accounting document”) applies for the purposes of this paragraph as for those of that paragraph.
(5) Nothing in this paragraph applies to any electricity or gas—
(a) that is covered by a special utility scheme (see paragraph 29),
(b) that is actually supplied before 1st April 2001, or
(c) that is treated under paragraph 36(3) as supplied on that day.

Electricity or gas: special utility schemes
29 (1) For the purposes of this Schedule a “special utility scheme” is a scheme for determining when—
(a) a supply of electricity, or
(b) a supply of gas that is in a gaseous state and is of a kind supplied by a gas utility,
is treated as taking place in cases where the electricity or gas is covered by the scheme.
(2) If in the opinion of the Commissioners it is reasonable to do so, they may in accordance with the provisions of this paragraph prepare a special utility scheme for a utility or for two or more utilities.
In this paragraph “utility” includes a person who makes supplies on which levy is chargeable by virtue of paragraph 5(2) (partly exempt combined heat and power stations).
(3) A special utility scheme shall specify the period for which it is to have effect.
(4) No special utility scheme shall be of any effect in relation to any electricity or gas supplied by a utility unless the utility elects in writing to be bound by it for the specified period.
(5) If a utility makes such an election—
(a) the scheme shall have effect for the specified period in relation to such electricity or gas supplied by the utility as is covered by the scheme, and
(b) during the specified period the scheme applies to determine when a supply of a taxable commodity is treated as taking place if the commodity is electricity or gas covered by the scheme.
(6) A special utility scheme may—
(a) cover all or any of the electricity or gas supplied by a utility for which the scheme is prepared;
(b) provide for paragraph 36 or 37 not to apply, or to apply with modifications, to electricity or gas covered by the scheme.
(7) The Commissioners may by regulations make further provision with respect to special utility schemes, including (in particular) provision amending this paragraph.

Other commodities: general rules for supply by UK residents
30 (1) This paragraph applies to supplies that are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state).
(2) The general rules as to when such supplies are taken to be made are, in cases where the supply is made by a person resident in the United Kingdom, as follows—
(a) if the commodity is to be removed, the supply takes place at the time of the removal;
(b) if the commodity is not to be removed, the supply takes place when the commodity is made available to the person to whom it is supplied;
(c) if the commodity (being sent or taken on approval or sale or return or similar terms) is removed before it is known whether a supply will take place, the supply takes place when it becomes certain that the supply has taken place or, if sooner, 12 months after the removal.
(3) These general rules are subject to—
paragraph 31 (earlier invoice),
paragraph 32 (later invoice),
paragraph 34 (deemed supplies), and
paragraph 36 (directions by Commissioners).

Other commodities: earlier invoice
31 (1) If before the time applicable under paragraph 30(2) the person making the supply—
(a) issues an invoice in respect of the supply, or
(b) receives a payment in respect of it,
the supply is treated, to the extent that it is covered by the invoice or payment, as taking place when the invoice is issued or the payment is received.
(2) Sub-paragraph (1) does not apply where the commodity (being sent or taken on approval or sale or return or similar terms) is removed before it is known whether a supply will take place.
(3) Sub-paragraph (1) applies subject to any direction under paragraph 35(3).

Other commodities: later invoice
32 (1) If within 14 days after the time applicable under paragraph 30(2) the person making the supply issues an invoice in respect of it, the supply is treated as taking place at the time the invoice is issued.
(2) This does not apply—
(a) to the extent that the supply is treated as taking place at the time mentioned in paragraph 31(1) (earlier invoice), or
(b) if the person liable to account for any levy charged on the supply has notified the Commissioners in writing that he elects not to avail himself of sub-paragraph (1).
(3) The Commissioners may, at the request of a person liable to account for any levy charged on any supplies, direct that sub-paragraph (1) shall apply—
(a) in relation to those supplies, or
(b) in relation to such of those supplies as may be specified in the direction,
with the substitution for the period of 14 days of such longer period as may be specified in the direction.
(4) Sub-paragraphs (1) to (3) apply subject to any direction under paragraph 35.

Other commodities: supply by non-UK residents
33 (1) This paragraph applies to supplies that—
(a) are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state), and
(b) are made by a person who is not resident in the United Kingdom.
(2) The supply is treated as taking place—
(a) when the commodity is delivered to the person to whom it is supplied, or
(b) if earlier, when it is made available in the United Kingdom to that person.
(3) Sub-paragraph (2) applies subject to—
(a) sub-paragraph (4),
(b) paragraph 34 (deemed supplies), and
(c) any direction under paragraph 35.
(4) If within 14 days after the time applicable under sub-paragraph (2) the person to whom the supply is made elects in writing for the supply to be treated as taking place at the time the election is made, the supply is treated as taking place at the time the election is made.

Other commodities: deemed supplies
34 (1) This paragraph applies to supplies that—
(a) are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state), and
(b) are deemed to be made under paragraph 23, 24 or 43B.
Words in Sch. 6 para. 34(1)(b) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 5(2), 13(1); S.I. 2007/2902, art. 2(1)
Word in Sch. 6 para. 34(1)(b) substituted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 8(a)
(2) A supply that is deemed to be made under paragraph 23 is treated as taking place when the commodity is burned ....
Words in Sch. 6 para. 34(2) repealed (19.7.2006) by Finance Act 2006 (c. 25), s. 172(7), Sch. 26 Pt. 8(1)
(3) A supply that is deemed to be made under paragraph 24 is treated as taking place upon the occurrence of the change in circumstances or intentions or, as the case may be, upon the later determination.
Words in Sch. 6 para. 34(3) inserted (22.7.2005) (with effect in accordance with s. 190(8) of the amending Act) by Finance Act 2003 (c. 14), s. 190(7); S.I. 2005/1713
(4) A supply that is deemed to be made under paragraph 43B is treated as taking place upon the later determination.
Sch. 6 para. 34(4) inserted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 5(3), 13(1); S.I. 2007/2902, art. 2(1)
Word in Sch. 6 para. 34(4) substituted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 8(b)

Other commodities: directions by Commissioners
35 (1) This paragraph applies to supplies that are not of either of the descriptions mentioned in paragraphs (a) and (b) of paragraph 26(1) (electricity and gas in a gaseous state).
(2) The Commissioners may, at the request of the person liable to account for any levy charged on any supplies to which this paragraph applies, make a direction under sub-paragraph (3) or (4) altering the time at which those supplies (or such of those supplies as may be specified in the direction) are to be treated as taking place.
(3) The Commissioners may direct that the supplies shall be treated as taking place—
(a) at times or on dates determined by or by reference to the occurrence of some event described in the direction, or
(b) at times or on dates determined by or by reference to the time when some event so described would in the ordinary course of events occur,
provided the resulting times or dates are in every case earlier than would otherwise apply.
(4) The Commissioners may direct that the supplies shall be treated as taking place—
(a) at the beginning of the relevant working period (as defined in the case of the person making the request in and for the purposes of the direction), or
(b) at the end of the relevant working period (as so defined).
(5) A direction under sub-paragraph (4) shall not apply to the extent that the time when the supplies in question are made is determined by paragraph 31(1).

Supplies invoiced or paid for before 1st April 2001
36 (1) This paragraph applies where—
(a) the taxable commodities covered by an invoice issued, or payment received, before 1st April 2001 are to any extent commodities that have not been burned (or, in the case of electricity, consumed) before the invoice is issued or payment is received, and
(b) the advance invoicing or payment is not acceptable normal practice.
It does not matter whether the invoice mentioned in paragraph (a) is, or is not, a climate change levy accounting document.
(2) A fair apportionment shall be made to determine the quantity of the taxable commodities covered by the invoice or payment that will not be, or was not, burned (or consumed) before 1st April 2001.
(3) Where this paragraph applies, a supply is treated as taking place on 1st April 2001.
That supply is a supply of the quantity of the taxable commodities that is mentioned in, and determined under, sub-paragraph (2).
(4) For the purposes of this paragraph advance invoicing or payment is “acceptable normal practice” if—
(a) the supply is of a kind in the case of which it is normal practice for invoices to be issued, or payments made, in respect of taxable commodities not already burned (or consumed),
(b) that practice does not involve issuing invoices, or making payments, more than 15 weeks in advance of the burning (or consumption) of any of the taxable commodities in respect of which the invoice is issued or payment is made, and
(c) the advance invoicing or payment is in accordance with the practice.
(5) Nothing in paragraph 27 requires a climate change levy accounting document to be issued to cover any commodities that are supplied by a supply that, under sub-paragraph (3), is treated as made on 1st April 2001.
(6) This paragraph applies to invoices issued, and payments received, before the passing of this Act (as well as to those issued or received after its passing).

Supplies of electricity or gas spanning change of rate etc.
37 (1) This paragraph applies in the case of a supply of electricity, or of gas that is in a gaseous state and is of a kind supplied by a gas utility, affected by—
(a) a change in the descriptions of supplies that are taxable supplies,
(b) a change in any rate of levy in force,
(c) a change consisting in the rate of levy applicable to the supply ceasing to be, or becoming, the rate that is applicable to ... reduced-rate supplies, or
Words in Sch. 6 para. 37(1)(c) repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(9)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
(d) the change consisting in the transition from 31st March 2001 to 1st April 2001.
(2) For the purposes of this paragraph a supply is affected by a change if the electricity or gas of which it is a supply (“the supplied commodity”) is actually supplied partly before the change and partly after.
However, this paragraph does not apply in the case of a supply that, under paragraph 36(3), is treated as made on 1st April 2001.
(3) If the person liable to account for any levy on the supply so elects—
(a) the rate at which levy is chargeable on any part of the supply, or
(b) any question whether, or to what extent, the supply is a taxable supply,
shall be determined in accordance with sub-paragraph (5) or (6).
(4) An election for determination in accordance with sub-paragraph (6) may be made only where—
(a) there is such a change as is mentioned in sub-paragraph (1)(c), and
(b) all the supplied commodity is actually supplied before the supply is treated as taking place.
(5) Where the election is for determination in accordance with this sub-paragraph, the rules are—
A Treat the fraction of the supplied commodity actually supplied before the change (“the pre-change fraction”) as supplied by a supply made before the change and treat the fraction of the supplied commodity actually supplied after the change (“the post-change fraction”) as supplied by a supply made after the change.
B Where the pre-change and post-change fractions are not known (because, for example, there are no relevant meter readings available)—
“the pre-change fraction" is calculated by dividing—
(a) the number of days in the period over which the supply is actually made that fall before the change, by
(b) the number of days in that period; and
“the post-change fraction" is the difference between 1 and the pre-change fraction.
C If use of the fractions given by rule B would produce an inequitable result, the pre-change and post-change fractions may be derived from a reasonable estimate of the fractions of the supplied commodity actually supplied before and after the change.
(6) Where the election is for determination in accordance with this sub-paragraph, treat the change as taking place immediately after the time at which the last of the supplied commodity was actually supplied.

Other supplies spanning change of rate etc.
38 (1) This paragraph applies where there is—
(a) a change in the descriptions of supplies that are taxable supplies,
(b) a change in the rate of levy in force,
(c) a change consisting in the rate of levy applicable to any supply ceasing to be, or becoming, the rate that is applicable to ... reduced-rate supplies, or
Words in Sch. 6 para. 38(1)(c) repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(10)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
(d) the change consisting in the transition from 31st March 2001 to 1st April 2001.
(2) Where—
(a) a supply affected by the change would apart from special provisions be treated under paragraph 30(2) or 33(2) as made wholly or partly at a time when it would not have been affected by the change, or
(b) a supply not so affected would apart from special provisions be treated under paragraph 30(2) or 33(2) as made wholly or partly at a time when it would have been so affected,
the rate at which levy is chargeable on the supply, or any question whether it is a taxable supply, shall, if the person liable to account for any levy on the supply so elects, be determined without regard to the special provisions.
(3) In this paragraph “special provisions” means the provisions of paragraphs 31, 32, 33(4) and 35.

Deemed supplies under paragraph 24A, 24B, 24C or 42D
38A (1) A deemed supply under paragraph 24A or 24B is treated as taking place when the quantity of the commodity is brought onto, or arrives at, the site at which the station is situated or the CHPQA site of the station (as the case may be).
(2) A deemed supply under paragraph 24C or 42D is treated as taking place upon the later determination.
Sch. 6 para. 38A and cross-heading inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 11, 21

Regulations as to time of supply
39 (1) The Commissioners may make provision by regulations as to the time at which a supply is to be treated as taking place—
(a) in cases where the supply is for a consideration and the whole or part of the consideration—
(i) is determined or payable periodically, or from time to time, or at the end of any period, or
(ii) is determined at the time when the commodity is appropriated for any purpose;
(b) in the case of a supply otherwise than for consideration;
(c) in the case of any supply that is deemed to be made under paragraph 23 , 24 , 24A, 24B, 24C, 42D or 43B.
Words in Sch. 6 para. 39(1)(c) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 6, 13(1); S.I. 2007/2902, art. 2(1)
Words in Sch. 6 para. 39(1)(c) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 12(2), 21
Word in Sch. 6 para. 39(1)(c) substituted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 9
(2) In any such case as is mentioned in sub-paragraph (1) the regulations may provide that a taxable commodity shall be treated as separately and successively supplied at prescribed times or intervals.
(3) Paragraphs 26 to 36 (main rules as to time of supply) and 38A have effect subject to any regulations under this paragraph.
Words in Sch. 6 para. 39(3) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 12(3), 21
(4) The power to make regulations under this paragraph includes power to provide for specified provisions of the regulations to be treated as special provisions for the purposes of paragraph 38 (supplies spanning change of rate etc.).

Part IV Payment and rate of levy

Persons liable to account for levy
40 (1) The person liable to account for the levy charged on a taxable supply is, except in a case where sub-paragraph (2) or (3) applies, the person making the supply.
Words in Sch. 6 para. 40(1) inserted (with effect in accordance with s. 118(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 59 para. 3(2)
(2) In the case of a taxable supply made by a person who—
(a) is not resident in the United Kingdom, and
(b) is not a utility,
the person liable to account for the levy charged on the supply is the person to whom the supply is made.
(3) In the case of levy charged on a taxable supply under paragraph 45B, the person liable to account for the levy is the operator of the facility to which the supply was made.
Sch. 6 para. 40(3) inserted (with effect in accordance with s. 118(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 59 para. 3(3)

Returns and payment of levy
41 (1) The Commissioners may by regulations make provision—
(a) for persons liable to account for levy to do so—
(i) by reference to such periods (“accounting periods”) as may be determined by or under the regulations, or
(ii) in such other way as may be so determined;
Sch. 6 para. 41(1)(a) substituted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(2)(a)
(b) for persons who are or are required to be registered for the purposes of the levy to be subject to such obligations to make returns for those purposes for such periods, at such times and in such form as may be so determined; and
(c) for persons who are required to account for levy ... to become liable to pay the amounts due from them at such times and in such manner as may be so determined.
Words in Sch. 6 para. 41(1)(c) repealed (10.7.2003) by Finance Act 2003 (c. 14), s. 192(2)(b), Sch. 43 Pt. 4(2)
(2) Without prejudice to the generality of the powers conferred by sub-paragraph (1), regulations under this paragraph may contain provision—
(a) for levy falling in accordance with the regulations to be accounted for by reference to one accounting period to be treated in prescribed circumstances, and for prescribed purposes, as levy due for a different period;
(b) for the correction of errors made when accounting for levy by reference to any period;
(c) for the entries to be made in any accounts in connection with the correction of any such errors and for the financial adjustments to be made in that connection;
(d) for a person, for purposes connected with the making of any such entry or financial adjustment, to be required to provide to any prescribed person, or to retain, a document in the prescribed form containing prescribed particulars of the matters to which the entry or adjustment relates;
(e) for enabling the Commissioners, in such cases as they may think fit, to dispense with or relax a requirement imposed by regulations made by virtue of paragraph (d);
(f) for the amount of levy which, in accordance with the regulations, is treated as due for a later period than that by reference to which it should have been accounted for to be treated as increased by an amount representing interest at the rate applicable under section 197 of the Finance Act 1996 for such period as may be determined in accordance with the regulations.
(2A) Paragraph 91(5) provides for the application of Part 7 of this Schedule (recovery and interest) in relation to cases where, by virtue of regulations under sub-paragraph (1)(a)(ii) above or by virtue of paragraph 45B(8), a person is liable to account for levy otherwise than by reference to accounting periods.
Sch. 6 para. 41(2A), (2B) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(2)(c)
Words in Sch. 6 para. 41(2A) inserted (with effect in accordance with s. 118(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 59 para. 4
(2B) Regulations under this paragraph may provide for the application of any provision of this Schedule in relation to such cases.
(3) Subject to the following provisions of this paragraph, if any person (“the taxpayer”) fails—
(a) to comply with so much of any regulations under this paragraph as requires him, at or before a particular time, to make a return for any accounting period, or
(b) to comply with so much of any regulations under this paragraph as requires him, at or before a particular time, to pay an amount of levy due from him,
he shall be liable to a penalty of £250.
(4) Liability to a penalty under sub-paragraph (3) shall not arise if the taxpayer satisfies the Commissioners or, on appeal, an appeal tribunal—
(a) that there is a reasonable excuse for the failure to make the return or to pay the levy in accordance with the regulations; and
(b) that there is not an occasion after the last day on which the return or payment was required by the regulations to be made when there was a failure without a reasonable excuse to make it.
(5) Where, by reason of any failure falling within paragraph (a) or (b) of sub-paragraph (3)—
(a) a person is convicted of an offence (whether under this Schedule or otherwise), or
(b) a person is assessed to a penalty under paragraph 98 (penalty for evasion) or to a penalty for a deliberate inaccuracy under Schedule 24 to the Finance Act 2007 (penalties for errors),
Words in Sch. 6 para. 41(5)(b) inserted (1.4.2009) by The Finance Act 2008, Schedule 40 (Appointed Day, Transitional Provisions and Consequential Amendments) Order 2009 (S.I. 2009/571), art. 1(1), Sch. 1 para. 20(2)
that person shall not, by reason of that failure, be liable also to a penalty under that sub-paragraph (3).

Amount payable by way of levy
42 (1) The amount payable by way of levy on a taxable supply is—
(a) if the supply is not a reduced-rate supply ..., the amount ascertained from the Table in accordance with sub-paragraph (2);
Word in Sch. 6 para. 42(1)(a) substituted (1.11.2007) by Finance Act 2006 (c. 25), s. 172(11)(a)(16); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
Words in Sch. 6 para. 42(1)(a) omitted (1.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 20 paras. 3(2)(a), 10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 42(1)(b) repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(11)(b)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
(ba) if the supply is a reduced-rate supply of electricity, 10 per cent of the amount that would be payable if the supply were a supply to which paragraph (a) applies;
Sch. 6 para. 42(1)(ba) inserted (with effect in relation to supplies treated as taking place on or after 1.4.2013) by Finance Act 2012 (c. 14), Sch. 30 paras. 20(a), 23
(c) if the supply is any other reduced-rate supply, 35 per cent. of the amount that would be payable if the supply were a supply to which paragraph (a) applies;
Words in Sch. 6 para. 42(1)(c) substituted (with effect in relation to supplies treated as taking place on or after 1.4.2013) by Finance Act 2012 (c. 14), Sch. 30 paras. 20(b), 23
Words in Sch. 6 para. 42(1)(c) substituted (with effect in relation to supplies treated as taking place on or after 1.4.2011) by Finance Act 2010 (c. 13), s. 18
Words in Sch. 6 para. 42(1)(c) substituted (with effect in relation to supplies of taxable commodities so far as the commodities are actually supplied on or after 1.4.2012) by Finance Act 2012 (c. 14), Sch. 30 paras. 10(a)(ii), 19
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 42(1)(d) omitted (1.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 20 paras. 3(2)(b), 10

TABLE
Taxable commodity supplied	Rate at which levy payable if supply is not a reduced-rate supply
Electricity	£0.00554 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility	£0.00193 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state	£0.01240 per kilogram
Any other taxable commodity	£0.01512 per kilogram
Sch. 6 para. 42(1) Table substituted (with effect in relation to supplies treated as taking place on or after 1.4.2015) by Finance Act 2014 (c. 26), s. 96

TABLE
Taxable commodity supplied	Rate at which levy payable if supply is not a reduced-rate supply
Electricity	£0.00559 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility	£0.00195 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state	£0.01251 per kilogram
Any other taxable commodity	£0.01526 per kilogram
Sch. 6 para. 42(1) Table substituted (with effect in relation to supplies treated as taking place on or after 1.4.2016) by Finance Act 2015 (c. 11), s. 62
(1ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 42(1ZA) omitted (1.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 20 paras. 3(3), 10
(1A) Sub-paragraph (1) is subject to paragraph 45B.
Sch. 6 para. 42(1A) inserted (with effect where the certification period begins on or after 1.4.2009) by Finance Act 2009 (c. 10), s. 118(2), Sch. 59 para. 5
(1B) Sub-paragraph (1) does not apply to a deemed supply under paragraph 24A or 24B.
Sch. 6 para. 42(1B) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 13, 21
(2) The levy payable on a fraction of a quantity of a commodity is that fraction of the levy payable on that quantity of the commodity.
(3) If a reduced-rate supply is part of an aid scheme within Article 25 of Commission Regulation (EC) No. 800/2008, sub-paragraph (4) cites the title and publication reference of that Regulation for the purpose of complying with Article 3(1) of that Regulation.
Sch. 6 para. 42(3)(4) inserted (8.4.2010) by Finance Act 2010 (c. 13), s. 67
(4) That citation is Commission Regulation (EC) No. 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General block exemption Regulation) (O.J. 2008 No. L214/3) (with the reference to Articles 87 and 88 being read, as a result of the Treaty of Lisbon, as a reference to Articles 107 and 108 of the Treaty on the Functioning of the European Union).
Sch. 6 para. 42 modified (retrospective to 1.4.2011) by Finance Act 2011 (c. 11), s. 79(2)(3)(6)
42A (1) This paragraph applies to a deemed supply under paragraph 24A or 24B.
(2) The amount payable by way of levy on the deemed supply is the amount ascertained by applying the relevant carbon price support rate; and the levy payable on a fraction of a kilowatt hour, kilogram or gigajoule is that fraction of the levy payable on a kilowatt hour, kilogram or gigajoule.
(3) The carbon price support rates are as follows.
Carbon price support rate commodity	Carbon price support rate
Any gas in a gaseous state that is of a kind supplied by a gas utility	£0.00331 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, in a liquid state	£0.05280 per kilogram
Any commodity falling within paragraph 3(1)(d) to (f)	£1.54790 per gigajoule
Sch. 6 para. 42A(3) substituted (with effect in relation to supplies treated as taking place on or after 1.4.2016) by Finance Act 2014 (c. 26), s. 98
(4) Sub-paragraph (2) needs to be read with paragraphs 42B and 42C.
Sch. 6 paras. 42A-42D inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 14, 21
42B (1) This paragraph applies for the purposes of paragraph 42A(2) if the commodity deemed to be supplied is a quantity of a commodity falling within paragraph 3(1)(d) to (f).
(2) The number of gigajoules in the quantity supplied is to be determined by reference to the total gross calorific value of that quantity.
(3) Sub-paragraph (4) applies if there is included in that quantity any coal slurry taken from a slurry pit situated at the site of a coal mine (including a disused coal mine).
(4) The gross calorific value of the coal slurry is to be left out of account in determining the total gross calorific value of that quantity.
42C (1) Sub-paragraph (2) applies for the purposes of paragraph 42A(2) if, in the calendar year in which the deemed supply is treated as taking place, carbon capture and storage technology is operated in relation to carbon dioxide generated by the station in question in producing electricity.
(2) In relation to the deemed supply, only C% of the relevant carbon price support rate is to be applied (instead of the full rate).
(3) “C%” is 100% minus the station's carbon capture percentage for the calendar year.
(4) The station's “carbon capture percentage” for the calendar year is the percentage of the station's generated carbon dioxide for that year which, through the operation of the carbon capture and storage technology, is—
(a) captured, and
(b) then disposed of by way of permanent storage.
(5) The station's “generated carbon dioxide” for the calendar year is the amount of carbon dioxide generated in the year by the station from the use of carbon price support rate commodities in producing electricity.
(6) In this paragraph “carbon capture and storage technology” and “carbon dioxide” have the meaning given by section 7(3) and (4) of the Energy Act 2010.
(7) Sub-paragraph (8) applies for the purposes of sub-paragraph (4) in relation to any carbon dioxide if—
(a) the carbon dioxide is captured but then leaks out and therefore is not disposed of by way of permanent storage, but
(b) the leak does not occur—
(i) on the land on which the station is situated,
(ii) on any other land under the control of the station's owner or a person connected with the station's owner, or
(iii) from any pipeline or other facility or installation which is operated by the station's owner or a person connected with the station's owner.
Section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies for the purposes of paragraph (b).
(8) The carbon dioxide is to be treated as if it had been disposed of by way of permanent storage.
(9) If the percentage mentioned in sub-paragraph (4) is not a whole number, it is to be rounded to the nearest whole number (taking 0.5% as nearest to the next whole number).
42D (1) This paragraph applies if—
(a) an amount is determined to be payable by way of levy on a deemed supply of a quantity of a commodity under paragraph 24A or 24B, but
(b) it is later determined that that amount is too low.
(2) For the purposes of this Schedule—
(a) the person who made the deemed supply is deemed to make a further taxable supply to himself of the quantity of the commodity, and
(b) the amount payable by way of levy on that further deemed supply is—
(i) the total amount payable on the first deemed supply on the basis of the later determination mentioned in sub-paragraph (1)(b), less
(ii) the amount previously determined to be payable on the first deemed supply.

Half-rate for supplies to horticultural producers
43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 43 repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(12)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))

...
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 43A and cross-heading omitted (with effect in accordance with Sch. 20 para. 10(2)(3) of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 20 paras. 4, 10(1)

Supplies for use in scrap metal recycling and reduced-rate supplies: deemed supply
43B (1) This paragraph applies where—
(a) a taxable supply (“the original supply”) has been made to any person (“the recipient”),
(b) the original supply was made on the basis that it was, to any extent—
(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 43B(1)(b)(i) omitted (with effect in accordance with Sch. 20 para. 10(2)(3) of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 20 paras. 5, 10(1)
(ii) a reduced-rate supply of electricity, or
(iii) a reduced-rate supply of any other taxable commodity,
Sch. 6 para. 43B(1)(b) substituted (with effect in accordance with Sch. 30 para. 23 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 21
(c) it is later determined that the original supply was (or was to some extent) a different kind of supply, and
(d) the amount payable on the supply on the basis mentioned in paragraph (b) is less than the amount payable on the supply on the basis of the later determination.
(2) For the purposes of this Schedule—
(a) the recipient is deemed to make a taxable supply to itself of the taxable commodity, and
(b) the amount payable by way of levy on that deemed supply is—
(i) the amount payable on the original supply on the basis of the later determination mentioned in sub-paragraph (1)(c), less
(ii) the amount payable on the original supply on the basis mentioned in sub-paragraph (1)(b).
(3) This paragraph does not apply where a supply is treated as not being a reduced-rate supply by virtue of paragraph 45B.
Sch. 6 paras. 43A, 43B and cross-headings inserted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 11

Reduced-rate for supplies covered by climate change agreement
44 (1) For the purposes of this Schedule, a taxable supply is a reduced-rate supply if—
(a) the taxable commodity is supplied to a facility specified in a certificate given by the Administrator to the Commissioners as a facility which is to be taken as being covered by a climate change agreement for a period specified in the certificate, and
Word in Sch. 6 para. 44(1)(a) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 2 (with Sch. 31 para. 11)
(b) the supply is made at a time falling in that period.
(2) Sub-paragraph (1) has effect subject to sub-paragraphs (2A) to (2D) andparagraphs 45 and 45B.
Words in Sch. 6 para. 44(2) inserted (21.7.2009) by Finance Act 2009 (c. 10), s. 117(3)(a)
Words in Sch. 6 para. 44(2) substituted (with effect in accordance with s. 118(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 59 para. 6
(2A) The Administrator may—
(a) give a certificate that includes provision specifying one or more descriptions of taxable commodity as being ineligible for reduced-rate supply,
(b) vary a certificate so that it includes provision (or further provision) specifying one or more descriptions of taxable commodity as being ineligible for reduced-rate supply, or
(c) vary a certificate so that it ceases to include the provision (or some of the provision) specifying one or more descriptions of taxable commodity as being ineligible for reduced-rate supply.
Sch. 6 para. 44(2A)-(2D) inserted (21.7.2009) by Finance Act 2009 (c. 10), s. 117(2)
Word in Sch. 6 para. 44(2A) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 2 (with Sch. 31 para. 11)
(2B) A taxable supply of a taxable commodity to a facility is not a reduced-rate supply if, at the time of the supply, the commodity falls within a description that is specified (by virtue of sub-paragraph (2A)(a) or (b)) in the certificate relating to the facility.
(2C) The Administrator may only include provision in a certificate by virtue of sub-paragraph (2A)(a) or (b)—
(a) if the Treasury consents in writing to the specification before the specification is made, and
(b) if, and for as long as, the result is compatible with the common market by virtue of Commission Regulation (EC) No. 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty establishing the European Community (General block exemption Regulation) (O.J. 2008 No. L214/3).
Word in Sch. 6 para. 44(2C) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 2 (with Sch. 31 para. 11)
(2D) In sub-paragraphs (2A) to (2C) “certificate” means such a certificate as is mentioned in sub-paragraph (1)(a).
(3) The Commissioners may by regulations make provision for giving effect to sub-paragraph (1).
(4) Regulations under this paragraph may, in particular, include provision for determining whether any taxable commodity is supplied to a facility.
(5) The provision that may be made by virtue of sub-paragraph (4) includes, in particular, provision for a taxable commodity of any description specified in the regulations to be taken as supplied to a facility only if the commodity is delivered to the facility.
Sch. 6 para. 44 substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 7, 13(1); S.I. 2007/2902, art. 2(1) (with art. 2(2)(4))

Reduced-rate supplies: variation of certificates under paragraph 44
45 (1) This paragraph applies where the Administrator, after having given in respect of a facility such a certificate as is mentioned in paragraph 44(1) (“the original certificate”), gives a certificate (a “variation certificate”) to the Commissioners stating—
(a) that, throughout the period (“the original period”) specified for the facility in the original certificate, the facility is to be taken as not being covered by a climate change agreement; or
(b) that, for so much of the original period as falls on or after a day specified in the variation certificate (being a day falling within the original period), the facility is to be taken as no longer being covered by a climate change agreement.
Word in Sch. 6 para. 45(1) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 3 (with Sch. 31 para. 11)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 45(2)-(4) repealed (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 8(2), 13(1), Sch. 27 Pt. 1(2); S.I. 2007/2902, art. 2(1)
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) If—
(a) the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(a), and
(b) the day on which the variation certificate is given falls before the beginning of the original period,
Words in Sch. 6 para. 45(5)(b) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 8(3)(a), 13(1); S.I. 2007/2902, art. 2(1)
the original certificate has effect as if the facility had never been specified in it.
Words in Sch. 6 para. 45(5) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 8(3)(b), 13(1); S.I. 2007/2902, art. 2(1)
(6) If—
(a) the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(a), and
(b) the day on which the variation certificate is given falls during the original period,
Words in Sch. 6 para. 45(6)(b) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 8(4)(a), 13(1); S.I. 2007/2902, art. 2(1)
the original certificate has effect as if the last day of the period specified for the facility in the original certificate were the day on which the variation certificate is given.
Words in Sch. 6 para. 45(6) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 8(4)(b), 13(1); S.I. 2007/2902, art. 2(1)
(7) If the statement in the variation certificate in respect of the facility is of the type described in sub-paragraph (1)(b), the original certificate has effect as if the last day of the period specified for the facility in the original certificate were the later of—
(a) the day on which the variation certificate is given, and
(b) the day specified in the variation certificate.
Words in Sch. 6 para. 45(7) substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 8(5), 13(1); S.I. 2007/2902, art. 2(1)
Sch. 6 para. 45 cross-heading substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 8(6), 13(1); S.I. 2007/2902, art. 2(1)

Reduced-rate supplies: deemed supply
45A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 45A omitted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 30 para. 12
Sch. 6 para. 45A and cross-heading inserted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 9, 13(1); S.I. 2007/2902, art. 2(1) (with art. 2(3)(4))

Removal of reduced rate where targets set by climate change agreement not met
45B (1) This paragraph applies where, by virtue of such a certificate as is mentioned in paragraph 44(1), a facility is to be taken as being covered by a climate change agreement for a period specified in that certificate (“the certification period”).
(2) If it appears to the Administrator that the progress made in the certification period towards meeting targets set for the facility by the agreement has been such as under the provisions of the agreement is unsatisfactory, the Administrator may issue a certificate under this paragraph.
Word in Sch. 6 para. 45B(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 4 (with Sch. 31 para. 11)
(3) The certificate must (in addition to specifying the facility, agreement and certification period to which it applies) specify—
(a) T, that is, the value (expressed in terms of a reduction in tonnes of carbon dioxide equivalent) of achieving the targets set for the facility by the agreement, and
(b) P, that is, the value (expressed in the same terms) of the progress made by the facility, during the certification period, towards meeting those targets.
(4) Where a certificate has been issued under this paragraph—
(a) each taxable supply made to the facility at any time falling within the certification period is to be treated as not being a reduced-rate supply, and
(b) accordingly, an amount (determined in accordance with sub-paragraph (5)) is payable by way of levy on that taxable supply.
(5) The amount payable under this paragraph on a taxable supply is—
where—
T and P have the values mentioned in sub-paragraph (3), and
R is the amount which would have been payable by way of levy on the supply (had it not been a reduced-rate supply) at the time that it was made, in accordance with paragraph 42(1)(a).
(6) The Administrator must send the certificate to—
(a) the Commissioners, and
(b) the person who is the operator of the facility.
Word in Sch. 6 para. 45B(6) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 4 (with Sch. 31 para. 11)
(7) A certificate under this paragraph may be issued after the certification period ends.
(8) A person liable to account for levy under this paragraph—
(a) is liable to account for it otherwise than by reference to an accounting period, and
(b) must not (by virtue of regulations under paragraph 41) become liable to pay it as from a date before the date on which the certificate under this paragraph is issued.
(9) Levy due under this paragraph is payable in addition to any levy already payable on any supply made in the certification period.
(10) In this paragraph—
“certification period”, in a case where the certificate referred to in sub-paragraph (1) has been varied under paragraph 45, means the period for which that certificate has effect as varied;
“tonne of carbon dioxide equivalent” has the meaning given in the Climate Change Act 2008.
Sch. 6 para. 45B inserted (with effect in accordance with s. 118(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 59 para. 1

Climate change agreements
46 In this Schedule “climate change agreement” means—
(a) an agreement that falls within paragraph 47, or
(b) a combination of agreements that falls within paragraph 48.

Climate change agreements: direct agreement ...
47 (1) An agreement (including one entered into before the passing of this Act) falls within this paragraph if it is an agreement—
(a) entered into with the Administrator,
Word in Sch. 6 para. 47(1)(a) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 6(a) (with Sch. 31 para. 11)
(b) expressed to be entered into for the purposes of the reduced rate of climate change levy,
(c) identifying the facilities to which it applies,
(d) to which a representative of each facility to which it applies is a party,
(e) setting, or providing for the setting of, targets for the facilities to which it applies,
(f) specifying certification periods (as to which see paragraph 49(1)) for the facilities to which it applies, ...
Word in Sch. 6 para. 47(1) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 31 para. 6(b) (with Sch. 31 para. 11)
(g) providing for seven-yearly (or more frequent) reviews by the Secretary of State or the Administrator of targets set by or under the agreement for those facilities and for giving effect to outcomes of such reviews , and
Words in Sch. 6 para. 47(1)(g) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 6(c)(i) (with Sch. 31 para. 11)
Words in Sch. 6 para. 47(1)(g) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 6(c)(ii) (with Sch. 31 para. 11)
Sch. 6 para. 47(1)(h) and word inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 6(d) (with Sch. 31 para. 11)
(h) containing any terms required by regulations falling within paragraph 52E.
(2) In this paragraph and paragraph 48 “representative”, in relation to a facility to which an agreement applies, means—
(a) the person who is the operator of the facility at—
(i) the time the agreement is entered into, or
(ii) if later, the time the facility last became a facility to which the agreement applies,
or
(b) a person authorised by that operator to agree to the facility being a facility to which the agreement applies.
Words in Sch. 6 para. 47 heading omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 31 para. 5 (with Sch. 31 para. 11)

Climate change agreement: combination of umbrella and underlying agreements
48 (1) A combination of agreements falls within this paragraph if the following conditions are satisfied.
(2) The first condition is that the combination is a combination of—
(a) an umbrella agreement (including one entered into before the passing of this Act), and
(b) an agreement (including one entered into before the passing of this Act) that, in relation to the umbrella agreement, is an underlying agreement.
(3) The second condition is that between them the two agreements—
(a) set, or provide for the setting of, targets for the facilities to which the underlying agreement applies,
(b) specify certification periods (as to which see paragraph 49(1)) for the facilities to which the underlying agreement applies, and
(c) provide for seven-yearly (or more frequent) reviews by the Secretary of State or the Administrator of targets set by or under the agreements for those facilities and for giving effect to outcomes of such reviews.
Words in Sch. 6 para. 48(3)(c) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 7(2)(a) (with Sch. 31 para. 11)
Words in Sch. 6 para. 48(3)(c) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 7(2)(b) (with Sch. 31 para. 11)
(4) For the purposes of this paragraph an “umbrella agreement” is an agreement—
(a) entered into with the Administrator,
Words in Sch. 6 para. 48(4)(a) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 7(3)(a) (with Sch. 31 para. 11)
(b) expressed to be entered into for the purposes of the reduced rate of climate change levy,
(c) identifying the facilities to which it applies, ...
Word in Sch. 6 para. 48(4) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 31 para. 7(3)(b) (with Sch. 31 para. 11)
(d) to which a representative of each facility to which it applies is a party , and
Sch. 6 para. 48(4)(e) and word inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 7(3)(c) (with Sch. 31 para. 11)
(e) containing any terms required by regulations falling within paragraph 52E.
(5) For the purposes of this paragraph an agreement is an “underlying agreement” in relation to an umbrella agreement if it is an agreement—
(a) expressed to be entered into for the purposes of the umbrella agreement,
(b) entered into with the Administrator,
Sch. 6 para. 48(5)(b) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 7(4)(a) (with Sch. 31 para. 11)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 48(5)(c) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 31 para. 7(4)(b) (with Sch. 31 para. 11)
(d) identifying which of the facilities to which the umbrella agreement applies are the facilities to which it applies, ...
Word in Sch. 6 para. 48(5) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 31 para. 7(4)(c) (with Sch. 31 para. 11)
(e) to which a representative of each facility to which it applies is a party , and
Sch. 6 para. 48(5)(f) and word inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 7(4)(d) (with Sch. 31 para. 11)
(f) containing any terms required by regulations falling within paragraph 52E.
(6) In the case of a climate change agreement that is a combination of agreements that falls within this paragraph, references to the facilities to which the climate change agreement applies are references to the facilities to which the underlying agreement applies.

Climate change agreement: supplemental provisions
49 (1) The first certification period specified by a climate change agreement for a facility to which it applies shall begin with the later of—
(a) the date on which the agreement, so far as relating to the facility, is expressed to take effect, and
(b) 1st April 2001;
and each subsequent certification period so specified shall begin immediately after the end of a previous certification period.
(2) Where a climate change agreement (the “new agreement”) applies to a facility to which another climate change agreement previously applied, the first certification period specified by the new agreement for the facility shall be—
(a) a period beginning as provided by sub-paragraph (1), or
(b) a period that—
(i) begins earlier than that, and
(ii) is a period that was a certification period specified for the facility by any climate change agreement that previously applied to the facility.
A period such as is mentioned in paragraph (b) includes a period beginning, or beginning and ending, before the date on which the new agreement, so far as relating to the facility, is expressed to take effect.
(3) For the purposes of giving certificates such as are mentioned in paragraphs 44(1) and 45(1), the Administrator may take a facility as being covered by a climate change agreement for a period if the facility is one to which the agreement applies and either—
(a) that period is the first certification period specified by the agreement for the facility, or
(b) that period is a subsequent certification period for the facility and it appears to the Administrator that progress made in the immediately preceding certification period towards meeting targets set for the facility by the agreement or by a climate change agreement that previously applied to the facility is, or is likely to be, such as under the provisions of the agreement in question is to be taken as being satisfactory.
Word in Sch. 6 para. 49(3) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 8(2) (with Sch. 31 para. 11)
(4) For the purposes of sub-paragraph (3)(b) a climate change agreement may (in particular) provide that progress towards meeting any targets for a facility is to be taken as being satisfactory if, in the absence (or partial absence) of any such progress required under the agreement, alternative requirements provided for by the agreement are satisfied.
(5) For the purposes of sub-paragraphs (2) and (3), the circumstances in which a facility to which a climate change agreement applies is one to which another such agreement previously applied include those where the facility is—
(a) a part, or a combination of parts, of a facility to which another such agreement previously applied,
(b) a combination of two or more such facilities,
(c) any combination of parts of such facilities, or
(d) any combination of such facilities and parts of such facilities.
(6) Paragraphs 47 and 48 and sub-paragraph (4) above are not to be taken as meaning that an agreement, or combination of agreements, containing provision in addition to any mentioned in those paragraphs and that sub-paragraph is not a climate change agreement.
(7) For the purposes of this Part of this Schedule “target”, in relation to a facility to which a climate change agreement applies, means a target relating to—
(a) energy, or energy derived from a source of any description, used in the facility or an identifiable group of facilities within which the facility falls, or
(b) emissions, or emissions of any description, from the facility or such a group of facilities;
and for this purpose “identifiable group” means a group that is identified in the agreement or that at any relevant time can be identified under the agreement.
Words in Sch. 6 para. 49(7) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 8(3) (with Sch. 31 para. 11)
(8) Nothing in this Schedule is to be taken as requiring the Administrator to—
(a) enter into any climate change agreement, or
Word in Sch. 6 para. 49(8) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 8(4)(b) (with Sch. 31 para. 11)
(b) enter into a climate change agreement with any particular person or persons, in respect of any particular facility or facilities or on any particular terms. ...
Sch. 6 para. 49(8)(c) and word omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 31 para. 8(4)(c) (with Sch. 31 para. 11)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Word in Sch. 6 para. 49(8) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 8(4)(a) (with Sch. 31 para. 11)

Facilities to which climate change agreements can apply
50 (1) This paragraph applies where, in connection with concluding or varying a climate change agreement, it falls to be determined whether a facility is to be, or is to continue to be, identified in the agreement as a facility to which the agreement applies.
(2) For the purposes of such a determination “facility” is (subject to any regulations under sub-paragraph (3) or (4)) to be taken as meaning—
(a) an installation covered by paragraph 51; or
(b) a site on which there is or are—
(i) such an installation or two or more such installations,
(ii) a part, or parts, of such an installation,
(iii) a part, or parts, of each of two or more such installations, or
(iv) any combination of such installations and parts of such installations.
(3) The Secretary of State may by regulations make provision for an installation covered by paragraph 51 to be taken to be a facility for those purposes only if—
(a) the taxable commodities supplied to the installation by taxable supplies are intended to be burned (or, in the case of electricity, consumed)—
(i) in the installation, or
(ii) on the site where the installation is situated but not in the installation,
and
(b) the amounts of taxable commodities, and of any other commodities specified in the regulations, subject to each of those intentions are such that any conditions specified in the regulations are satisfied.
(4) The Secretary of State may by regulations make provision for a site to be taken to be a facility for those purposes only if—
(a) the taxable commodities supplied to the site by taxable supplies are intended to be burned (or, in the case of electricity, consumed)—
(i) in installations on the site that are covered by paragraph 51 (or in parts of such installations), or
(ii) on the site but not in any such installation (or part of such an installation),
and
(b) the amounts of taxable commodities, and of any other commodities specified in the regulations, subject to each of those intentions are such that any conditions specified in the regulations are satisfied.
(5) Regulations under sub-paragraph (3) or (4) may make provision for deeming, for the purposes of the regulations, commodities to be intended to be burned (or, in the case of electricity, consumed) in circumstances specified in the regulations.
(6) In this paragraph and paragraph 51 “installation” means a stationary technical unit.

Energy-intensive installations
51 (1) An installation is covered by this paragraph if it falls within any one or more of the descriptions of installation set out in the Table.
(2) Sub-paragraph (2A) applies where—
(a) an installation falls within any one or more of those descriptions, and
(b) there is, on the same site as the installation, a location at which ancillary activities are carried out.
Sch. 6 para. 51(2)(2A)(2B) substituted for Sch. 6 para. 51(2) (23.3.2001) by S.I. 2001/1139, reg. 2(2)
(2A) The installation (taken alone) is not covered by this paragraph, but the combination—
(a) of the installation and that location, or
(b) where there is more than one such location, of the installation and all of those locations,
is to be taken as being an installation covered by this paragraph.
(2B) In sub-paragraph (2) “ancillary activities" means activities that—
(a) are directly associated with any of the primary activities carried out in the installation,
(b) have a technical connection with those primary activities, and
(c) could have an effect on environmental pollution.
(3) sub-paragraphs (1) to (2B) are subject to any regulations under paragraph 52.
Words in Sch. 6 para. 51(3) substituted (23.3.2001) by S.I. 2001/1139, reg. 2(3)
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 51(4)(5) omitted (23.3.2001) by S.I. 2001/1139, reg. 2(4)
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) sub-paragraph (2B)—
“environmental pollution” has the same meaning as in the Pollution Prevention and Control Act 1999;
“primary activity”, in relation to an installation falling within any one or more of the descriptions of installation set out in the Table, means an activity the carrying out of which at the installation results in the installation falling within one or more of those descriptions.
Words in Sch. 6 para. 51(6) substituted (23.3.2001) by S.I. 2001/1139, reg. 2(5)
1999 c. 24.

TABLE
1 Installations regulated under the Environmental Permitting (England and Wales) Regulations 2010 1. Part A installations. Sch. 6 para. 51: Table entries 1-5 substituted for entries 1-33 (23.3.2001) by S.I. 2001/1139, reg. 2(6) Sch. 6 para. 51 Table cross-heading substituted (E.W.) (6.4.2010) by The Environmental Permitting (England and Wales) Regulations 2010 (S.I. 2010/675), reg. 1(1)(b), Sch. 26 Pt. 1 para. 16 (with reg. 1(2), Sch. 4)
2 Installations that would be so regulated but for a threshold or exception Installations that would be Part A installations but for— (a) a relevant numeric threshold, or (b) a relevant exception.
3 Installations that would be so regulated if certain modifications were made to the Regulations Installations that would be Part A installations if the relevant modifications were made.
4 Corresponding installations in Scotland and Northern Ireland Installations that are situated in Scotland or Northern Ireland, but if situated in England and Wales— (a) would be Part A installations, (b) would be Part A installations but for— (i) a relevant numeric threshold, or (ii) a relevant exception, or (c) would be Part A installations if the relevant modifications were made.
5 Interpretation of entries 1 to 4 (1) In this entry “the Schedule” means Schedule 1 to the Environmental Permitting (England and Wales) Regulations 2010. Sch. 6 para. 51 Table entry 5 substituted (E.W.) (6.4.2008) by The Environmental Permitting (England and Wales) Regulations 2007 (S.I. 2007/3538), reg. 1(1)(b), Sch. 21 para. 27(2)(b) (with reg. 72, Sch. 4) Words in Sch. 6 para. 51 Table entry 5 substituted (E.W.) (6.4.2010) by The Environmental Permitting (England and Wales) Regulations 2010 (S.I. 2010/675), reg. 1(1)(b), Sch. 26 Pt. 1 para. 16(a) (with reg. 1(2), Sch. 4) (2) In entries 1 to 4— (a) “Part A installation” has the meaning given in paragraph 1 of Part 1 of Schedule 1 to the Environmental Permitting (England and Wales) Regulations 2010; Sch. 6 para. 51 Table entry 5 substituted (E.W.) (6.4.2008) by The Environmental Permitting (England and Wales) Regulations 2007 (S.I. 2007/3538), reg. 1(1)(b), Sch. 21 para. 27(2)(c) (with reg. 72, Sch. 4) Words in Sch. 6 para. 51 Table entry 5 substituted (E.W.) (6.4.2010) by The Environmental Permitting (England and Wales) Regulations 2010 (S.I. 2010/675), reg. 1(1)(b), Sch. 26 Pt. 1 para. 16(b) (with reg. 1(2), Sch. 4) (b) “relevant exception” means— (i) the exception in paragraph (b)(i) or (ii) of Part A(1) of Section 2.1 of Part 2 of the Schedule, Words in Sch. 6 para. 51 Table entry 5 inserted (12.7.2006) by The Climate Change Agreements (Miscellaneous Amendments) Regulations 2006 (S.I. 2006/1848), regs. 1, 2(2) Words in Sch. 6 para. 51 Table entry 5 substituted (E.W.) (6.4.2008) by The Environmental Permitting (England and Wales) Regulations 2007 (S.I. 2007/3538), reg. 1(1)(b), Sch. 21 para. 27(2)(d) (with reg. 72, Sch. 4) (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch. 6 para. 51 Table entry 5 omitted (12.7.2006) by virtue of The Climate Change Agreements (Miscellaneous Amendments) Regulations 2006 (S.I. 2006/1848), regs. 1, 2(3) (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) “the relevant modifications” means the omission of the following provisions of Part 2 of the Schedule: (i) the final twelve words of paragraph (b) of Part A(1) of Section 4.4; (ii) the final twelve words of paragraph (b) of Part A(1) of Section 4.5; (iia) in the interpretation of Section 5.1, in relation to the definitions of “co-incineration plant” and “incineration plant”, the final nine words in the sentence beginning “This definition covers; Words in Sch. 6 para. 51 Table entry 5 inserted (12.7.2006) by The Climate Change Agreements (Miscellaneous Amendments) Regulations 2006 (S.I. 2006/1848), regs. 1, 2(4) (iii) paragraph 1 of the Interpretation and application of Part A(1) of Section 5.4; Sch. 6 para. 51 Table entry 5 substituted (E.W.) (6.4.2008) by The Environmental Permitting (England and Wales) Regulations 2007 (S.I. 2007/3538), reg. 1(1)(b), Sch. 21 para. 27(2)(e) (with reg. 72, Sch. 4) (iv) the final fourteen words of paragraph (c) of Part A(1) of Section 6.1; (v) the final fourteen words of paragraph (c) of Part A(1) of Section 6.4; and (vi) the final fourteen words of paragraph (f)(ii) of Part A(1) of Section 6.8; and (d) “relevant numeric threshold” means a numeric threshold specified in any of the following provisions of Part 2 of the Schedule: (i) paragraphs (c) and (d) of Part A(1) of Section 2.1; (ii) Part A(2) of Section 2.1; (iii) paragraph (b) of Part A(1) of Section 2.2; (iv) Part A(1) of Section 2.3; (v) paragraph (b) of Part A(1) of Section 3.1; (vi) paragraph (b) of Part A(2) of Section 3.1; (vii) paragraph (b) of Part A(1) of Section 3.3; (viii) Part A(2) of Section 3.3; (ix) paragraph (a) of Part A(1) of Section 3.4; (ixa) Part A(1) of Section 3.6; Words in Sch. 6 para. 51 Table entry 5 inserted (12.7.2006) by The Climate Change Agreements (Miscellaneous Amendments) Regulations 2006 (S.I. 2006/1848), regs. 1, 2(5) (x) Part A(2) of Section 3.6; (xi) paragraphs (c) and (d) of Part A(1) of Section 4.1; (xii) paragraphs (c) and (e) of Part A(1) of Section 5.1; Word in Sch. 6 para. 51 Table entry 5 substituted (12.7.2006) by The Climate Change Agreements (Miscellaneous Amendments) Regulations 2006 (S.I. 2006/1848), regs. 1, 2(6) (xiai) paragraphs (a) and (c) of Part A(2) of Section 5.1; Words in Sch. 6 para. 51 Table entry 5 inserted (12.7.2006) by The Climate Change Agreements (Miscellaneous Amendments) Regulations 2006 (S.I. 2006/1848), regs. 1, 2(7) (xiii) Part A(1) of Section 5.2; (xiv) Part A(1) of Section 5.3; (xv) paragraph (c) of Part A(1) of Section 5.4; (xvi) paragraph (b) of Part A(1) of Section 6.1; (xvii) Part A(1) of Section 6.3; (xviii) paragraphs (a) and (b) of Part A(1) of Section 6.4; (xix) Part A(2) of Section 6.4; (xx) Part A(2) of Section 6.7; (xxi) paragraphs (a) to (e) of Part A(1) of Section 6.8; (xxii) Part A(2) of Section 6.8; and (xxiii) Part A(1) of Section 6.9; and (e) any reference to a part of the United Kingdom includes the territorial waters adjacent to that part.

Power to vary the installations covered by paragraph 51
52 (1) The Treasury may make provision by regulations for varying the installations covered by paragraph 51.
(2) The provision that may be made by regulations under this paragraph includes, in particular, provision—
(a) for the installations covered by paragraph 51 to include, or not to include, any installation of a description specified in the regulations;
(b) amending the Table in paragraph 51 by adding a description of installation to the Table, removing a description of installation from the Table or altering a description of installation set out in the Table;
(c) amending paragraph 51.

The Administrator etc
52A (1) In this Part of this Schedule references to “the Administrator” are to the body appointed as such by regulations made by the Secretary of State.
(2) The body appointed must be a body established by an enactment (as defined in section 97 of the Climate Change Act 2008).
(3) Different bodies may be appointed in relation to facilities in different parts of the United Kingdom.
52B (1) The Administrator is responsible for administering the scheme set out in paragraphs 44 to 52.
(2) This covers (in particular) the administration of climate change agreements.
(3) In this Part of this Schedule “administrative function” means—
(a) the Administrator's function imposed by sub-paragraph (1), or
(b) any other power or duty of the Administrator conferred or imposed by or under a provision of this Part of this Schedule.
52C (1) The Administrator may require persons falling within sub-paragraph (2) to pay to the Administrator such charges as may from time to time be specified to cover any costs incurred by the Administrator in carrying out any administrative function.
(2) The persons falling within this sub-paragraph are parties or potential or former parties to agreements falling within paragraph 47 or to umbrella or underlying agreements within the meaning of paragraph 48.
(3) In sub-paragraph (1) “specified” means specified in, or determined in accordance with, a scheme made by the Administrator for the purposes of this paragraph.
(4) A scheme may provide for the times at which, and the manner in which, charges are to be paid.
(5) Paragraph 146(7) applies in relation to the Administrator's power to make a scheme under this paragraph as it applies in relation to a power to make regulations under this Schedule.
(6) A scheme may revoke or vary any previous scheme.
(7) A scheme may be made only with the consent of the Secretary of State.
(8) Charges received by the Administrator must be paid to the Secretary of State who must pay them into the Consolidated Fund.
(9) Sub-paragraph (8) does not apply if the Administrator is the Environment Agency.
52D (1) The Secretary of State may by regulations make provision about the administration of the scheme set out in paragraphs 44 to 52.
(2) Sub-paragraph (1) covers (in particular)—
(a) provision about climate change agreements, and
(b) provision about how the Administrator is to carry out any administrative function.
(3) Without prejudice to the generality of sub-paragraphs (1) and (2), regulations may contain any provision falling within paragraph 52E or 52F.
(4) Regulations may—
(a) require the Administrator to obtain the Secretary of State's consent to any course of action,
(b) confer or impose other powers or duties on the Secretary of State or the Administrator, or
(c) confer or impose powers or duties on other persons.
(5) The Secretary of State may give directions to the Administrator about how the Administrator is to carry out any administrative function (and this power to give directions includes power to vary or revoke directions previously given).
(6) The Secretary of State may issue guidance to the Administrator about how the Administrator is to carry out any administrative function; and the Administrator must have regard to any guidance issued.
52E (1) Regulations may—
(a) specify terms which must be included in agreements falling within paragraph 47 or in umbrella or underlying agreements within the meaning of paragraph 48, and
(b) confer power on the Administrator to vary such agreements to take account of any changes in the terms specified under paragraph (a) from time to time.
(2) The terms which may be specified under sub-paragraph (1)(a) include (in particular) terms falling within paragraph 49(4) under which the absence (or partial absence) of any progress towards meeting any targets for a facility may be made up for by the payment to the Administrator of a sum specified in, or determined in accordance with, the regulations.
(3) Sums received by the Administrator must be paid to the Secretary of State who must pay them into the Consolidated Fund.
52F (1) Regulations may confer power on the Administrator—
(a) to impose a financial penalty of a specified amount on a person who, as a representative of a facility to which a climate change agreement applies, contravenes a term of the agreement, and
(b) to terminate, with effect from a specified date, the agreement so far as it applies to the facility if—
(i) the financial penalty is not paid to the Administrator within a specified period, or
(ii) the contravention is not remedied to the Administrator's satisfaction within a specified period.
(2) Regulations may also confer power on the Administrator to terminate, with effect from a specified date and without first imposing a financial penalty, a climate change agreement so far as it applies to a facility if there is a contravention of the agreement by a person who is a representative of the facility.
(3) Neither sub-paragraph (1)(a) nor sub-paragraph (2) covers a failure to meet, or to make progress towards meeting, any targets set for a facility under a climate change agreement.
(4) If regulations falling within sub-paragraph (1) or (2) are made, the regulations must also—
(a) confer rights of appeal against a decision taken by the Administrator to impose a financial penalty or to terminate a climate change agreement (as the case may be), and
(b) specify the court, tribunal or person who is to hear and determine the appeal.
(5) The Secretary of State may be specified for the purposes of sub-paragraph (4)(b).
(6) Penalties received by the Administrator must be paid to the Secretary of State who must pay them into the Consolidated Fund.
(7) Regulations may confer power on the Administrator to terminate, with effect from a specified date, a climate change agreement so far as it applies to a facility in specified circumstances not involving a contravention of the agreement.
(8) In sub-paragraphs (1) to (7)—
“representative” has the meaning given by paragraph 47(2), and
“specified” means specified in, or determined in accordance with, the regulations.
(9) Sub-paragraph (10) or (11) (as the case may be) applies if a climate change agreement is terminated in respect of a facility before the start of, or during, a period specified for the facility in such a certificate as is mentioned in paragraph 44(1).
(10) If the termination is before the start of the specified period, the Administrator must, in respect of the facility, give a variation certificate within paragraph 45(1)(a) in relation to the specified period.
(11) If the termination is during the specified period, the Administrator must, in respect of the facility, give a variation certificate within paragraph 45(1)(b) in relation to the specified period specifying the day of the termination.
Sch. 6 paras. 52A-52F and cross-heading inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 9 (with Sch. 31 para. 11)

Part V Registration

Requirement to be registered
53 (1) A person is required to be registered with the Commissioners for the purposes of the levy if a taxable supply is made in respect of which he is the person liable to account for the levy charged.
(2) The Commissioners shall, for the purposes of sub-paragraph (1) and in accordance with the provisions of this Part of this Schedule, establish and maintain a register of persons liable to account for levy.
(3) The Commissioners shall keep such information in the register as they consider appropriate for the care and management of the levy.
(4) Regulations made by the Commissioners may provide that, in such cases or circumstances and subject to such conditions or requirements as may be prescribed in the regulations, the Commissioners may exempt a person from the requirement to be registered.
Sch. 6 para. 53(4) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(3)

Interpretation of Part V
54 In this Part of this Schedule—
(a) references to the register are references to the register maintained under paragraph 53(2);
(b) references to registering a person are references to registering him in that register; and
(c) references to a person’s registration are references to his registration in that register.

Notification of registrability etc.
55 (1) A person who—
(a) intends to make, or have made to him, any taxable supply in respect of which (if made) he will be the person liable to account for the levy charged, or
(aa) expects to be deemed to make a taxable supply to himself under paragraph 24A or 24B, or
Sch. 6 para. 55(1)(aa) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 15, 21
(b) is required to be registered for the purposes of the levy,
shall (if he is not so registered) notify the Commissioners of that fact.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 55(2)-(6) omitted (with effect in accordance with art. 3 of the commencing S.I.) by virtue of Finance Act 2008 (c. 9), s. 123(2), Sch. 41 para. 25(k)(ii); S.I. 2009/511, art. 2 (with art. 4)
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form of registration
56 (1) The Commissioners shall register a person if—
(a) they receive from him a notification given in pursuance of paragraph 55, or
(b) although they have not received from him such a notification, it appears to them that he is required to be registered.
Where the Commissioners register a person who is required to be registered, they shall register him with effect from the time when the requirement arose.
(2) Where any two or more bodies corporate are members of the same group they shall be registered together as one person in the name of the representative member.
(3) The registration of a body corporate carrying on a business in several divisions may, if the body corporate so requests and the Commissioners see fit, be in the names of those divisions.
(4) The registration of—
(a) any two or more persons carrying on a business in partnership, or
(b) an unincorporated body,
may be in the name of the firm or body concerned.

Notification of loss or prospective loss of registrability
57 (1) Where a person who has become liable to give a notification by virtue of paragraph 55 ceases (whether before or after being registered for the purposes of the levy) to intend to make, or to intend to have made to him, taxable supplies in respect of which (if made) he would be the person liable to account for the levy charged, he shall notify the Commissioners of that fact.
(2) A person who fails to comply with sub-paragraph (1) shall be liable to a penalty of £250.

Cancellation of registration
58 (1) If the Commissioners are satisfied that a registered person—
(a) has ceased to make, or have made to him, taxable supplies on which he is liable to account for the levy charged, and
(b) does not intend to make, or have made to him, any such supplies,
they may cancel his registration with effect from such time after he last made, or had made to him, taxable supplies as appears to them to be appropriate.
(2) Sub-paragraph (1) applies whether or not the registered person has notified the Commissioners under paragraph 57.
(3) The Commissioners shall be under a duty to exercise the power conferred by sub-paragraph (1) with effect from any time if, where the power is exercisable, they are satisfied that the conditions specified in sub-paragraph (4) are satisfied and were or will be satisfied at that time.
(4) Those conditions are—
(a) that the person in question has given a notification under paragraph 57;
(b) that no levy due from that person, and no amount recoverable as if it were levy, remains unpaid;
(c) that no tax credit to which that person is entitled by virtue of any tax credit regulations is outstanding; and
(d) that that person is not subject to any outstanding liability to make a return for the purposes of the levy.
(5) Where—
(a) a registered person notifies the Commissioners under paragraph 57, and
(b) they are satisfied that (if he had not been registered) he would not have been required to be registered at any time since the time when he was registered,
they shall cancel his registration with effect from the date of his registration.

Correction of the register etc.
59 (1) The Commissioners may by regulations make provision for and with respect to the correction of entries in the register.
(2) Regulations under this paragraph may, to such extent as appears to the Commissioners appropriate for keeping the register up to date, make provision requiring—
(a) registered persons, and
(b) persons who are required to be registered,
to notify the Commissioners of changes in circumstances relating to themselves, their businesses or any other matter with respect to which particulars are contained in the register (or would be, were the person registered).

Supplemental regulations about notifications
60 (1) For the purposes of any provision made by or under this Part of this Schedule for any matter to be notified to the Commissioners, regulations made by the Commissioners may make provision—
(a) as to the time within which the notification is to be given;
(b) as to the form and manner in which the notification is to be given; and
(c) as to the information and other particulars to be contained in or provided with any notification.
(2) For those purposes the Commissioners may also by regulations impose obligations requiring a person who has given a notification to notify the Commissioners if any information contained in or provided in connection with that notification is or becomes inaccurate.
(3) The power under this paragraph to make regulations as to the time within which any notification is to be given shall include power to authorise the Commissioners to extend the time for the giving of a notification.

Publication of information on the register
61 (1) The Commissioners may publish, by such means as they think fit, any information which—
(a) is derived from the register; and
(b) falls within any of the descriptions set out below.
(2) The descriptions are—
(a) the names of registered persons;
(b) the fact (where it is the case) that the registered person is a body corporate which is a member of a group;
(c) the names of the other bodies corporate which are members of the group.
(3) Information may be published in accordance with this paragraph notwithstanding any obligation not to disclose the information that would otherwise apply.

Part VI Credits and repayments

Tax credits
62 (1) The Commissioners may, in accordance with the following provisions of this paragraph, by regulations make provision in relation to cases where—
(a) after a taxable supply has been made, there is such a change in circumstances or any person’s intentions that, if the changed circumstances or intentions had existed at the time the supply was made, the supply would not have been a taxable supply;
(b) after a supply of a taxable commodity is made on the basis that it is a taxable supply, it is determined that the supply was not (to any extent) a taxable supply;
(ba) a quantity of a carbon price support rate commodity is the subject of a deemed supply under paragraph 24A or 24B but afterwards the quantity—
(i) is not used as mentioned in paragraph 24A(1)(b) or 24B(1)(b) (as the case may be), and
(ii) is removed from the site at which the station is situated or from the CHPQA site of the station (as the case may be);
Sch. 6 para. 62(1)(ba)-(bc) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 16, 21
(bb) after—
(i) a determination is made under regulations falling within paragraph 24B(3) that a quantity, or a proportion of a quantity, of a carbon price support rate commodity is referable to the production of electricity to which paragraph 24B(2A) does not apply, and
Words in Sch. 6 para. 62(1)(bb) inserted (with effect in accordance with s. 63(5) of the amending Act) by Finance Act 2015 (c. 11), s. 63(4)
(ii) it is accordingly determined that the quantity or proportion of a quantity is the subject of a deemed supply under paragraph 24B,
it is determined that the quantity or proportion of a quantity was not referable to the production of electricity to which paragraph 24B(2A) does not apply;
(bc) after an amount is determined to be payable by way of levy on a deemed supply under paragraph 24A or 24B, it is determined that that amount is too high;
(c) after a taxable supply has been made on the basis that it was not a reduced-rate supply, it is determined that the supply was (to any extent) a ... reduced-rate supply;
Word in Sch. 6 para. 62(1)(c) substituted (1.11.2007) by Finance Act 2006 (c. 25), s. 172(13)(a)(i)(16); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
Words in Sch. 6 para. 62(1)(c) repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(13)(a)(ii)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
(ca) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 62(1)(ca)(cb) omitted (with effect in accordance with Sch. 20 para. 10(2)(3) of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 20 paras. 6, 10(1)
(cb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 62(1)(d) repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(13)(b)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
(e) after a charge to levy has arisen on a supply of a taxable commodity (“the original commodity”) to a person who uses the commodity supplied in producing taxable commodities primarily for his own consumption, that person makes supplies of any of the commodities in whose production he has used the original commodity;
(f) after a person has become entitled to a debt as a result of making a taxable supply, the debt turns out to be bad (in whole or in part);
(g) the making of a taxable supply gives rise to a double charge to levy within the meaning of paragraph 21.
(2) The provision that may be made in relation to any such case as is mentioned in sub-paragraph (1) is provision—
(a) for such person as may be specified in the regulations to be entitled to a tax credit in respect of any levy charged on the supply (or, in such a case as is mentioned in sub-paragraph (1)(g), one of the supplies) in question;
(b) for a tax credit to which any person is entitled under the regulations to be brought into account when he is accounting for such levy due from him as may be determined in accordance with the regulations; and
Words in Sch. 6 para. 62(2)(b) substituted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(4)
(c) for a person entitled to a tax credit to be entitled, in any prescribed case where he cannot bring the tax credit into account so as to set it against a liability to levy, to a repayment of levy of an amount so determined.
(3) Regulations under this paragraph may contain any or all of the following provisions—
(a) provision making any entitlement to a tax credit conditional on the making of a claim by such person, within such period and in such manner as may be prescribed;
(b) provision making entitlement to bring a tax credit into account, or to receive a repayment in respect of such a credit, conditional on compliance with such requirements (including the making of a claim) as may be determined in accordance with the regulations;
(c) provision requiring a claim for a tax credit to be evidenced and quantified by reference to such records and other documents as may be so determined;
(d) provision requiring a person claiming any entitlement to a tax credit to keep, for such period and in such form and manner as may be so determined, those records and documents and a record of such information relating to the claim as may be so determined;
(e) provision for the withdrawal of a tax credit where any requirement of the regulations is not complied with;
(f) provision for interest at the rate applicable under section 197 of the Finance Act 1996 to be treated as added, for such period and for such purposes as may be prescribed, to the amount of any tax credit;
(g) provision for determining whether, and to what extent, a debt is to be taken as bad;
(h) provision for the withdrawal of a tax credit to which a person has become entitled in a case within sub-paragraph (1)(f) where any part of the debt that has been taken to be bad falls to be regarded as not having been bad;
(i) provision for determining whether, and to what extent, any part of a debt that has been taken to be bad should be regarded as not having been bad;
(j) provision for anything falling to be determined in accordance with the regulations to be determined by reference to a general or specific direction given in accordance with the regulations by the Commissioners.
(4) Regulations made under this paragraph shall have effect subject to the provisions of paragraph 64.

Repayments of overpaid levy
63 (1) Where a person has paid an amount to the Commissioners by way of levy which was not levy due to them, they shall be liable to repay the amount to him.
(2) The Commissioners shall not be liable to repay an amount under this paragraph if, or to the extent that, any person has become entitled to a tax credit in respect of that amount by virtue of tax credit regulations.
(3) The Commissioners shall not be liable to repay an amount under this paragraph except on the making of a claim for that purpose.
(4) A claim under this paragraph must be made in such form and manner, and must be supported by such documentary evidence, as may be required by regulations made by the Commissioners.
(5) The preceding provisions of this paragraph are subject to the provisions of paragraph 64.
(6) Except as provided by this paragraph or tax credit regulations, the Commissioners shall not, by virtue of the fact that it was not levy due to them, be liable to repay any amount paid to them by way of levy.

Supplemental provisions about repayments etc.
64 (1) The Commissioners shall not be liable, on any claim for a repayment of levy, to repay any amount paid to them more than 4 years before the making of the claim.
Words in Sch. 6 para. 64(1) substituted (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 33; S.I. 2010/867, art. 2(1) (with art. 16)
(2) It shall be a defence to any claim for a repayment of an amount of levy that the repayment of that amount would unjustly enrich the claimant.
(3) Sub-paragraph (4) applies for the purposes of sub-paragraph (2) where—
(a) there is an amount paid by way of levy which (apart from sub-paragraph (2)) would fall to be the subject of a repayment of levy to any person (“person A”); and
(b) the whole or a part of the cost of the payment of that amount to the Commissioners has, for practical purposes, been borne by a person other than person A.
(4) Where, in a case to which this sub-paragraph applies, loss or damage has been or may be incurred by person A as a result of mistaken assumptions made in his case about the operation of any provisions relating to levy, that loss or damage shall be disregarded, except to the extent of the quantified amount, in the making of any determination as to—
(a) whether or to what extent the repayment of an amount to person A would enrich him; or
(b) whether or to what extent any enrichment of person A would be unjust.
(5) In sub-paragraph (4) “the quantified amount” means the amount (if any) which is shown by person A to constitute the amount that would appropriately compensate him for loss or damage shown by him to have resulted, for any business carried on by him, from the making of the mistaken assumptions.
(6) The reference in sub-paragraph (4) to provisions relating to levy is a reference to any provisions of—
(a) any enactment or subordinate legislation (whether or not still in force) which relates to the levy or to any matter connected with it; or
(b) any notice published by the Commissioners under or for the purposes of any enactment or subordinate legislation relating to the levy.

Reimbursement arrangements
65 (1) The Commissioners may by regulations make provision for reimbursement arrangements made by any person to be disregarded for the purposes of paragraph 64(2) except where the arrangements—
(a) contain such provision as may be required by the regulations; and
(b) are supported by such undertakings to comply with the provisions of the arrangements as may be required by the regulations to be given to the Commissioners.
(2) In this paragraph “reimbursement arrangements” means any arrangements for the purposes of a claim to a repayment of levy which—
(a) are made by any person for the purpose of securing that he is not unjustly enriched by the repayment of any amount in pursuance of the claim; and
(b) provide for the reimbursement of persons who have for practical purposes borne the whole or any part of the cost of the original payment of that amount to the Commissioners.
(3) Without prejudice to the generality of sub-paragraph (1), the provision that may be required by regulations under this paragraph to be contained in reimbursement arrangements includes—
(a) provision requiring a reimbursement for which the arrangements provide to be made within such period after the repayment to which it relates as may be specified in the regulations;
(b) provision for the repayment of amounts to the Commissioners where those amounts are not reimbursed in accordance with the arrangements;
(c) provision requiring interest paid by the Commissioners on any amount repaid by them to be treated in the same way as that amount for the purposes of any requirement under the arrangements to make reimbursement or to repay the Commissioners;
(d) provision requiring such records relating to the carrying out of the arrangements as may be described in the regulations to be kept and produced to the Commissioners, or to an officer of theirs.
(4) Regulations under this paragraph may impose obligations on such persons as may be specified in the regulations—
(a) to make the repayments to the Commissioners that they are required to make in pursuance of any provisions contained in any reimbursement arrangements by virtue of sub-paragraph (3)(b) or (c);
(b) to comply with any requirements contained in any such arrangements by virtue of sub-paragraph (3)(d).
(5) Regulations under this paragraph may make provision for the form and manner in which, and the times at which, undertakings are to be given to the Commissioners in accordance with the regulations; and any such provision may allow for those matters to be determined by the Commissioners in accordance with the regulations.

Interest payable by the Commissioners
66 (1) Where, due to an error on the part of the Commissioners, a person—
(a) has paid to them by way of levy an amount which was not levy due and which they are in consequence liable to repay to him,
(b) has failed to claim a repayment of levy to which he was entitled, under any tax credit regulations, in respect of any tax credits, or
(c) has suffered delay in receiving payment of an amount due to him from them in connection with levy,
then, if and to the extent that they would not be liable to do so apart from this paragraph, they shall (subject to the following provisions of this paragraph) pay interest to him on that amount for the applicable period.
(2) In sub-paragraph (1), the reference in paragraph (a) to an amount which the Commissioners are liable to repay in consequence of the making of a payment that was not due is a reference to only so much of that amount as is the subject of a claim that the Commissioners are required to satisfy or have satisfied.
(3) In that sub-paragraph the amounts referred to in paragraph (c)—
(a) do not include any amount payable under this paragraph;
(b) do not include the amount of any interest for which provision is made by virtue of paragraph 62(3)(f); but
(c) do include any amount due (in respect of an adjustment of overpaid interest) by way of a repayment under paragraph 87(3) or 110(3).
(4) The applicable period, in a case falling within sub-paragraph (1)(a), is the period—
(a) beginning with the date on which the payment is received by the Commissioners; and
(b) ending with the date on which they authorise payment of the amount on which the interest is payable.
(5) The applicable period, in a case falling within sub-paragraph (1)(b) or (c), is the period—
(a) beginning with the date on which, apart from the error, the Commissioners might reasonably have been expected to authorise payment of the amount on which the interest is payable; and
(b) ending with the date on which they in fact authorise payment of that amount.
(6) In determining the applicable period for the purposes of this paragraph there shall be left out of account any period by which the Commissioners’ authorisation of the payment of interest is delayed by circumstances beyond their control.
(7) The reference in sub-paragraph (6) to a period by which the Commissioners’ authorisation of the payment of interest is delayed by circumstances beyond their control includes, in particular, any period which is referable to—
(a) any unreasonable delay in the making of any claim for the payment or repayment of the amount on which interest is claimed;
(b) any failure by any person to provide the Commissioners—
(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 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.
(8) In determining for the purposes of sub-paragraph (7) 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.
(9) The Commissioners shall not be liable to pay interest under this paragraph except on the making of a claim for that purpose.
(10) A claim under this paragraph must be in writing and must be made not more than 4 years after the end of the applicable period to which it relates.
Words in Sch. 6 para. 66(10) substituted (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 34; S.I. 2010/867, art. 2(1) (with art. 17)
(11) References in this paragraph—
(a) to receiving payment of any amount from the Commissioners, or
(b) to the authorisation by the Commissioners of the payment of any amount,
include references to the discharge by way of set-off (whether in accordance with regulations under paragraph 73 or 74 or otherwise) of the Commissioners’ liability to pay that amount.
(12) Interest under this paragraph shall be payable at the rate applicable under section 197 of the Finance Act 1996.
1966 c. 8.

Assessment for excessive repayment
67 (1) Where—
(a) any amount has been paid at any time to any person by way of a repayment of levy, and
(b) the amount paid exceeded the amount which the Commissioners were liable at that time to repay to that person,
the Commissioners may, to the best of their judgement, assess the excess paid to that person and notify it to him.
(2) Where—
(a) any amount has been paid to any person by way of repayment of levy,
(b) the repayment is in respect of a tax credit the entitlement to which arose in a case falling within paragraph 62(1)(f) (tax credit where all or part of a debt is bad),
(c) the whole or any part of the credit is withdrawn on account of any part of the debt taken as bad falling to be regarded as not having been bad, and
(d) the amount paid exceeded the amount which the Commissioners would have been liable to repay to that person had that withdrawal been taken into account,
the Commissioners may, to the best of their judgement, assess the excess paid to that person and notify it to him.
(3) Where any person is liable to pay any amount to the Commissioners in pursuance of an obligation imposed by virtue of paragraph 65(4)(a), the Commissioners may, to the best of their judgement, assess the amount due from that person and notify it to him.
(4) Subject to sub-paragraph (5), where—
(a) an assessment is made on any person under this paragraph in respect of a repayment of levy made in relation to any accounting period, and
(b) the Commissioners have power under Part VII of this Schedule to make an assessment on that person to an amount of levy due from that person for that period,
the assessments may be combined and notified to him as one assessment.
(5) A notice of a combined assessment under sub-paragraph (4) must separately identify the amount being assessed in respect of repayments of levy.

Assessment for overpayments of interest
68 Where—
(a) any amount has been paid to any person by way of interest under paragraph 66, but
(b) that person was not entitled to that amount under that paragraph,
the Commissioners may, to the best of their judgement, assess the amount so paid to which that person was not entitled and notify it to him.

Assessments under paragraphs 67 and 68
69 (1) An assessment under paragraph 67 or 68 shall not be made more than two years after the time when evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to the knowledge of the Commissioners.
(2) Where an amount has been assessed and notified to any person under paragraph 67 or 68, it shall be recoverable as if it were levy due from him.
(3) Sub-paragraph (2) does not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

Interest on amounts assessed
70 (1) Where an assessment is made under paragraph 67 or 68, the whole of the amount assessed shall carry interest, for the period specified in sub-paragraph (2), as follows—
(a) so much of that amount as represents the amount of a tax credit claimed by a person who was not entitled to it (but not any amount assessed under paragraph 67(2)) shall carry penalty interest;
(b) so much of that amount as does not carry penalty interest under paragraph (a) shall carry interest at the rate applicable under section 197 of the Finance Act 1996.
1996 c. 8.
(2) That period is the period which—
(a) begins with the day after that on which the person is notified of the assessment; and
(b) ends with the day before that on which payment is made of the amount assessed.
(3) Interest under this paragraph shall be paid without any deduction of income tax.
(4) Penalty interest under this paragraph shall be compound interest calculated—
(a) at the penalty rate, and
(b) with monthly rests.
(5) For this purpose the penalty rate is the rate found by—
(a) taking the rate applicable under section 197 of the Finance Act 1996 for the purposes of sub-paragraph (1)(b); and
(b) adding 10 percentage points to that rate.
(6) Where a person is liable under this paragraph to pay any penalty interest, the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper.
(7) Subject to sub-paragraph (8), where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay penalty interest, that is a matter which (among other things) may be taken into account under sub-paragraph (6).
(8) In determining whether there is a reasonable excuse for the purposes of sub-paragraph (7), no account shall be taken of any of the following matters, that is to say—
(a) the insufficiency of the funds available to any person for paying any levy due or for paying the amount of the interest;
(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 levy;
(c) the fact that the person liable to pay the interest or a person acting on his behalf has acted in good faith.
(9) In the case of interest reduced by the Commissioners under sub-paragraph (6) an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners.

Assessments to interest under paragraph 70
71 (1) Where any person is liable to interest under paragraph 70 the Commissioners may assess the amount due by way of interest and notify it to him accordingly.
(2) Without prejudice to the power to make assessments under this paragraph for later periods, the interest to which an assessment under this paragraph may relate shall be confined to interest for a period of no more than two years ending with the time when the assessment under this paragraph is made.
(3) Where an amount has been assessed and notified to any person under this paragraph it shall be recoverable as if it were levy due from him.
(4) Sub-paragraph (3) does not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.
(5) Where an assessment is made under this paragraph to an amount of interest under paragraph 70—
(a) the notice of assessment shall specify a date, not later than the date of the notice of assessment, to which the amount of interest which is assessed is calculated; and
(b) if the interest continues to accrue after that date, a further assessment or further assessments may be made under this paragraph in respect of the amounts so accruing.
(6) Where—
(a) an assessment to interest is made specifying a date for the purposes of sub-paragraph (5)(a), and
(b) within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the interest, the amount on which the interest is payable is paid,
that amount shall be deemed for the purposes of any further liability to interest to have been paid on the specified date.

Supplementary assessments
72 If it appears to the Commissioners that the amount which ought to have been assessed in an assessment under paragraph 67, 68 or 71 exceeds the amount which was so assessed, then—
(a) under the same paragraph 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 notify the person concerned accordingly.

Set-off of or against amounts due under this Schedule
73 (1) The Commissioners may by regulations make provision in relation to any case where—
(a) a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of levy; and
(b) the Commissioners are under a duty to pay to that person at the same time an amount or amounts in respect of levy or any of the other taxes under their care and management.
(2) Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b), the latter shall be set off against the former.
(3) Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a), the Commissioners may set off the latter in paying the former.
(4) Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) no payment need be made in respect of the former or the latter.
(5) Regulations under this paragraph may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of levy to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a).
(6) Regulations under this paragraph may include provision treating any duty to pay mentioned in sub-paragraph (1) as discharged accordingly.
(7) References in sub-paragraph (1) to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalties that are or may be recovered as if they were amounts of tax.
(8) In this paragraph “tax” includes duty.

Set-off of or against other taxes and duties
74 (1) The Commissioners may by regulations make provision in relation to any case where—
(a) a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of any tax (or taxes) under their care and management other than levy; and
(b) the Commissioners are under a duty, at the same time, to make any repayment of levy to that person or to make any other payment to him of any amount or amounts in respect of levy.
(2) Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b), the latter shall be set off against the former.
(3) Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a), the Commissioners may set off the latter in paying the former.
(4) Regulations under this paragraph may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) no payment need be made in respect of the former or the latter.
(5) Regulations under this paragraph may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of any of the taxes under their care and management to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a).
(6) Regulations under this paragraph may include provision treating any duty to pay mentioned in sub-paragraph (1) as discharged accordingly.
(7) References in sub-paragraph (1) to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalties that are or may be recovered as if they were amounts of tax.
(8) In this paragraph “tax” includes duty.

Restriction on powers to provide for set-off
75 (1) Regulations made under paragraph 73 or 74 shall not require any such amount or amounts as are mentioned in sub-paragraph (1)(b) of that paragraph (“the credit”) to be set against any such amount or amounts as are mentioned in sub-paragraph (1)(a) of that paragraph (“the debit”) in any case where—
(a) an insolvency procedure has been applied to the person entitled to the credit;
(b) the credit became due after that procedure was so applied; and
(c) the liability to pay the debit either arose before that procedure was so applied or (having arisen afterwards) relates to, or to matters occurring in the course of, the carrying on of any business at times before the procedure was so applied.
(2) For the purposes of this paragraph, an insolvency procedure is applied to a person if—
(a) a bankruptcy order, winding-up order or administration order is made or an administrator is appointed in relation to that person or an award of sequestration is made on that person’s estate;
Words in Sch. 6 para. 75(2)(a) inserted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 32(a) (with art. 6)
(b) that person is put into administrative receivership;
(c) that person passes a resolution for voluntary winding up;
(d) any voluntary arrangement approved in accordance with—
(i) Part I or VIII of the Insolvency Act 1986, or
1986 c. 45.
(ii) Part II or Chapter II of Part VIII of the Insolvency (Northern Ireland) Order 1989,
S.I 1989/2405 (N.I 19.).
comes into force in relation to that person;
(e) a deed of arrangement registered in accordance with—
(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 75(2)(e)(i) omitted (1.10.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(7), Sch. 6 para. 2(14)(a) (with Sch. 6 para. 3); S.I. 2015/1732, art. 2(e)(i)
(ii) Chapter I of Part VIII of that Order,
takes effect in relation to that person;
(f) a person is appointed as the interim receiver of some or all of that person’s property under section 286 of the Insolvency Act 1986 or Article 259 of the Insolvency (Northern Ireland) Order 1989;
(g) a person is appointed as the provisional liquidator in relation to that person under section 135 of that Act or Article 115 of that Order;
(h) an interim order is made under Part VIII of that Act, or Chapter II of Part VIII of that Order, in relation to that person; or
(i) that person’s estate becomes vested in any other person as that person’s trustee under a trust deed (within the meaning of the Bankruptcy (Scotland) Act 1985).
1985 c. 66.
(3) In this paragraph references, in relation to any person, to the application of an insolvency procedure to that person shall not include—
(a) the making of a bankruptcy order, winding-up order... or award of sequestration or the appointment of an administrator at a time when any such arrangement or deed as is mentioned in paragraph (d), (e) or (i) of sub-paragraph (2) is in force in relation to that person;
Words in Sch. 6 para. 75(3)(a) omitted (15.9.2003) by virtue of Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 32(b)(i) (with art. 6)
Words in Sch. 6 para. 75(3)(a) inserted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 32(b)(ii) (with art. 6)
(b) the making of a winding-up order at any of the following times, that is to say—
(i) immediately upon the appointment of an administrator in respect of the person ceasing to have effect;
Sch. 6 para. 75(3)(b)(i) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 32(c) (with art. 6)
(ii) when that person is being wound up voluntarily;
(iii) when that person is in administrative receivership;
or
(c) the making of an administration order in relation to that person at any time when that person is in administrative receivership.
(4) For the purposes of this paragraph a person shall be regarded as being in administrative receivership throughout any continuous period for which (disregarding any temporary vacancy in the office of receiver) there is an administrative receiver of that person.
(5) In this paragraph—
“administration order” means an administration order under Schedule B1 to the Insolvency Act 1986 or Article 21 of the Insolvency (Northern Ireland) Order 1989;
“administrative receiver” means an administrative receiver within the meaning of section 251 of that Act or Article 5(1) of that Order.
Words in Sch. 6 para. 75(5) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 32(d) (with art. 6)
1986 c. 45.
S.I. 1989/2405 )N.I. 19.

Part VI: supplemental provisions
76 (1) Any notification of an assessment under any provision of this Part of this Schedule to a person’s representative shall be treated for the purposes of this Schedule as notification to the person in relation to whom the representative acts.
(2) In this paragraph “representative”, in relation to any person, means—
(a) any of that person’s personal representatives;
(b) that person’s trustee in bankruptcy or liquidator;
(c) any person holding office as a receiver in relation to that person or any of his property;
(d) that person’s tax representative or any other person for the time being acting in a representative capacity in relation to that person.
(3) In this paragraph “trustee in bankruptcy” includes, as respects Scotland—
(a) an interim or permanent trustee (within the meaning of the Bankruptcy (Scotland) Act 1985); and
(b) a trustee acting under a trust deed (within the meaning of that Act).
(4) The powers conferred by paragraphs 73 and 74 are without prejudice to any power of the Commissioners to provide by tax credit regulations for any amount to be set against another.

Part VII Recovery and interest

Recovery of levy as debt due
77 Levy shall be recoverable as a debt due to the Crown.

Assessments of amounts of levy due
78 (1) Where it appears to the Commissioners—
(a) that any period is an accounting period by reference to which a person is liable to account for levy,
(b) that any levy for which that person is liable to account by reference to that period has become due, and
(c) that there has been a default by that person that falls within sub-paragraph (2),
they may assess the amount of levy due from that person for that period to the best of their judgement and notify that amount to that person.
(1A) Where it appears to the Commissioners—
(a) that any levy for which a person is liable to account otherwise than by reference to an accounting period has become due, and
(b) that there has been a default by that person that falls within sub-paragraph (2),
they may assess the amount of that levy to the best of their judgement and notify it to him.
Sch. 6 para. 78(1A) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(5)
(2) The defaults falling within this sub-paragraph are—
(a) any failure to make a return required to be made by any provision made by or under this Schedule;
(b) any failure to keep any documents necessary to verify returns required to be made under any such provision;
(c) any failure to afford the facilities necessary to verify returns required to be made under any such provision;
(d) the making, in purported compliance with any requirement of any such provision to make a return, of an incomplete or incorrect return;
(e) any failure to comply with a requirement imposed by or under Part V of this Schedule (registration).
(3) Where it appears to the Commissioners that a default falling within sub-paragraph (2) is a default by a person on whom the requirement to make a return is imposed in his capacity as the representative of another person, sub-paragraph (1) shall apply as if the reference to the amount of levy due included a reference to any levy due from that other person.
(4) In a case where—
(a) the Commissioners have made an assessment for any accounting period as a result of any person’s failure to make a return for that period,
(b) the levy assessed has been paid but no proper return has been made for that period,
(c) as a result of a failure (whether by that person or a representative of his) to make a return for a later accounting period, the Commissioners find it necessary to make another assessment under this paragraph in relation to the later period, and
(d) the Commissioners think it appropriate to do so in the light of the absence of a proper return for the earlier period,
they may, in the assessment in relation to the later period, specify an amount of levy due that is greater than the amount that they would have considered to be appropriate had they had regard only to the later period.
(5) Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable on the basis that it is an amount of levy due from him.
(6) Sub-paragraph (5) does not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

Supplementary assessments
79 (1) If, where an assessment has been notified to any person under paragraph 78 or this paragraph, it appears to the Commissioners that the amount which ought to have been assessed as due for any accounting period exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and notify that person accordingly.
(2) Where an amount has been assessed and notified to any person under this paragraph it shall be recoverable on the basis that it is an amount of levy due from him.
(3) Sub-paragraph (2) does not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.

Time limits for assessments
80 (1) An assessment under paragraph 78 or 79 of an amount of levy due for any accounting period—
(a) shall not be made more than two years after the end of the accounting period unless it is made within the period mentioned in sub-paragraph (2); and
(b) subject to sub-paragraph (3), shall not in any event be made more than 4 years after the end of that accounting period.
Words in Sch. 6 para. 80(1)(b) substituted (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 35(2); S.I. 2010/867, art. 2(1) (with art. 18)
(2) The period referred to in sub-paragraph (1)(a) is the period of one year after evidence of facts sufficient in the Commissioners’ opinion to justify the making of the assessment first came to their knowledge.
(3) An assessment of an amount due from a person in a case involving a loss of levy—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under paragraph 53 or 55,
may be made at any time not more than 20 years after the end of the accounting period to which it relates (subject to sub-paragraph (4)).
Sch. 6 para. 80(3)(3A) substituted for Sch. 6 para. 80(3) (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 35(3); S.I. 2010/867, art. 2(1) (with art. 19)
(3A) In sub-paragraph (3)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(4) Where, after a person’s death, the Commissioners propose to assess an amount of levy as due by reason of some conduct of the deceased—
(a) the assessment shall not be made more than 4 years after the death; ...
Words in Sch. 6 para. 80(4)(a) substituted (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 35(4)(a); S.I. 2010/867, art. 2(1) (with art. 20)
Sch. 6 para. 80(4)(b) and word omitted (1.4.2010) by virtue of Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 35(4)(b); S.I. 2010/867, art. 2(1) (with art. 20)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Nothing in this paragraph shall prejudice the powers of the Commissioners under paragraph 78(4).

Ordinary interest on overdue levy paid before assessment
81 (1) Where—
(a) the circumstances are such that an assessment could have been made under paragraph 78 or 79 of an amount of levy due from any person, but
(b) before such an assessment was made and notified to that person that amount was paid (so that no such assessment was necessary),
the whole of the amount paid shall carry interest for the period specified in sub-paragraph (2).
(2) That period is the period which—
(a) begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period to which the amount paid relates; and
(b) ends with the day before that on which the amount is paid.
(3) Interest under this paragraph shall be payable at the rate applicable under section 197 of the Finance Act 1996.
1966 c. 8.

Penalty interest on unpaid levy
82 (1) Where—
(a) a person makes a return for the purposes of any regulations made under paragraph 41 (whether or not at the time required by the regulations), and
(b) the return shows that an amount of levy is due from him for the accounting period for which the return is made,
that amount shall carry penalty interest for the period specified in sub-paragraph (2).
(2) That period is the period which—
(a) begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period in question; and
(b) ends with the day before that on which the amount shown in the return is paid.

Penalty interest on levy where no return made
83 (1) Where—
(a) the Commissioners make an assessment under paragraph 78 or 79 of an amount of levy due from any person for any accounting period and notify it to him, and
(b) the assessment is made at a time after the time by which a return is required by regulations under paragraph 41 to be made by that person for that accounting period and before any such return has been made,
that amount shall carry penalty interest for the period specified in sub-paragraph (2).
(2) That period is the period which—
(a) begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period in question; and
(b) ends with the day before that on which the assessed amount is paid.
(3) Where the person, after the assessment is made, makes for the purposes of any regulations under paragraph 41 a return for the accounting period in question, the assessed amount shall not carry penalty interest under this paragraph to the extent that that amount is shown in the return as an amount of levy due from him for that accounting period (and, accordingly, carries penalty interest under paragraph 82).

Ordinary and penalty interest on under-declared levy
84 (1) Subject to sub-paragraph (4), where—
(a) the Commissioners make an assessment under paragraph 78 or 79 of an amount of levy due from any person for any accounting period and notify it to him,
(b) the assessment is made after a return for the purposes of any regulations under paragraph 41 has been made by that person for that accounting period, and
(c) the assessment is made on the basis that the amount (“the additional amount”) is due from him in addition to any amount shown in the return, or in a previous assessment made in relation to the accounting period,
the additional amount shall carry interest for the period specified in sub-paragraph (2).
(2) That period is the period which—
(a) begins with the day after that on which the person is required in accordance with regulations under paragraph 41 to pay levy due from him for the accounting period in question; and
(b) ends with the day before the day on which the additional amount is paid.
(3) Interest under this paragraph—
(a) in respect of so much of the period specified in sub-paragraph (2) as falls before the day on which the assessment is notified to the person in question, shall be payable at the rate applicable under section 197 of the Finance Act 1996 for the purposes of paragraph 81(3); and
1996 c. 8.
(b) in respect of the remainder (if any) of that period, shall be penalty interest.
(4) Where—
(a) the Commissioners make an assessment under paragraph 78 or 79 of an amount of levy due from any person for any accounting period and notify it to him,
(b) they also specify a date for the purposes of this sub-paragraph, and
(c) the amount assessed is paid on or before that date,
the only interest carried by that amount under this paragraph shall be interest, at the rate given by sub-paragraph (3)(a), for the period before the day on which the assessment is notified.

Penalty interest on unpaid ordinary interest
85 (1) Subject to sub-paragraph (2), where the Commissioners make an assessment under paragraph 88 of an amount of interest payable at the rate given by paragraph 81(3), that amount shall carry penalty interest for the period which—
(a) begins with the day on which the assessment is notified to the person on whom the assessment is made; and
(b) ends with the day before the day on which the assessed interest is paid.
(2) Where—
(a) the Commissioners make an assessment under paragraph 88 of an amount of interest due from any person,
(b) they also specify a date for the purposes of this sub-paragraph, and
(c) the amount of interest assessed is paid on or before that date,
the amount paid before that date shall not carry penalty interest under this paragraph.

Penalty interest
86 (1) Penalty interest under any of paragraphs 82 to 85 shall be compound interest calculated—
(a) at the penalty rate, and
(b) with monthly rests.
(2) For this purpose the penalty rate is the rate found by—
(a) taking the rate applicable under section 197 of the Finance Act 1996 for the purposes of paragraph 81(3); and
1996 c. 8.
(b) adding 10 percentage points to that rate.
(3) Where a person is liable under any of paragraphs 82 to 85 to pay any penalty interest, the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper.
(4) Subject to sub-paragraph (5), where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay penalty interest, that is a matter which (among other things) may be taken into account under sub-paragraph (3).
(5) In determining whether there is a reasonable excuse for the purposes of sub-paragraph (4), no account shall be taken of any of the following matters, that is to say—
(a) the insufficiency of the funds available to any person for paying any levy due or for paying the amount of the interest;
(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 levy;
(c) the fact that the person liable to pay the interest or a person acting on his behalf has acted in good faith.
(6) In the case of interest reduced by the Commissioners under sub-paragraph (3) an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners.

Supplemental provisions about interest
87 (1) Interest under any of paragraphs 81 to 85 shall be paid without any deduction of income tax.
(2) Sub-paragraph (3) applies where—
(a) an amount carries interest under any of paragraphs 81 to 85 (or would do so apart from that sub-paragraph); and
(b) all or part of the amount turns out not to be due.
(3) In such a case—
(a) the amount or part that turns out not to be due shall not carry interest under the applicable paragraph and shall be treated as never having done so; and
(b) all such adjustments as are reasonable shall be made, including (subject to paragraphs 64 to 76) adjustments by way of repayment.

Assessments to interest
88 (1) Where a person is liable for interest under any of paragraphs 81 to 85, the Commissioners may assess the amount due by way of interest and notify it to him accordingly.
(2) If, where an assessment has been notified to any person under sub-paragraph (1) or this sub-paragraph, it appears to the Commissioners that the amount which ought to have been assessed exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and shall notify that person accordingly.
(3) Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable as if it were levy due from him.
(4) Sub-paragraph (3)—
(a) shall not apply so as to require any interest to be payable on interest except—
(i) in accordance with paragraph 85, or
(ii) in so far as it falls to be compounded in accordance with paragraph 86;
and
(b) shall not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.
(5) Paragraph 80 shall apply in relation to assessments under this paragraph as if any assessment to interest were an assessment under paragraph 78 to levy due for the period which is the relevant accounting period in relation to that interest.
(6) Subject to sub-paragraph (7), where a person—
(a) is assessed under this paragraph to an amount due by way of any interest, and
(b) is also assessed under paragraph 78 or 79 for the accounting period which is the relevant accounting period in relation to that interest,
the assessments may be combined and notified to him as one assessment.
(7) A notice of a combined assessment under sub-paragraph (6) must separately identify the interest being assessed.
(8) The relevant accounting period for the purposes of this paragraph is—
(a) in the case of interest on levy due for any accounting period, that accounting period; and
(b) in the case of interest on interest (whether under paragraph 85 or by virtue of any compounding under paragraph 86), the period which is the relevant accounting period for the interest on which the interest is payable.
(9) In a case where—
(a) the amount of any interest falls to be calculated by reference to levy which was not paid at the time when it should have been, and
(b) that levy cannot be readily attributed to any one or more accounting periods,
that levy shall be treated for the purposes of interest on any of that levy as levy due for such period or periods as the Commissioners may determine to the best of their judgement and notify to the person liable.

Further assessments to penalty interest
89 (1) Where an assessment is made under paragraph 88 to an amount of penalty interest under any of paragraphs 82 to 85—
(a) the notice of assessment shall specify a date, not later than the date of the notice of assessment, to which the amount of interest which is assessed is calculated; and
(b) if the interest continues to accrue after that date, a further assessment or further assessments may be made under paragraph 88 in respect of the amounts so accruing.
(2) Where—
(a) an assessment to penalty interest is made specifying a date for the purposes of sub-paragraph (1)(a), and
(b) within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the interest, the amount on which the interest is payable is paid,
that amount shall be deemed for the purposes of any further liability to interest to have been paid on the specified date.

Controlled goods agreements
89A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 89A (which was inserted (6.4.2014) by 2007 c. 15, s. 148, Sch. 13 para. 136 (with s. 89); S.I. 2014/768, art. 2(1)(b)) omitted (6.4.2014) by Finance Act 2008 (c. 9), s. 129(4), Sch. 43 para. 7; S.I. 2014/906, art. 2

Walking possession agreements
90 (1) This paragraph applies where—
(a) in accordance with regulations under section 51 of the Finance Act 1997 (enforcement by distress), a distress is authorised to be levied on the goods and chattels of a person (“the person in default”) who has refused or neglected to pay an amount of levy due from him or an amount recoverable from him as if it were levy; and
1997 c. 16.
(b) the person levying the distress and the person in default have entered into a walking possession agreement.
(2) For the purposes of this paragraph a walking possession agreement is an agreement under which, in consideration of the property distrained upon being allowed to remain in the custody of the person in default and of the delaying of its sale, the person in default—
(a) acknowledges that the property specified in the agreement is under distraint and held in walking possession; and
(b) undertakes that, except with the consent of the Commissioners and subject to such conditions as they may impose, he will not remove or allow the removal of any of the specified property from the premises named in the agreement.
(3) Subject to sub-paragraph (4), if the person in default is in breach of the undertaking contained in a walking possession agreement, he shall be liable to a penalty equal to one half of the levy or other amount referred to in sub-paragraph (1)(a).
(4) The person in default shall not be liable to a penalty under sub-paragraph (3) if he satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the breach in question.
(5) This paragraph extends only to Northern Ireland.
Sch. 6 para. 90(5) substituted (6.4.2014) by Tribunals, Courts and Enforcement Act 2007 (c. 15), s. 148, Sch. 13 para. 137 (with s. 89); S.I. 2014/768, art. 2(1)(b)

Interpretation etc. of Part VII
91 (1) In this Part of this Schedule “penalty interest” shall be construed in accordance with paragraph 86.
(2) Any notification of an assessment under any provision of this Part of this Schedule to a person’s representative shall be treated for the purposes of this Schedule as notification to the person in relation to whom the representative acts.
(3) In this Part of this Schedule “representative”, in relation to any person, means—
(a) any of that person’s personal representatives;
(b) that person’s trustee in bankruptcy or liquidator;
(c) any person holding office as a receiver in relation to that person or any of his property;
(d) that person’s tax representative or any other person for the time being acting in a representative capacity in relation to that person.
(4) In this paragraph “trustee in bankruptcy” includes, as respects Scotland—
(a) an interim or permanent trustee (within the meaning of the Bankruptcy (Scotland) Act 1985); and
1985 c. 66.
(b) a trustee acting under a trust deed (within the meaning of that Act).
(5) In relation to cases where, by virtue of regulations under paragraph 41(1)(a)(ii) or by virtue of paragraph 45B(8), a person is liable to account for levy otherwise than by reference to accounting periods, this Part of this Schedule shall have effect as if—
(a) references to levy due for “an” or “any” accounting period were references simply to levy due;
(b) references to levy due for a specified accounting period were references to the levy in question;
(c) references to an assessment for a specified accounting period were references to an assessment in respect of the levy in question;
(d) any time limit framed by reference to the end of the accounting period for which levy is due were framed by reference to the date on which payment of the levy is due;
(e) references to the making of a return for an accounting period were references to the payment of the levy in question;
(f) references to the amount shown in such a return were references to the amount of levy paid;
(g) paragraph 88(8) and (9) were omitted.
Sch. 6 para. 91(5) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(6)
Words in Sch. 6 para. 91(5) inserted (with effect in accordance with s. 118(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 59 para. 8(2)

Part VIII Evasion, misdeclaration and neglect

Criminal offences: Evasion
92 (1) A person is guilty of an offence if he is knowingly concerned in, or in the taking of steps with a view to—
(a) the fraudulent evasion by that person of any levy with which he is charged; or
(b) the fraudulent evasion by any other person of any levy with which that other person is charged.
(2) The references in sub-paragraph (1) to the evasion of levy include references to obtaining, in circumstances where there is no entitlement to it, either a tax credit or a repayment of levy.
(3) A person guilty of an offence under this paragraph shall be liable (subject to sub-paragraph (4))—
(a) on summary conviction, to a penalty of the statutory maximum£20,000 or to imprisonment for a term not exceeding six months, or to both;
Sum in Sch. 6 para. 92(3)(a) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(2)(a) (with reg. 5(1))
(b) on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding seven years, or to both.
(4) In the case of any offence under this paragraph, where the statutory maximumthe amount of £20,000 mentioned in sub-paragraph (3)(a) is less than three times the sum of the amounts of levy which are shown to be amounts that were or were intended to be evaded, the penalty on summary conviction shall be the amount equal to three times that sum (instead of the statutory maximumthe amount of £20,000 mentioned in sub-paragraph (3)(a)).
Words in Sch. 6 para. 92(4) substituted (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(2)(b) (with reg. 5(1))
(5) For the purposes of sub-paragraph (4) the amounts of levy that were or were intended to be evaded shall be taken to include—
(a) the amount of any tax credit, and
(b) the amount of any repayment of levy,
which was, or was intended to be, obtained in circumstances where there was no entitlement to it.
(6) In determining for the purposes of sub-paragraph (4) how much levy (in addition to any amount falling within sub-paragraph (5)) was or was intended to be evaded, no account shall be taken of the extent (if any) to which any liability to levy of any person fell, or would have fallen, to be reduced by the amount of any tax credit or repayment of levy to which he was, or would have been, entitled.

Criminal offences: Misstatements
93 (1) A person is guilty of an offence if, with the requisite intent and for purposes connected with the levy—
(a) he produces or provides, or causes to be produced or provided, any document which is false in a material particular, or
(b) he otherwise makes use of such a document;
and in this sub-paragraph “the requisite intent” means the intent to deceive any person or to secure that a machine will respond to the document as if it were a true document.
(2) A person is guilty of an offence if, in providing any information under any provision made by or under this Schedule—
(a) he makes a statement which he knows to be false in a material particular; or
(b) he recklessly makes a statement which is false in a material particular.
(3) A person guilty of an offence under this paragraph shall be liable (subject to sub-paragraph (4))—
(a) on summary conviction, to a penalty of the statutory maximum£20,000 or to imprisonment for a term not exceeding six months, or to both;
Sum in Sch. 6 para. 93(3)(a) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(3)(a) (with reg. 5(1))
(b) on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding seven years, or to both.
(4) In the case of any offence under this paragraph, where—
(a) the document referred to in sub-paragraph (1) is a return or other notification required under any provision made by or under this Schedule, or
Words in Sch. 6 para. 93(4)(a) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(7)(a)
(b) the information referred to in sub-paragraph (2) is contained in or otherwise relevant to such a return or notification,
Words in Sch. 6 para. 93(4)(b) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(7)(b)
the amount of the penalty on summary conviction shall be whichever is the greater of the statutory maximumthe amount of £20,000 mentioned in sub-paragraph (3)(a) and the amount equal to three times the sum of the amounts (if any) by which the return or notification understates any person’s liability to levy.
Words in Sch. 6 para. 93(4) substituted (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(3)(b) (with reg. 5(1))
Words in Sch. 6 para. 93(4) inserted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(7)(b)
(5) In sub-paragraph (4) the reference to the amount by which any person’s liability to levy is understated shall be taken to be equal to the sum of—
(a) the amount (if any) by which his gross liability was understated; and
(b) the amount (if any) by which any entitlements of his to tax credits and repayments of levy were overstated.
(6) In sub-paragraph (5) “gross liability” means liability to levy before any deduction is made in respect of any entitlement to any tax credit or repayments of levy.

Criminal offences: Conduct involving evasions or misstatements
94 (1) A person is guilty of an offence under this paragraph if his conduct during any particular period must have involved the commission by him of one or more offences under the preceding provisions of this Part of this Schedule.
(2) For the purposes of any proceedings for an offence under this paragraph it shall be immaterial whether the particulars of the offence or offences that must have been committed are known.
(3) A person guilty of an offence under this paragraph shall be liable (subject to sub-paragraph (4))—
(a) on summary conviction, to a penalty of the statutory maximum£20,000 or to imprisonment for a term not exceeding six months, or to both;
Sum in Sch. 6 para. 94(3)(a) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(4)(a) (with reg. 5(1))
(b) on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding seven years, or to both.
(4) In the case of any offence under this paragraph, where the statutory maximumthe amount of £20,000 mentioned in sub-paragraph (3)(a) is less than three times the sum of the amounts of levy which are shown to be amounts that were or were intended to be evaded by the conduct in question, the penalty on summary conviction shall be the amount equal to three times that sum (instead of the statutory maximumthe amount of £20,000 mentioned in sub-paragraph (3)(a)).
Words in Sch. 6 para. 94(4) substituted (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(4)(b) (with reg. 5(1))
(5) For the purposes of sub-paragraph (4) the amounts of levy that were or were intended to be evaded by any conduct shall be taken to include—
(a) the amount of any tax credit, and
(b) the amount of any repayment of levy,
which was, or was intended to be, obtained in circumstances where there was no entitlement to it.
(6) In determining for the purposes of sub-paragraph (4) how much levy (in addition to any amount falling within sub-paragraph (5)) was or was intended to be evaded, no account shall be taken of the extent (if any) to which any liability to levy of any person fell, or would have fallen, to be reduced by the amount of any tax credit or repayments of levy to which he was, or would have been, entitled.

Criminal offences: Preparations for evasion
95 (1) Where a person—
(a) becomes a party to any agreement under or by means of which a supply of a taxable commodity is or is to be made, or
(b) makes arrangements for any other person to become a party to such an agreement,
he is guilty of an offence if he does so in the belief that levy chargeable on the supply will be evaded.
(2) Subject to sub-paragraph (3), a person guilty of an offence under this paragraph shall be liable, on summary conviction, to a penalty of level 5 on the standard scale£20,000.
Sum in Sch. 6 para. 95(2) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(5)(a) (with reg. 5(1))
(3) In the case of any offence under this paragraph, where level 5 on the standard scalethe amount of £20,000 mentioned in sub-paragraph (2) is less than three times the sum of the amounts of levy which are shown to be amounts that were or were intended to be evaded in respect of the supply in question, the penalty shall be the amount equal to three times that sum (instead of level 5 on the standard scalethe amount of £20,000 mentioned in sub-paragraph (2)).
Words in Sch. 6 para. 95(3) substituted (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(5)(b) (with reg. 5(1))
(4) For the purposes of sub-paragraph (3) the amounts of levy that were or were intended to be evaded shall be taken to include—
(a) the amount of any tax credit, and
(b) the amount of any repayment of levy,
which was, or was intended to be, obtained in circumstances where there was no entitlement to it.
(5) In determining for the purposes of sub-paragraph (3) how much levy (in addition to any amount falling within sub-paragraph (4)) was or was intended to be evaded, no account shall be taken of the extent (if any) to which any liability to levy of any person fell, or would have fallen, to be reduced by the amount of any tax credit or repayments of levy to which he was, or would have been, entitled.

Offences under paragraphs 92 to 95: procedural matters
96 Sections 145 to 155 of the Customs and Excise Management Act 1979 (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to offences and penalties under paragraphs 92 to 95 as they apply in relation to offences and penalties under the customs and excise Acts.

Arrest for offences under paragraphs 92 to 94
97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 97 repealed (1.12.2007) by Finance Act 2007 (c. 11), s. 84(4)(5), Sch. 22 para. 11(a), Sch. 27 Pt. 5(1); S.I. 2007/3166, art. 3(a)

Civil penalties: Evasion
98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 paras. 98-100 omitted (1.4.2009) by virtue of Finance Act 2008 (c. 9), s. 122(2), Sch. 40 para. 21(h) (with savings in relation to paras. 98, 99 by The Finance Act 2008, Schedule 41 (Appointed Day and Transitional Provisions) Order 2009 (S.I. 2009/511, art. 4(d)); S.I. 2009/571, art. 2 (with art. 6)

Liability of directors etc. for penalties under paragraph 98
99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Civil penalties: Misdeclaration or neglect
100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Civil penalties: Incorrect notifications etc.
101 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 101(1) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(2), Sch. 27 Pt. 1(2)
(2) Where—
(a) a person gives, in relation to any supply (or supplies) of a taxable commodity (or taxable commodities) being made to him, to the supplier a certificate that the supply (or supplies) is (or are) to any extent—
(i) for domestic or charity use,
(ii) exempt under any of paragraphs 11, 12, 12A, 13, 14, 15, 18 ... and 21,... or
Word in Sch. 6 para. 101(2) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(3)(a)
Word in Sch. 6 para. 101(2)(a)(ii) inserted (with effect in accordance with Sch. 20 para. 10(2)(3) of the amending Act) by Finance Act 2014 (c. 26), Sch. 20 paras. 7(a), 10(1)
Words in Sch. 6 para. 101(2)(a)(ii) substituted (24.7.2002 with application as mentioned in s. 127(2) of the amending Act) by 2002 c. 23, s. 127(1)(a)(2)
Word in Sch. 6 para. 101(2)(a)(ii) omitted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 30 para. 14(a)
Word in Sch. 6 para. 101(2)(a) omitted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 30 para. 14(b)
Word in Sch. 6 para. 101(2)(a) inserted (with effect in accordance with Sch. 20 para. 10(2)(3) of the amending Act) by Finance Act 2014 (c. 26), Sch. 20 paras. 7(b), 10(1)
(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 101(2)(a)(iii) repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(14)(b)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
(iiia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 101(2)(a)(iiia) omitted (with effect in accordance with Sch. 20 para. 10(2)(3) of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 20 paras. 7(c), 10(1)
(iv) a reduced-rate supply (or reduced-rate supplies),
Sch. 6 para. 101(2)(a)(iv) and word preceding it inserted (24.7.2002 with application as mentioned in s. 127(2) of the amending Act) by 2002 c. 23, s. 127(1)(b)(2)
and
(b) the certificate is (or becomes) incorrect,
Words in Sch. 6 para. 101(2) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(3)(b)
the person shall be liable to a penalty.
(3) The amount of the penalty to which a person is liable under this paragraph shall be equal to 105 per cent. of the difference between—
(a) the amount of levy (which may be nil) that would have been chargeable on the supply (or supplies) if the ... certificate had been correct, and
Words in Sch. 6 para. 101(3) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(4)(b), Sch. 27 Pt. 1(2)
(b) the amount of levy actually chargeable.
Words in Sch. 6 para. 101(3) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(4)(a)
(4) The giving of a certificate (or not revoking or varying it) shall not give rise to a penalty under this paragraph if the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that the person has a reasonable excuse.
Words in Sch. 6 para. 101(4) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(5)(a)
Words in Sch. 6 para. 101(4) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(5)(b)
Words in Sch. 6 para. 101(4) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(5)(c)
(5) Where by reason of giving a certificate (or not revoking or varying it) —
(a) a person is convicted of an offence (whether under this Act or otherwise), or
(b) a person is assessed to a penalty under paragraph 98,
that person shall not by reason of that be liable also to a penalty under this paragraph.
Words in Sch. 6 para. 101(5) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(6)(a)
Word in Sch. 6 para. 101(5) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 2 para. 12(6)(b)

Interpretation of Part VIII
102 (1) References in this Part of this Schedule to obtaining a tax credit are references to bringing an amount into account as a tax credit for the purposes of levy on the basis that that amount is an amount which may be so brought into account in accordance with tax credit regulations.
(2) References in this Part of this Schedule to obtaining a repayment of levy are references to obtaining either—
(a) the payment or repayment of any amount, or
(b) the acknowledgement of a right to receive any amount,
on the basis that that amount is the amount of a repayment of levy to which there is an entitlement.

Part IX Civil penalties

Preliminary
103 (1) In this Part of this Schedule “civil penalty” means any penalty liability to which—
(a) is imposed by or under this Schedule, and
(b) arises otherwise than in consequence of a person’s conviction for a criminal offence.
(2) In this Part of this Schedule—
(a) references to a person’s being liable to a civil penalty include references to his being a person from whom the whole or any part of a civil penalty is recoverable by virtue of paragraph 99; and
(b) references, in relation to a person from whom the whole or any part of a civil penalty is so recoverable, to the penalty to which he is liable are references to so much of the penalty as is recoverable from him.
(3) Any notification of an assessment under any provision of this Part of this Schedule to a person’s representative shall be treated for the purposes of this Schedule as notification to the person in relation to whom the representative acts.
(4) In this paragraph “representative”, in relation to any person, means—
(a) any of that person’s personal representatives;
(b) that person’s trustee in bankruptcy or liquidator;
(c) any person holding office as a receiver in relation to that person or any of his property;
(d) that person’s tax representative or any other person for the time being acting in a representative capacity in relation to that person.
(5) In this paragraph “trustee in bankruptcy” includes, as respects Scotland—
(a) an interim or permanent trustee (within the meaning of the Bankruptcy (Scotland) Act 1985); and
1985 c. 66.
(b) a trustee acting under a trust deed (within the meaning of that Act).

Reduction of penalties
104 (1) Where a person is liable to a civil penalty—
(a) the Commissioners or, on appeal, an appeal tribunal may reduce the penalty to such amount (including nil) as they think proper; but
(b) on an appeal relating to any penalty reduced by the Commissioners, an appeal tribunal may cancel the whole or any part of the Commissioners’ reduction.
(2) In determining whether a civil penalty should be, or should have been, reduced under sub-paragraph (1), no account shall be taken of any of the following matters, that is to say—
(a) the insufficiency of the funds available to any person for paying any levy 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 levy;
(c) the fact that the person liable to the penalty or a person acting on his behalf has acted in good faith.

Matters not amounting to reasonable excuse
105 For the purposes of any provision made by or under this Schedule under which liability to a civil penalty does not arise in respect of conduct for which there is shown to be a reasonable excuse—
(a) an insufficiency of funds available for paying any amount is not a reasonable excuse; and
(b) where reliance has been placed on any other person to perform any task, neither the fact of that reliance nor any conduct of the person relied upon is a reasonable excuse.

Assessments to penalties etc.
106 (1) Where a person is liable to a civil penalty, the Commissioners may assess the amount due by way of penalty and notify it to him accordingly.
(2) If, where an assessment has been notified to any person under sub-paragraph (1) or this sub-paragraph, it appears to the Commissioners that the amount which ought to have been assessed exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and shall notify that person accordingly.
(3) The fact that any conduct giving rise to a civil penalty may have ceased before an assessment is made under this paragraph shall not affect the power of the Commissioners to make such an assessment.
(4) Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable as if it were levy due from him.
(5) Sub-paragraph (4)—
(a) shall not apply so as to require any interest to be payable on a penalty otherwise than in accordance with this Part of this Schedule; and
(b) shall not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.
(6) Subject to sub-paragraph (7), where a person—
(a) is assessed under this paragraph to an amount due by way of a penalty, and
(b) is also assessed under any one or more provisions of Part VII of this Schedule for an accounting period to which the conduct attracting the penalty is referable,
the assessments may be combined and notified to him as one assessment.
(7) A notice of a combined assessment under sub-paragraph (6) must separately identify the penalty being assessed.
(8) The power to make an assessment under this paragraph is subject to paragraph 99(4).

Further assessments to daily penalties
107 (1) This paragraph applies where an assessment is made under paragraph 106 to an amount of a civil penalty to which any person is liable—
(a) under paragraph 124(3) (failure to provide information); or
(b) under paragraph 127(4) (failure to produce a document).
(2) The notice of assessment shall specify a time, not later than the end of the day of the giving of the notice of assessment, to which the amount of any daily penalty is calculated.
(3) For the purposes of sub-paragraph (2) “daily penalty” means—
(a) in a case within sub-paragraph (1)(a), a penalty imposed by virtue of paragraph 124(3)(b); and
(b) in a case within sub-paragraph (1)(b), a penalty imposed by virtue of paragraph 127(4)(b).
(4) If further penalties accrue in respect of a continuing failure after that date to provide the information or, as the case may be, produce the document, a further assessment or further assessments may be made under paragraph 106 in respect of the amounts so accruing.
(5) Where—
(a) an assessment to a civil penalty is made specifying a date for the purposes of sub-paragraph (2), and
(b) the failure in question is remedied within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the penalty,
the failure shall be deemed for the purposes of any further liability to civil penalties to have been remedied on the specified date.

Time limits on penalty assessments
108 (1) Subject to sub-paragraphs (2) and (3), an assessment under paragraph 106 to a penalty shall not be made more than 4 years after the conduct to which the penalty relates.
Words in Sch. 6 para. 108(1) substituted (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 36(2); S.I. 2010/867, art. 2(1) (with art. 21)
(2) An assessment of a person to a penalty in a case involving a loss of levy—
(a) brought about deliberately by the person (or by another person acting on that person's behalf), or
(b) attributable to a failure by the person to comply with an obligation under paragraph 53 or 55,
may be made at any time not more than 20 years after the conduct to which the penalty relates (subject to sub-paragraph (3)).
Sch. 6 para. 108(2)(2A) substituted for Sch. 6 para. 108(2) (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 36(3); S.I. 2010/867, art. 2(1) (with art. 22)
(2A) In sub-paragraph (2)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person.
(3) Where, after a person’s death, the Commissioners propose to assess an amount of a civil penalty due by reason of some conduct of the deceased—
(a) the assessment shall not be made more than 4 years after the death; ...
Words in Sch. 6 para. 108(3)(a) substituted (1.4.2010) by Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 36(4)(a); S.I. 2010/867, art. 2(1) (with art. 23)
Sch. 6 para. 108(3)(b) and word omitted (1.4.2010) by virtue of Finance Act 2009 (c. 10), s. 99(2), Sch. 51 para. 36(4)(b); S.I. 2010/867, art. 2(1) (with art. 23)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalty interest on unpaid penalties
109 (1) Subject to sub-paragraph (2), where the Commissioners make an assessment under paragraph 106 of any civil penalty to which a person is liable the amount of that penalty shall carry penalty interest for the period which—
(a) begins with the day on which the assessment is notified to the person on whom the assessment is made; and
(b) ends with the day before the day on which the assessed penalty is paid.
(2) Where—
(a) the Commissioners make an assessment under paragraph 106 of an amount of any civil penalty to which any person is liable,
(b) they also specify a date for the purposes of this sub-paragraph, and
(c) the amount of the penalty assessed is paid on or before that date,
the amount paid before that date shall not carry penalty interest under this paragraph.
(3) Penalty interest under this paragraph shall be compound interest calculated—
(a) at the penalty rate, and
(b) with monthly rests.
(4) For this purpose the penalty rate is the rate found by—
(a) taking the rate applicable under section 197 of the Finance Act 1996 for the purposes of paragraph 81(3); and
1996 c. 8.
(b) adding 10 percentage points to that rate.
(5) Where a person is liable under this paragraph to pay any penalty interest, the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper.
(6) Subject to sub-paragraph (7), where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay penalty interest, that is a matter which (among other things) may be taken into account under sub-paragraph (5).
(7) In determining whether there is a reasonable excuse for the purposes of sub-paragraph (6), no account shall be taken of any of the following matters, that is to say—
(a) the insufficiency of the funds available to any person for paying any levy or penalty due or for paying the amount of the interest;
(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 levy;
(c) the fact that the person liable to pay the interest or a person acting on his behalf has acted in good faith.
(8) In the case of interest reduced by the Commissioners under sub-paragraph (5), an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners.

Supplemental provisions about interest
110 (1) Interest under paragraph 109 shall be paid without any deduction of income tax.
(2) Sub-paragraph (3) applies where—
(a) an amount carries interest under paragraph 109 (or would do so apart from that sub-paragraph); and
(b) all or part of the amount turns out not to be due.
(3) In such a case—
(a) the amount or part that turns out not to be due shall not carry interest under paragraph 109 and shall be treated as never having done so; and
(b) all such adjustments as are reasonable shall be made, including (subject to paragraphs 64 to 76) adjustments by way of repayment.

Assessments to penalty interest on unpaid penalties
111 (1) Where a person is liable for interest under paragraph 109, the Commissioners may assess the amount due by way of interest and notify it to him accordingly.
(2) If, where an assessment has been notified to any person under sub-paragraph (1) or this sub-paragraph, it appears to the Commissioners that the amount which ought to have been assessed exceeds the amount that has already been assessed, the Commissioners may make a supplementary assessment of the amount of the excess and notify that person accordingly.
(3) Where an amount has been assessed and notified to any person under this paragraph, it shall be recoverable as if it were levy due from him.
(4) Sub-paragraph (3)—
(a) shall not apply so as to require any interest to be payable on interest (except in so far as it falls to be compounded in accordance with paragraph 109(3)); and
(b) shall not have effect if, or to the extent that, the assessment in question has been withdrawn or reduced.
(5) Paragraph 108 shall apply in relation to assessments under this paragraph as if any assessment to interest on a penalty were an assessment under paragraph 106 to the penalty in question.
(6) Subject to sub-paragraph (7), where a person—
(a) is assessed under this paragraph to an amount due by way of any interest on a penalty, and
(b) is also assessed under any one or more provisions of Part VII of this Schedule for the accounting period to which the conduct attracting the penalty is referable,
the assessments may be combined and notified to him as one assessment.
(7) A notice of a combined assessment under sub-paragraph (6) must separately identify the interest being assessed.

Further assessments to interest on penalties
112 (1) Where an assessment is made under paragraph 111 to an amount of penalty interest under paragraph 109—
(a) the notice of assessment shall specify a date, not later than the date of the notice of assessment, to which the amount of interest which is assessed is calculated; and
(b) if the interest continues to accrue after that date, a further assessment or further assessments may be made under paragraph 111 in respect of the amounts so accruing.
(2) Where—
(a) an assessment to penalty interest is made specifying a date for the purposes of sub-paragraph (1)(a), and
(b) within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the interest, the amount on which the interest is payable is paid,
that amount shall be deemed for the purposes of any further liability to interest to have been paid on the specified date.

Up-rating of amounts of penalties
113 (1) If it appears to the Treasury that there has been a change in the value of money since the time when the amount of a civil penalty provided for by this Schedule was fixed, they may by regulations substitute, for the amount for the time being specified as the amount of that penalty, such other sum as appears to them to be justified by the change.
(2) In sub-paragraph (1) the reference to the time when the amount of a civil penalty was fixed is a reference—
(a) in the case of a penalty which has not previously been modified under that sub-paragraph, to the time of the passing of this Act; and
(b) in any other case, to the time of the making of the regulations under that sub-paragraph that made the most recent modification of the amount of that penalty.
(3) Regulations under sub-paragraph (1) shall not apply to the penalty for any conduct before the coming into force of the regulations.

Part X Non-residents, groups and other special cases

Non-resident taxpayers: appointment of tax representatives
114 (1) The Commissioners may by regulations make provision for securing that every non-resident taxpayer has a person resident in the United Kingdom to act as his tax representative for the purposes of the levy.
(2) Regulations under this paragraph may, in particular, contain any or all of the following—
(a) provision requiring notification to be given to the Commissioners where a person becomes a non-resident taxpayer;
(b) provision requiring the appointment of tax representatives by non-resident taxpayers;
(c) provision for the appointment of a person as a tax representative to take effect only where the person appointed is approved by the Commissioners;
(d) provision authorising the Commissioners to give a direction requiring the replacement of a tax representative;
(e) provision authorising the Commissioners to give a direction requiring a person specified in the direction to be treated as the appointed tax representative of a non-resident taxpayer so specified;
(f) provision about the circumstances in which a person ceases to be a tax representative and about the withdrawal by the Commissioners of their approval of a tax representative;
(g) provision enabling a tax representative to act on behalf of the person for whom he is the tax representative through an agent of the representative;
(h) provision for the purposes of any provision made by virtue of paragraphs (a) to (g) regulating the procedure to be followed in any case and imposing requirements as to the information and other particulars to be provided to the Commissioners;
(i) provision as to the time at which things done under or for the purposes of the regulations are to take effect.
(3) Subject to sub-paragraph (4), a person who—
(a) becomes subject, in accordance with any regulations under this paragraph, to an obligation to request the Commissioners’ approval for any person’s appointment as his tax representative, but
(b) fails (with or without making the appointment) to make the request as required by the regulations,
shall be liable to a penalty of £10,000.
(4) A failure such as is mentioned in sub-paragraph (3) 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.

Effect of appointment of tax representatives
115 (1) The tax representative of a non-resident taxpayer shall be entitled to act on the non-resident taxpayer’s behalf for the purposes of any provision made by or under this Schedule.
(2) The tax representative of a non-resident taxpayer shall be under a duty, except to such extent as the Commissioners by regulations otherwise provide, to secure the non-resident taxpayer’s compliance with, and discharge of, the obligations and liabilities to which the non-resident taxpayer is subject by virtue of any provision made by or under this Schedule (including obligations and liabilities arising or incurred before he became the non-resident taxpayer’s tax representative).
(3) A person who is or has been the tax representative of a non-resident taxpayer shall be personally liable—
(a) in respect of any failure while he is or was the non-resident taxpayer’s tax representative to secure compliance with, or the discharge of, any obligation or liability to which sub-paragraph (2) applies, and
(b) in respect of anything done in the course of, or for purposes connected with, acting on the non-resident taxpayer’s behalf,
as if the obligations and liabilities to which sub-paragraph (2) applies were imposed jointly and severally on the tax representative and the non-resident taxpayer.
(4) A tax representative shall not be liable by virtue of this paragraph to be registered for the purposes of the levy; but the Commissioners may by regulations—
(a) require the names of tax representatives to be registered against the names of the non-resident taxpayers of whom they are the representatives;
(b) make provision for the deletion of the names so registered of persons who cease to be tax representatives.
(5) A tax representative shall not by virtue of this paragraph be guilty of any offence except in so far as—
(a) he has consented to, or connived in, the commission of the offence by the non-resident taxpayer;
(b) the commission of the offence by the non-resident taxpayer is attributable to any neglect on the part of the tax representative; or
(c) the offence consists in a contravention by the tax representative of an obligation which, by virtue of this paragraph, is imposed both on the tax representative and on the non-resident taxpayer.

Groups of companies etc.
116 (1) The Commissioners may make provision by regulations for two or more bodies corporate to be treated as members of a group for the purposes of the Schedule.
(2) Regulations under sub-paragraph (1) may, in particular, make provision for or about—
(a) eligibility for group treatment;
(b) representative members of groups;
(c) applications for, or the variation or ending of, group treatment;
(d) the decisions to be made on applications;
(e) the variation or ending of group treatment by notice given by the Commissioners otherwise than on an application;
(f) treating a member of a group as charged with levy that would otherwise be levy with which another member of the group would be charged;
(g) the members of a group liable for levy, or amounts recoverable as levy, due from a member of a group.
(3) The provision mentioned in sub-paragraph (2)(c) includes provision—
(a) about the time within which applications are to be made,
(b) for authorising the Commissioners to extend such time, and
(c) for applications that seek group treatment, or its variation or ending, with effect from a time before they are made.
(4) The provision mentioned in sub-paragraph (2)(e) includes provision for a notice to have effect from a time before it is given.
(5) Regulations under sub-paragraph (1) may make provision for imposing requirements on a body corporate to notify the Commissioners of prescribed matters relating to group treatment.
(6) A body corporate which fails to comply with any such requirement imposed by such regulations shall be liable to a penalty of £250.

Partnerships and other unincorporated bodies
117 (1) The Commissioners may by regulations make provision for determining by what persons anything required to be done under this Schedule is to be done where, apart from those regulations, that requirement would fall on—
(a) persons carrying on business in partnership; or
(b) persons carrying on business together as an unincorporated body;
but any regulations under this sub-paragraph must be construed subject to the following provisions of this paragraph.
(2) In determining for the purposes of this Schedule who at any time is the person accountable for any levy in a case where, apart from this sub-paragraph, the persons accountable are persons carrying on any business—
(a) in partnership, or
(b) as an unincorporated body,
the firm or body shall be treated, for the purposes of that determination (and notwithstanding any changes from time to time in the members of the firm or body), as the same person and as separate from its members.
(3) Without prejudice to section 36 of the Partnership Act 1890 (rights of persons dealing with firm against apparent members of firm), where—
(a) persons have been carrying on in partnership any business in the course or furtherance of which there has been done any thing that resulted in the firm becoming liable to account for any levy, and
(b) a person ceases to be a member of the firm,
that person shall be regarded for the purposes of this Schedule (including sub-paragraph (7) below) as continuing to be a partner until the date on which the change in the partnership is notified to the Commissioners.
1890 c. 39.
(4) Where a person ceases to be a member of a firm during an accounting period (or is treated as so ceasing by virtue of sub-paragraph (3)) any notice, whether of assessment or otherwise, which—
(a) is served on the firm under or for the purposes of any provision made by or under this Schedule, and
(b) relates to, or to any matter arising in, that period or any earlier period during the whole or part of which he was a member of the firm,
shall be treated as served also on him.
(5) Without prejudice to section 16 of the Partnership Act 1890 (notice to acting partner to be notice to the firm), any notice, whether of assessment or otherwise, which—
(a) is addressed to a firm by the name in which it is registered, and
(b) is served in accordance with this Schedule,
shall be treated for the purposes of this Schedule as served on the firm and, accordingly, where sub-paragraph (4) applies, as served also on the former partner.
1890 c. 39.
(6) Subject to sub-paragraph (7), nothing in this paragraph shall affect the extent to which, under section 9 of the Partnership Act 1890 (liability of partners for debts of the firm), a partner is liable for levy owed by the firm.
(7) Where a person is a partner in a firm during part only of an accounting period, his personal liability for levy incurred by the firm in respect of taxable supplies made in that period shall include, but shall not exceed, such proportion of the firm’s liability as may be just and reasonable in the circumstances.

Death and incapacity
118 (1) The Commissioners may, in accordance with sub-paragraph (2), by regulations make provision for the purposes of the levy in relation to cases where a person carries on a business of an individual who has died or become incapacitated.
(2) The provisions that may be contained in regulations under this paragraph are—
(a) provision requiring the person who is carrying on the business to inform the Commissioners of the fact that he is carrying on the business and of the event that has led to his carrying it on;
(b) provision allowing that person to be treated for a limited time as if he and the person who has died or become incapacitated were the same person; and
(c) such other provision as the Commissioners think fit for securing continuity in the application of this Schedule where a person is so treated.

Transfer of a business as a going concern
119 (1) The Commissioners may by regulations make provision for securing continuity in the application of this Schedule in cases where any business carried on by a person is transferred to another person as a going concern.
(2) Regulations under this paragraph may, in particular, include any or all of the following—
(a) provision requiring the transferor to inform the Commissioners of the transfer;
(b) provision for liabilities and duties under this Schedule of the transferor to become, to such extent as may be provided by the regulations, liabilities and duties of the transferee;
(c) provision for any right of either of them to a tax credit or repayment of levy to be satisfied by allowing the credit or making the repayment to the other;
(d) provision as to the preservation of any records or accounts relating to the business which, by virtue of any regulations under paragraph 125, are required to be preserved for any period after the transfer.
(3) Regulations under this paragraph may provide that no such provision as is mentioned in paragraph (b) or (c) of sub-paragraph (2) shall have effect in relation to any transferor and transferee unless an application for the purpose has been made by them under the regulations.

Insolvency etc.
120 (1) The Commissioners may by regulations make provision in accordance with the following provisions of this paragraph for the application of this Schedule in cases in which an insolvency procedure is applied to a person or to a deceased individual’s estate.
In this paragraph “the relevant person” means the person to whom, or the deceased individual to whose estate, the insolvency procedure is applied.
(2) The provision that may be contained in regulations under this paragraph may include any or all of the following—
(a) provision requiring any such person as may be prescribed to give notification to the Commissioners, in the prescribed manner, of the prescribed particulars of any relevant matter;
(b) provision requiring a person to be treated, to the prescribed extent, as if he were the same person as the relevant person for the purposes of this Schedule or such of its provisions as may be prescribed; and
(c) provision for securing continuity in the application of any of the provisions of this Schedule where, by virtue of any regulations under this paragraph, any person is treated as if he were the same person as the relevant person.
(3) In sub-paragraph (2) “relevant matter”, in relation to a case in which an insolvency procedure is applied to any person or to any deceased individual’s estate, means—
(a) the application of that procedure to that person or estate;
(b) the appointment of any person for the purposes of the application of that procedure;
(c) any other matter relating to—
(i) the application of that procedure to the person to whom, or the estate to which, it is applied;
(ii) the holding of an appointment made for the purposes of that procedure; or
(iii) the exercise or discharge of any powers or duties conferred or imposed on any person by virtue of such an appointment.
(4) Regulations made by virtue of sub-paragraph (2)(b) may include provision for a person to cease to be treated as if he were the same person as the relevant person on the occurrence of such an event as may be prescribed.
(5) Regulations under this paragraph prescribing the manner in which any notification is to be given to the Commissioners may require it to be given in such manner and to contain such particulars as may be specified in a general notice published by the Commissioners in accordance with the regulations.
(6) Regulations under this paragraph may provide that the extent to which, and the purposes for which, a person is to be treated under the regulations as if he were the same person as the relevant person may be determined by reference to a notice given in accordance with the regulations to the person so treated.
(7) For the purposes of this paragraph, an insolvency procedure is applied to a person if—
(a) a bankruptcy order, winding-up order or administration order is made or an administrator is appointed in relation to that person or a partnership of which he is a member;
Words in Sch. 6 para. 120(7)(a) inserted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 33(a) (with art. 6)
(b) an award of sequestration is made on that person’s estate or on the estate of a partnership of which he is a member;
(c) that person is put into administrative receivership;
(d) that person passes a resolution for voluntary winding up;
(e) any voluntary arrangement approved in accordance with—
(i) Part I or VIII of the Insolvency Act 1986, or
1986 c. 45.
(ii) Part II or Chapter II of Part VIII of the Insolvency (Northern Ireland) Order 1989,
S.I. 1989/2405 (N.I. 19.
comes into force in relation to that person or a partnership of which that person is a member;
(f) a deed of arrangement registered in accordance with—
(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 120(7)(f)(i) omitted (1.10.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(7), Sch. 6 para. 2(14)(b) (with Sch. 6 para. 3); S.I. 2015/1732, art. 2(e)(i)
(ii) Chapter I of Part VIII of that Order,
takes effect in relation to that person;
(g) a person is appointed as the receiver or manager of some or all of that person’s property, or of income arising from some or all of his property;
(h) a person is appointed as the interim receiver of some or all of that person’s property under section 286 of the Insolvency Act 1986 or Article 259 of the Insolvency (Northern Ireland) Order 1989;
(i) a person is appointed as the provisional liquidator in relation to that person under section 135 of that Act or Article 115 of that Order;
(j) an interim order is made under Part VIII of that Act, or Chapter II of Part VIII of that Order, in relation to that person; or
(k) that person’s estate, or the estate of a partnership of which that person is a member, becomes vested in any other person as that person’s, or the partnership’s, trustee under a trust deed (within the meaning of the Bankruptcy (Scotland) Act 1985).
1985 c. 66.
(8) For the purposes of this paragraph, an insolvency procedure is applied to a deceased individual’s estate if—
(a) a bankruptcy order, or an order by some other name but corresponding to a bankruptcy order, is made after the individual’s death in relation to his estate under provisions of—
(i) the Insolvency Act 1986, or
(ii) the Insolvency (Northern Ireland) Order 1989,
as applied to the administration of the insolvent estates of deceased individuals; or
(b) an award of sequestration is made on the individual’s estate after the individual’s death.
(9) In sub-paragraph (7)—
(a) “administration order” means an administration order under Schedule B1 tothe Insolvency Act 1986 or Article 21 of the Insolvency (Northern Ireland) Order 1989;
Words in Sch. 6 para. 120(9) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 33(b) (with art. 6)
S.I. 1989/2405 (N.I. 19.).
(b) references to a member of a partnership include references to any person who is liable as a partner under section 14 of the Partnership Act 1890 (persons liable by “holding out”).
1890 c. 39.

Part XI Review and appeal

Appeals
121 (1) Subject to paragraph 122, an appeal shall lie to an appeal tribunal from any person who is or will be affected by any decision of HMRC with respect to any of the following matters—
(a) whether or not a person is charged in any case with an amount of levy;
(b) the amount of levy charged in any case and the time when the charge is to be taken as having arisen;
(c) the registration of any person for the purposes of the levy or the cancellation of any registration;
(d) the person liable to pay the levy charged in any case, the amount of a person’s liability to levy and the time by which he is required to pay an amount of levy;
(e) whether to prepare a special utility scheme for a utility;
(f) the imposition of a requirement on any person to give security, or further security, under paragraph 139 and the amount and manner of providing any security required under that paragraph;
(g) whether or not liability to a penalty or to interest on any amount arises in any person’s case under any provision made by or under this Schedule, and the amount of any such liability;
(h) any matter the decision as to which is appealable under this paragraph of this Part of this Schedule in accordance with paragraph 99(6) or (7);
Word in Sch. 6 para. 121(1)(h) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 288(4) (with Sch. 3 paras. 2-4)
(i) the extent of any person’s entitlement to any tax credit or to a repayment in respect of a tax credit and the extent of any liability of the Commissioners under this Schedule to pay interest on any amount;
(j) whether or not any person is required to have a tax representative by virtue of any regulations under paragraph 114;
(k) the giving, withdrawal or variation, for the purposes of any such regulations, of any approval or direction with respect to the person who is to act as another’s tax representative;
(l) the giving, withdrawal or variation of a utility direction under paragraph 151(1);
(m) whether a body corporate is to be treated, or is to cease to be treated, as a member of a group, the times at which a body corporate is to be so treated and the body corporate which is, in relation to any time, to be the representative member for a group;
(n) any matter not falling within the preceding paragraphs the decision with respect to which is contained in—
(i) an assessment under paragraph 78 or 79 in respect of an accounting period in relation to which any return required to be made by virtue of regulations under paragraph 41 has been made, or
(ii) an assessment under any provision of this Schedule other than paragraph 78 or 79.
Words in Sch. 6 para. 121(1) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 288(3) (with Sch. 3 paras. 2-4)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 121(2)-(9) omitted (1.4.2009) by virtue of The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 288(5) (with Sch. 3 paras. 2-4)
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10) This paragraph has effect subject to paragraph 99(5).
Sch. 6 para. 121 cross-heading substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 288(2) (with Sch. 3 paras. 2-4)

Offer of review
121A (1) HMRC must offer a person (P) a review of a decision that has been notified to P if an appeal lies under paragraph 121 in respect of the decision.
(2) The offer of the review must be made by notice given to P at the same time as the decision is notified to P.
(3) This paragraph does not apply to the notification of the conclusions of a review.
Sch. 6 paras. 121A-121G and cross-headings inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 289 (with Sch. 3 paras. 2-4)

Right to require review
121B (1) Any person (other than P) who has the right of appeal under paragraph 121 against a decision may require HMRC to review that decision if that person has not appealed to the appeal tribunal under paragraph 121G.
(2) A notification that such a person requires a review must be made within 30 days of that person becoming aware of the decision.

Review by HMRC
121C (1) HMRC must review a decision if—
(a) they have offered a review of the decision under paragraph 121A, and
(b) P notifies HMRC accepting the offer within 30 days from the date of the document containing the notification of the offer.
(2) But P may not notify acceptance of the offer if P has already appealed to the appeal tribunal under paragraph 121G.
(3) HMRC must review a decision if a person other than P notifies them under paragraph 121B.
(4) HMRC shall not review a decision if P, or another person, has appealed to the appeal tribunal under paragraph 121G in respect of the decision.

Extensions of time
121D (1) If under paragraph 121A, HMRC have offered P a review of a decision, HMRC may within the relevant period notify P that the relevant period is extended.
(2) If under paragraph 121B another person may require HMRC to review a matter, HMRC may within the relevant period notify the other person that the relevant period is extended.
(3) If notice is given the relevant period is extended to the end of 30 days from—
(a) the date of the notice, or
(b) any other date set out in the notice or a further notice.
(4) In this paragraph “relevant period” means—
(a) the period of 30 days referred to in—
(i) paragraph 121C(1)(b) (in a case falling within sub-paragraph (1)), or
(ii) paragraph 121B(2) (in a case falling within sub-paragraph (2)), or
(b) if notice has been given under sub-paragraph (1) or (2), that period as extended (or as most recently extended) in accordance with sub-paragraph (3).

Review out of time
121E (1) This paragraph applies if—
(a) HMRC have offered a review of a decision under paragraph 121A and P does not accept the offer within the time allowed under paragraph 121C(1)(b) or 121D(3); or
(b) a person who requires a review under paragraph 121B does not notify HMRC within the time allowed under that paragraph or paragraph 121D(3).
(2) HMRC must review the decision under paragraph 121C if—
(a) after the time allowed, P, or the other person, notifies HMRC in writing requesting a review out of time,
(b) HMRC are satisfied that P, or the other person, had a reasonable excuse for not accepting the offer or requiring review within the time allowed, and
(c) HMRC are satisfied that P, or the other person, made the request without unreasonable delay after the excuse had ceased to apply.
(3) HMRC shall not review a decision if P, or another person, has appealed to the appeal tribunal under paragraph 121G in respect of the decision.

Nature of review etc
121F (1) This paragraph applies if HMRC are required to undertake a review under paragraph 121C or 121E.
(2) The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances.
(3) For the purpose of sub-paragraph (2), HMRC must, in particular, have regard to steps taken before the beginning of the review—
(a) by HMRC in reaching the decision, and
(b) by any person in seeking to resolve disagreement about the decision.
(4) The review must take account of any representations made by P, or the other person, at a stage which gives HMRC a reasonable opportunity to consider them.
(5) The review may conclude that the decision is to be—
(a) upheld,
(b) varied, or
(c) cancelled.
(6) HMRC must give P, or the other person, notice of the conclusions of the review and their reasoning within—
(a) a period of 45 days beginning with the relevant date, or
(b) such other period as HMRC and P, or the other person, may agree.
(7) In sub-paragraph (6) “relevant date” means—
(a) the date HMRC received P’s notification accepting the offer of a review (in a case falling within paragraph 121A), or
(b) the date HMRC received notification from another person requiring review (in a case falling within paragraph 121B), or
(c) the date on which HMRC decided to undertake the review (in a case falling within paragraph 121E).
(8) Where HMRC are required to undertake a review but do not give notice of the conclusions within the time period specified in sub-paragraph (6), the review is to be treated as having concluded that the decision is upheld.
(9) If sub-paragraph (8) applies, HMRC must notify P, or the other person of the conclusion which the review is treated as having reached.

Bringing of appeals
121G (1) An appeal under paragraph 121 is to be made to the appeal tribunal before—
(a) the end of the period of 30 days beginning with—
(i) in a case where P is the appellant, the date of the document notifying the decision to which the appeal relates, or
(ii) in a case where a person other than P is the appellant, the date that person becomes aware of the decision, or
(b) if later, the end of the relevant period (within the meaning of paragraph 121D).
(2) But that is subject to sub-paragraphs (3) to (5).
(3) In a case where HMRC are required to undertake a review under paragraph 121C—
(a) an appeal may not be made until the conclusion date, and
(b) any appeal is to be made within the period of 30 days beginning with the conclusion date.
(4) In a case where HMRC are requested to undertake a review by virtue of paragraph 121E—
(a) an appeal may not be made to an appeal tribunal—
(i) unless HMRC have notified P, or the other person, as to whether or not a review will be undertaken, and
(ii) if HMRC have notified P, or the other person, that a review will be undertaken, until the conclusion date;
(b) any appeal where paragraph (a)(ii) applies is to be made within the period of 30 days beginning with the conclusion date;
(c) if HMRC have notified P, or the other person, that a review will not be undertaken, an appeal may be made only if the appeal tribunal gives permission to do so.
Sch. 6 para. 121G(4) substituted (1.6.2014) by The Revenue and Customs (Amendment of Appeal Provisions for Out of Time Reviews) Order 2014 (S.I. 2014/1264), arts. 1(2), 6 (with art. 1(3))
(5) In a case where paragraph 121F(8) applies, an appeal may be made at any time from the end of the period specified in paragraph 121F(6) to the date 30 days after the conclusion date.
(6) An appeal may be made after the end of the period specified in sub-paragraph (1), (3)(b), (4)(b) or (5) if the appeal tribunal gives permission to do so.
(7) In this paragraph “conclusion date” means the date of the document notifying the conclusions of the review.

Appeals: further provisions
122 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 122(1) omitted (1.4.2009) by virtue of The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 290(3) (with Sch. 3 paras. 2-4)
(2) Subject to sub-paragraphs (2A) and (2B), where an appeal relates to a decision (whether or not contained in an assessment) that an amount of levy is due from any person, it shall not be entertained unless the amount which HMRC have determined to be due has been paid or deposited with them.
Sch. 6 para. 122(2) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 290(4) (with Sch. 3 paras. 2-4)
(2A) In a case where the amount determined to be payable as levy has not been paid or deposited an appeal shall be entertained if—
(a) HMRC are satisfied (on the application of the appellant), or
(b) the appeal tribunal decides (HMRC not being so satisfied and on the application of the appellant),
that the requirement to pay or deposit the amount determined would cause the appellant to suffer hardship.
Sch. 6 para. 122(2A)(2B) inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 290(5) (with Sch. 3 paras. 2-4)
(2B) Notwithstanding the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007, the decision of the appeal tribunal as to the issue of hardship is final.
(3) On an appeal under this paragraph relating to a penalty under paragraph 98 (evasion), the burden of proof as to the matters specified in paragraphs (a) and (b) of sub-paragraph (1) of that paragraph shall lie upon the Commissioners.
Sch. 6 para. 122 cross-heading substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 290(2) (with Sch. 3 paras. 2-4)

Determinations on appeal
123 (1) Where, on an appeal under paragraph 121—
(a) it is found that an assessment of the appellant ... is an assessment for an amount that is less than it ought to have been, and
Words in Sch. 6 para. 123(1)(a) omitted (1.4.2009) by virtue of The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(2)(b) (with Sch. 3 paras. 2-4)
(b) the appeal tribunal give a direction specifying the correct amount,
the assessment shall have effect as an assessment of the amount specified in the direction and (without prejudice to any power under this Schedule to reduce the amount of interest payable on the amount of an assessment) as if it were an assessment notified to the appellant in that amount at the same time as the original assessment.
Word in Sch. 6 para. 123(1) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(2)(a) (with Sch. 3 paras. 2-4)
(2) On an appeal under paragraph 121, the powers of the appeal tribunal in relation to any decision of the Commissioners shall include a power, where the tribunal allow an appeal on the ground that the Commissioners could not reasonably have arrived at the decision, either—
(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct; or
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a review or a further review of the original decision as appropriate.
Words in Sch. 6 para. 123(2)(b) inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(3)(b)(i) (with Sch. 3 paras. 2-4)
Words in Sch. 6 para. 123(2)(b) inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(3)(b)(ii) (with Sch. 3 paras. 2-4)
Word in Sch. 6 para. 123(2) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(3)(a) (with Sch. 3 paras. 2-4)
(3) Where, on an appeal under paragraph 121, the appeal tribunal find that a liability to a penalty or to an amount of interest arises, the tribunal shall not give any direction for the modification of the amount payable in respect of that liability except—
(a) in exercise of a power conferred on the tribunal by paragraph 104(1) (penalties) or paragraph 70(6) or (9), 86(3) or (6) or 109(5) or (8) (penalty interest); or
(b) for the purpose of making the amount payable conform to the amount of the liability imposed by this Schedule.
Word in Sch. 6 para. 123(3) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(4) (with Sch. 3 paras. 2-4)
(4) Where, on an appeal under paragraph 121, it is found that the whole or part of any amount paid or deposited in pursuance of paragraph 122(2) is not due, so much of that amount as is found not to be due shall be repaid with interest at the rate applicable under section 197 of the Finance Act 1996.
Word in Sch. 6 para. 123(4) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(5)(a) (with Sch. 3 paras. 2-4, 9(2)(e))
Words in Sch. 6 para. 123(4) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(5)(b) (with Sch. 3 paras. 2-4, 9(2)(e))
(5) Where, on an appeal under paragraph 121, it is found that the whole or part of any amount due to the appellant by way of any repayment in respect of a tax credit has not been paid, so much of that amount as is found not to have been paid shall be paid with interest at the rate applicable under section 197 of the Finance Act 1996.
Word in Sch. 6 para. 123(5) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(6)(a) (with Sch. 3 paras. 2-4, 9(2)(e))
Words in Sch. 6 para. 123(5) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(6)(b) (with Sch. 3 paras. 2-4, 9(2)(e))
(6) Where—
(a) an appeal under paragraph 121 has been entertained notwithstanding that an amount determined by the Commissioners to be payable as levy has not been paid or deposited, and
Word in Sch. 6 para. 123(6)(a) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(7)(a) (with Sch. 3 paras. 2-4, 9(2)(e))
(b) it is found on the appeal that that amount is due,
it shall be paid with interest at the rate applicable under section 197 of the Finance Act 1996
Words in Sch. 6 para. 123(6) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(7)(b) (with Sch. 3 paras. 2-4, 9(2)(e))
(6A) Interest under sub-paragraph (6) shall be paid without any deduction of income tax.
Sch. 6 para. 123(6A) inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(8) (with Sch. 3 paras. 2-4)
(7) Sections 85 and 85B of the Value Added Tax Act 1994 (settling of appeals by agreement and payment of tax where there is a further appeal) shall have effect as if—
(a) the references to section 83 of that Act included references to paragraph 121 above, and
(b) the references to value added tax included references to climate change levy.
Sch. 6 para. 123(7) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 291(9) (with Sch. 3 paras. 2-4)

Part XII Information and evidence

Provision of information
124 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 124 omitted (1.4.2010) by virtue of The Finance Act 2009, Section 96 and Schedule 48 (Appointed Day, Savings and Consequential Amendments) Order 2009 (S.I. 2009/3054), art. 1, Sch. para. 8 (with art. 6)

Records
125 (1) The Commissioners may by regulations impose obligations to keep records on persons who—
(a) are registered,
(b) are required to be registered, or
(c) are exempted from the requirement to be registered by regulations under paragraph 53(4).
Words in Sch. 6 para. 125(1) substituted (10.7.2003) by Finance Act 2003 (c. 14), s. 192(9)
(2) Regulations under this paragraph may be framed by reference to such records as may be stipulated in any notice published by the Commissioners in pursuance of the regulations and not withdrawn by a further notice.
(3) Regulations under this paragraph may—
(a) require any records kept in pursuance of the regulations to be preserved for such period, not exceeding six years, as may be specified in the regulations;
(b) authorise the Commissioners to direct that any such records need only be preserved for a shorter period than that specified in the regulations;
(c) authorise a direction to be made so as to apply generally or in such cases as the Commissioners may stipulate.
(4) A duty under regulations under this paragraph to preserve records may be discharged—
(a) by preserving them in any form and by any means, or
(b) by preserving the information contained in them in any form and by any means,
subject to any conditions or exceptions specified in writing by the Commissioners.
Sch. 6 para. 125(4) substituted for Sch. 6 para. 125(4)(5) (1.4.2010) by Finance Act 2009 (c. 10), s. 98(2), Sch. 50 para. 19(2); S.I. 2010/815, art. 2
(6) Subject to sub-paragraphs (7) and (8), a person who fails to preserve any record in compliance with—
(a) any regulations under this paragraph, or
(b) any notice, direction or requirement given or imposed under such regulations,
shall be liable to a penalty of £250.
(7) A failure such as is mentioned in sub-paragraph (6) shall not give rise to any penalty under that sub-paragraph if the person required to preserve the record satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the failure.
(8) Where, by reason of any such failure by any person as is mentioned in sub-paragraph (6)—
(a) that person is convicted of an offence (whether under this Act or otherwise), or
(b) that person is assessed to a penalty under paragraph 98 (penalty for evasion) or to a penalty for a deliberate inaccuracy under Schedule 24 to the Finance Act 2007 (penalties for errors),
Words in Sch. 6 para. 125(8)(b) inserted (1.4.2009) by The Finance Act 2008, Schedule 40 (Appointed Day, Transitional Provisions and Consequential Amendments) Order 2009 (S.I. 2009/571), art. 1(1), Sch. 1 para. 20(5)
that person shall not by reason of that failure be liable also to a penalty under this paragraph.
(9) The Commissioners may if they think fit at any time modify or withdraw any ... requirement ... imposed for the purposes of this paragraph.
Words in Sch. 6 para. 125(9) omitted (1.4.2010) by virtue of Finance Act 2009 (c. 10), s. 98(2), Sch. 50 para. 19(3); S.I. 2010/815, art. 2

Evidence of records that are required to be preserved
126 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 126 omitted (1.4.2010) by virtue of Finance Act 2009 (c. 10), s. 98(2), Sch. 50 para. 20; S.I. 2010/815, art. 2

Production of documents
127 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 127 omitted (1.4.2010) by virtue of The Finance Act 2009, Section 96 and Schedule 48 (Appointed Day, Savings and Consequential Amendments) Order 2009 (S.I. 2009/3054), art. 1, Sch. para. 8 (with art. 6)

Powers in relation to documents produced
128 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 128 omitted (1.4.2010) by virtue of The Finance Act 2009, Section 96 and Schedule 48 (Appointed Day, Savings and Consequential Amendments) Order 2009 (S.I. 2009/3054), art. 1, Sch. para. 8

Entry and inspection
129 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 129 omitted (1.4.2010) by virtue of The Finance Act 2009, Section 96 and Schedule 48 (Appointed Day, Savings and Consequential Amendments) Order 2009 (S.I. 2009/3054), art. 1, Sch. para. 8

Entry and search
130 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 130 repealed (1.12.2007) by Finance Act 2007 (c. 11), s. 84(4)(5), Sch. 22 para. 11(b), Sch. 27 Pt. 5(1); S.I. 2007/3166, art. 3(a)

Order for access to recorded information etc.
131 (1) Where, on an application by an authorised person, a justice of the peace or, in Scotland, a justice (within the meaning of section 307 of the Criminal Procedure (Scotland) Act 1995) is satisfied that there are reasonable grounds for believing—
(a) that an offence in connection with levy is being, has been or is about to be committed, and
(b) that any recorded information (including any document of any nature at all) 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.
1995 c. 46.
(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 seven days beginning with 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) 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 stored in any electronic form, an order under this paragraph shall have effect as an order to produce the information—
(a) in a form in which it is visible and legible or from which it can readily be produced in a visible and legible form; and
Words inserted (1.4.2003) by 2001 c. 16, ss. 70, 138(2), Sch. 2 Pt. II para. 13(1)(b)(2)(i); S.I. 2003/708, art. 2(k)
(b) if the authorised person wishes to remove it, in a form in which it can be removed.
Words substituted (1.4.2003) by 2001 c. 16, ss. 70, 138(2), Sch. 2 Pt. II para. 13(1)(a)(2)(i); S.I. 2003/708, art. 2(k)
(5) This paragraph is without prejudice to the preceding paragraphs of this Part of this Schedule.

Removal of documents etc.
132 (1) An authorised person who removes anything in the exercise of a power conferred by or under paragraph 130 or 131 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 authorised person shall provide the record within a reasonable time from the making of the request for it.
(3) Subject to sub-paragraph (7), if a request for permission to be allowed access to anything which—
(a) has been removed by an authorised person, and
(b) is retained by the Commissioners for the purposes of investigating an offence,
is made to the officer in overall charge of the investigation by a person who had custody or control of the thing 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 authorised person.
(4) Subject to sub-paragraph (7), if a request for a photograph or copy of any such thing is made to the officer in overall charge of the investigation by a person who had custody or control of the thing 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 authorised person for the purpose of photographing it or copying it; or
(b) photograph or copy it, or cause it to be photographed or copied.
(5) Subject to sub-paragraph (7), where anything is photographed or copied under sub-paragraph (4)(b), 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 anything, 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).
(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.

Enforcement of paragraph 132
133 (1) Where, on an application made as mentioned in sub-paragraph (2), the appropriate judicial authority is satisfied that a person has failed to comply with a requirement imposed by paragraph 132, 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) shall not be made except—
(a) in the case of a failure to comply with any of the requirements imposed by paragraph 132(1) and (2)—
(i) by the occupier of the premises from which the thing in question was removed, or
(ii) by the person who had custody or control of it immediately before it was so removed;
(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 Magistrates’ Courts (Northern Ireland) Order 1981.
S.I. 1981/1675 (N.I. 26.)
(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 Interpretation Act (Northern Ireland) 1954 shall apply as if any reference in those provisions to any enactment included a reference to this paragraph.
1954 c. 33 (N.I.).

Power to take samples and examine meters
134 (1) An authorised person, if it appears to him necessary for the protection of the revenue against mistake or fraud, may at any time take, from material which he has reasonable cause to believe is—
(a) a taxable commodity which is intended to be, is being or has been the subject of a taxable supply, or
(b) a product of the burning of a taxable commodity (other than electricity) which is being or has been the subject of a taxable supply,
such samples as he may require with a view to determining how the material ought to be treated, or to have been treated, for the purposes of the levy.
(2) An authorised person, if it appears to him necessary for the protection of the revenue against mistake or fraud, may at any time examine any meter which he has reasonable cause to believe is intended to be, is being or has been used for ascertaining the quantity of any taxable commodity supplied by a taxable supply.
(3) Any sample taken under sub-paragraph (1) shall be disposed of in such manner as the Commissioners may direct.

Evidence by certificate
135 (1) In any proceedings a certificate of the Commissioners—
(a) that a person was or was not at any time registered for the purposes of the levy, or
Word in Sch. 6 para. 135(1)(a) inserted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 44 para. 8(a)
(b) that any return required by regulations made under paragraph 41 has not been made or had not been made at any time,
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 135(1)(c) omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), Sch. 44 para. 8(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 135(1)(d) omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), Sch. 44 para. 8(b)
shall be evidence or, in Scotland, sufficient evidence of that fact.
(2) A photograph of any document provided to the Commissioners for the purposes of this Schedule 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) In any proceedings any document purporting to be a certificate under sub-paragraph (1) or (2) shall be taken to be such a certificate unless the contrary is shown.

Inducements to provide information
136 (1) This paragraph applies—
(a) to any criminal proceedings against a person in respect of an offence in connection with or in relation to levy; and
(b) to any proceedings against a person for the recovery of any sum due from him in connection with or in relation to levy.
(2) Statements made or documents produced or provided by or on behalf of a person shall not be inadmissible in any proceedings to which this paragraph applies by reason only that—
(a) a matter falling within sub-paragraph (3) or (4) has been drawn to that person’s attention; and
(b) he was or may have been induced, as a result, to make the statements or to produce or provide the documents.
(3) The matters falling within this sub-paragraph are—
(a) that, in relation to levy, the Commissioners may assess an amount due by way of a civil penalty instead of instituting criminal proceedings;
(b) that it is the practice of the Commissioners (without giving any undertaking as to whether they will make such an assessment in any case) to be influenced by whether a person—
(i) has made a full confession of any dishonest conduct to which he has been a party; and
(ii) has otherwise co-operated to the full with any investigation.
(4) The matter falling within this sub-paragraph is the fact that the Commissioners or, on appeal, an appeal tribunal have power under any provision of this Schedule to reduce a penalty.

Disclosure of information
137 (1) Notwithstanding any obligation not to disclose information that would otherwise apply, but subject to sub-paragraph (2), the Commissioners may disclose any information obtained or held by them in or in connection with the carrying out of their functions in relation to the levy to any of the following—
(a) any Minister of the Crown;
(b) the Scottish Ministers;
(c) any Minister, within the meaning of the Northern Ireland Act 1998, or any Northern Ireland department;
1998 c. 47.
(d) the National Assembly for Wales;
(e) the Environment Agency;
(f) the Scottish Environment Protection Agency;
(fa) the Administrator (within the meaning of Part 4 of this Schedule);
Sch. 6 para. 137(1)(fa) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 31 para. 10 (with Sch. 31 para. 11)
(g) the Gas and Electricity Markets Authority;
(h) the Director General of Electricity Supply for Northern Ireland;
(i) the Director General of Gas for Northern Ireland;
(j) an authorised officer of any person mentioned in paragraphs (a) to (i).
(2) Information shall not be disclosed under sub-paragraph (1) except for the purpose of assisting a person falling within paragraphs (a) to (j) of that sub-paragraph in the performance of his duties.
(3) Notwithstanding any such obligation as is mentioned in sub-paragraph (1), any person mentioned in sub-paragraph (1)(a) to (j) may disclose information—
(a) to the Commissioners, or
(b) to an authorised officer of the Commissioners,
for the purpose of assisting the Commissioners in the performance of duties in relation to the levy.
(4) 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 made by or under any enactment relating to the environment or to levy.
(5) References in the preceding provisions of this paragraph to an authorised officer of any person (“the principal”) are to any person who has been designated by the principal as a person to and by whom information may be disclosed by virtue of this paragraph.
(6) Where the principal is a person falling within any of paragraphs (a) to (c) of sub-paragraph (1), the principal shall notify the Commissioners in writing of the name of any person designated by the principal for the purposes of this paragraph.
(7) No charge may be made for any disclosure made by virtue of this paragraph.
(8) In this paragraph “enactment” includes an enactment contained in an Act of the Scottish Parliament or in any Northern Ireland legislation.

Meaning of “authorised person"
138 In this Part of this Schedule “authorised person” means any person acting under the authority of the Commissioners.

Part XIII Miscellaneous and supplementary

Security for levy
139 (1) Where it appears to the Commissioners necessary to do so for the protection of the revenue they may require any person who is or is required to be registered for the purposes of the levy to give security, or further security, for the payment of any levy which is or may become due from him.
(2) The power of the Commissioners to require any security, or further security, under this paragraph shall be a power to require security, or further security, of such amount and in such manner as they may determine.
(3) A person who is liable to account for the levy on a taxable supply that he makes is guilty of an offence if, at the time the supply is made—
(a) he has been required to give security under this paragraph, and
(b) he has not complied with that requirement.
(4) A person who is liable to account for the levy on a taxable supply that another person makes to him is guilty of an offence if he makes any arrangements for the making of the supply at a time when—
(a) he has been required to give security under this paragraph, and
(b) he has not complied with that requirement.
(5) A person guilty of an offence under this paragraph shall be liable, on summary conviction, to a penalty of level 5 on the standard scale£20,000.
Sum in Sch. 6 para. 139(5) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 11(6) (with reg. 5(1))
(6) Sections 145 to 155 of the Customs and Excise Management Act 1979 (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to an offence under this paragraph as they apply in relation to offences and penalties under the customs and excise Acts.
1979 c. 2.

Destination of receipts
140 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 140 repealed (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 81, Sch. 5; S.I. 2005/1126, art. 2(2)(h)(i)

Provisional collection of levy
141 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 141 repealed (11.5.2001) by 2001 c. 9, s. 110, Sch. 33 Pt. 3(3)

Invoices incorrectly showing levy due
141A (1) This paragraph applies where—
(a) a person issues an invoice showing an amount as levy chargeable on a supply, and
(b) no levy is chargeable on the supply, or the amount chargeable is less than the amount shown.
(2) The person shall be liable to a penalty unless he satisfies the Commissioners or, on appeal, a tribunal that there is a reasonable excuse for the inclusion in the invoice of the false information.
(3) The amount of the penalty is £50 or, if more, the following amount—
(a) where no levy is chargeable, the amount shown as chargeable;
(b) where an amount of levy is chargeable, the difference between that amount and the amount shown as chargeable.
(4) It is irrelevant for the purposes of sub-paragraph (1) whether or not the supply shown on the invoice actually takes place or has taken place.
(5) A reference in this paragraph to an invoice is a reference to any kind of invoice (and not just a climate change levy accounting document).
Sch. 6 para. 141A inserted (24.7.2002 with application as mentioned in s. 128(2) of the amending Act) by 2002 c. 23, s. 128

Adjustment of contracts
142 (1) Sub-paragraph (2) applies in the case of a contract for the supply of a taxable commodity if—
(a) the contract is entered into before 1st April 2001 (whether before or after the passing of this Act) or at a time when supplies such as are provided for by the contract are not taxable supplies, but
(b) supplies falling to be made under the contract will be, or become or will become, taxable supplies.
(2) The supplier of the commodity may unilaterally vary the contract by adjusting the price chargeable for any supply made under the contract if he does so for the purpose of passing on, to the person liable to pay for the supply, the burden (or any part of the burden) of the levy for which the supplier is liable to account on the supply.
(3) Sub-paragraph (4) applies in the case of a contract for the supply of a taxable commodity if it provides (whether as a result of a variation under sub-paragraph (2) or otherwise) for the passing on, to the person liable to pay for the supply, of the burden (or any part of the burden) of any levy for which the supplier is liable to account on the supply.
(4) The supplier of the commodity may unilaterally vary the contract by adjusting the price chargeable for any supply made under the contract if he does so for the purpose of giving effect (to any extent) to—
(a) any change in the rate at which levy is charged on the supply;
(b) levy ceasing to be chargeable on the supply.
(5) The powers conferred by this paragraph are in addition to any contractual powers.

Climate change levy accounting documents
143 (1) Provision may be made by regulations requiring registered persons who make taxable supplies—
(a) in prescribed cases, or
(b) to persons of prescribed descriptions,
to provide the persons supplied with climate change levy accounting documents.
(2) For the purposes of this Schedule a “climate change levy accounting document” for a taxable supply is an invoice—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 143(2)(a) omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 150
(b) stating the date on which it is issued, and
(c) containing the required statements.
(3) For the purposes of sub-paragraph (2)(c) “the required statements” means—
(a) in the case of a climate change levy accounting document issued under paragraph 27, the statements required by paragraph 27(5);
(b) in the case of a climate change levy accounting document whose provision is required by regulations, statements of prescribed particulars of or relating to—
(i) the supply,
(ii) the persons by and to whom the supply is made, and
(iii) the levy chargeable.
(4) Where regulations make provision requiring a climate change levy accounting document to be provided in connection with any description of supply, regulations may make provision for—
(a) requiring the accounting document to be provided within a prescribed time after, or at a prescribed time before, the supply is treated as taking place;
(b) allowing an accounting document to be provided later than required by the regulations where it is provided in accordance with general or special directions given by the Commissioners.
(5) Regulations may make provision conferring power on the Commissioners to allow the requirements of any regulations as to the statements to be contained in a climate change levy accounting document to be relaxed or dispensed with.
(6) Regulations may make provision for allowing a climate change levy accounting document required to be issued under paragraph 27 to be issued later than the time applicable under paragraph 27(2) where it is issued in accordance with general or special directions given by the Commissioners.
(7) In this paragraph “regulations” means regulations made by the Commissioners.

Service of notices etc.
144 (1) Any notice, notification or requirement that is to be or may be served on, given to or imposed on any person for the purposes of any provision made by or under this Schedule may be served, given or imposed by sending it to that person or his tax representative by post in a letter addressed to that person or his representative at the latest or usual residence or place of business of that person or representative.
(2) Any direction required or authorised by or under this Schedule to be given by the Commissioners may be given by sending it by post in a letter addressed to each person affected by it at his latest or usual residence or place of business.

Variation and withdrawal of directions etc.
145 Any direction, notice or notification required or authorised by or under this Schedule to be given by the Commissioners may be withdrawn or varied by them by a direction, notice or notification given in the same manner as the one withdrawn or varied.

Regulations and orders
146 (1) Any power under this Schedule to make regulations shall be exercisable by statutory instrument.
(2) A statutory instrument that—
(a) contains regulations made under this Schedule, and
(b) is not subject to a requirement that a draft of the instrument be laid before ... and approved by a resolution of the House of Commons,
Word in Sch. 6 para. 146(2)(b) omitted (17.7.2014) by virtue of Finance Act 2014 (c. 26), Sch. 20 para. 14(2)
shall be subject to annulment in pursuance of a resolution of the House of Commons.
(3) A statutory instrument that contains (whether alone or with other provisions) regulations under paragraph 3(3), 5(2A), 14(2), 15(4)(a), 16, 17(1B), 18(2), ... 52, 113(1), 148(4), 149 or 151(2) (regulations made by the Treasury) shall not be made unless a draft of the statutory instrument containing the regulations has been laid before ... and approved by a resolution of the House of Commons.
Words in Sch. 6 para. 146(3) substituted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 17(a), 21
Word in Sch. 6 para. 146(3) inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 17(b), 21
Word in Sch. 6 para. 146(3) omitted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 30 para. 15
Word in Sch. 6 para. 146(3) omitted (17.7.2014) by virtue of Finance Act 2014 (c. 26), Sch. 20 para. 14(2)
(3A) A statutory instrument that contains (whether alone or with other provision) regulations under paragraph 12A(5) that remove a process (in whole or in part) from the scope of the definition of “mineralogical process” shall not be made unless a draft of the statutory instrument containing the regulations has been laid before and approved by a resolution of the House of Commons.
Sch. 6 para. 146(3A)(3B) inserted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 20 para. 14(3)
(3B) A statutory instrument that contains (whether alone or with other provision) regulations under paragraph 12A(6) that—
(a) remove a description, or
(b) modify a description so as to narrow its scope,
shall not be made unless a draft of the statutory instrument containing the regulations has been laid before and approved by a resolution of the House of Commons.
(4) Where regulations under this Schedule made by the Commissioners impose a relevant requirement on any person, they may provide that if the person fails to comply with the requirement he shall be liable, subject to sub-paragraph (5), to a penalty of £250.
(5) Where by reason of any conduct—
(a) a person is convicted of an offence (whether under this Act or otherwise), or
(b) a person is assessed to a penalty under paragraph 98 or to a penalty for a deliberate inaccuracy under Schedule 24 to the Finance Act 2007 (penalties for errors),
Words in Sch. 6 para. 146(5)(b) inserted (1.4.2009) by The Finance Act 2008, Schedule 40 (Appointed Day, Transitional Provisions and Consequential Amendments) Order 2009 (S.I. 2009/571), art. 1(1), Sch. 1 para. 20(7)
that person shall not by reason of that conduct be liable also to a penalty under any regulations under this Schedule.
(6) In sub-paragraph (4) “relevant requirement” means any requirement other than one the penalty for a contravention of which is specified in paragraph 41(3), 114(3) or 125(6).
(7) A power under this Schedule to make any provision by regulations—
(a) may be exercised so as to apply the provision only in such cases as may be described in the regulations;
(b) may be exercised so as to make different provision for different cases or descriptions of case; and
(c) shall include power by the regulations to make such supplementary, incidental, consequential or transitional provision as the authority making the regulations may think fit.

Part XIV Interpretation

General
147 In this Schedule—
“accounting period” means a period which, in pursuance of any regulations under paragraph 41, is an accounting period for the purposes of the levy;
“agreement” includes any arrangement or understanding (whether or not legally enforceable), and cognate expressions shall be construed accordingly;
“appeal tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal;;
“auto-generator” has the meaning given by paragraph 152;
“carbon price support rate commodity” means any taxable commodity other than electricity;
“CHPQA certificate” has the same meaning as in the Climate Change Levy (Combined Heat and Power Stations) Exemption Certificate Regulations 2001 (S.I. 2001/486);
“climate change agreement” has the meaning given by paragraph 46;
“climate change levy accounting document” has the meaning given by paragraph 143(2);
“combined heat and power station” has the meaning given by paragraph 148(1);
“the Commissioners” means the Commissioners of Customs and Excise;
“conduct” includes acts and omissions;
“electricity utility” has the meaning given by paragraph 150(2) (but see paragraph 150(4));
“exempt unlicensed electricity supplier” has the meaning given by paragraph 152A;
“fully exempt combined heat and power station” has the meaning given by paragraph 148(2);
“gas utility” has the meaning given by paragraph 150(3) (but see paragraph 150(4));
“Great Britain” includes the territorial waters of the United Kingdom so far as adjacent to Great Britain;
“HMRC” means Her Majesty’s Revenue and Customs;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“member”, in relation to a group, shall be construed in accordance with regulations under paragraph 116;
“non-resident taxpayer” means a person who—
(a) is or is required to be registered for the purposes of the levy, and
(b) is not resident in the United Kingdom;
“partly exempt combined heat and power station” has the meaning given by paragraph 148(3);
“prescribed” (except in paragraphs 5(2A), 14(2), 16(3) , 17(1B)... and 148(4)) means prescribed by regulations made by the Commissioners under this Schedule;
“produced"—
(a) in relation to electricity, means generated, and
(b) in relation to any other commodity, includes extracted;
“reduced-rate supply” has the meaning given by paragraph 44(1) (which, by virtue of paragraph 44(2), has effect subject to paragraph 44(2A) to (2D) andparagraphs 45 and 45B);
“registered” means registered in the register maintained under paragraph 53(2);
“representative member”, in relation to a group, shall be construed in accordance with regulations under paragraph 116;
“resident in the United Kingdom” has the meaning given by paragraph 156;
“ship” includes hovercraft;
“small generating station” has the meaning given by paragraph 152B;
“special utility scheme” has the meaning given by paragraph 29(1);
“stand-by generator” means a generating station which—
(a) is used to provide an emergency electricity supply to a building in the event of a failure of the building's usual electricity supply, and
(b) is not used for any other purpose;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978;
“supply for charity use” shall be construed in accordance with paragraph 8;
“supply for domestic use” shall be construed in accordance with paragraphs 8 and 9;
“supply for use in scrap metal recycling” has the meaning given by paragraph 43A(1);
“tax credit” means a tax credit for which provision is made by tax credit regulations;
“tax credit regulations” means regulations under paragraph 62;
“tax representative”, in relation to any person, means the person who, in accordance with any regulations under paragraph 114, is for the time being that person’s tax representative for the purposes of the levy;
“taxable commodity” shall be construed in accordance with paragraph 3;
“taxable supply” shall be construed in accordance with paragraphs 2(2) and 4;
“the United Kingdom” includes the territorial waters adjacent to any part of the United Kingdom;
“utility” has the meaning given by paragraph 150(1).
Words in Sch. 6 para. 147 substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 292(2)
Words in Sch. 6 para. 147 inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 18(a), 21
Words in Sch. 6 para. 147 inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 292(3)
Words in Sch. 6 para. 147 repealed (1.11.2007) by Finance Act 2006 (c. 25), s. 172(15)(16), Sch. 26 Pt. 8(1); S.I. 2007/2901, art. 2(1) (with art. 2(2)-(4))
Words in Sch. 6 para. 147 substituted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 18(b)(i), 21
Word in Sch. 6 para. 147 inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 18(b)(ii), 21
Word in Sch. 6 para. 147 omitted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 30 para. 16(a)
Word in Sch. 6 para. 147 substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 10(a), 13(1); S.I. 2007/2902, art. 2(1) (with art. 2(2)(4))
Word in Sch. 6 para. 147 substituted (1.11.2007) by Finance Act 2007 (c. 11), Sch. 2 paras. 10(b), 13(1); S.I. 2007/2902, art. 2(1) (with art. 2(2)(4))
Words in Sch. 6 para. 147 inserted (21.7.2009) by Finance Act 2009 (c. 10), s. 117(3)(b)
Words in Sch. 6 para. 147 substituted (with effect in accordance with s. 118(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 59 para. 9
1978 c. 30.
Words in Sch. 6 para. 147 inserted (with effect in accordance with Sch. 30 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 30 para. 16(b)

Meaning of “combined heat and power station" etc.
148 (1) In this Schedule “combined heat and power station” means a station producing electricity or motive power that is (or may be) operated for purposes including the supply to any premises of—
(a) heat produced in association with electricity or motive power, or
(b) steam produced from, or air or water heated by, such heat.
(2) In this Schedule “fully exempt combined heat and power station” means a combined heat and power station in respect of which there is in force a certificate (a “full-exemption certificate”)—
(a) given by the Secretary of State,
(b) stating that the station is a fully exempt combined heat and power station for the purposes of the levy, and
(c) complying (so far as applicable) with any provision made by regulations under sub-paragraph (10).
Words in Sch. 6 para. 148(2)(c) substituted (22.7.2005, with effect in accordance with s. 189(5) of the amending Act) by Finance Act 2003 (c. 14), s. 189(3)(a); S.I. 2005/1713, art. 2
(3) In this Schedule “partly exempt combined heat and power station” means a combined heat and power station in respect of which there is in force a certificate (a “part-exemption certificate”)—
(a) given by the Secretary of State,
(b) stating that the station is a partly exempt combined heat and power station for the purposes of the levy, and
(c) complying (so far as applicable) with any provision made by regulations under sub-paragraph (10).
Words in Sch. 6 para. 148(3)(c) substituted (22.7.2005, with effect in accordance with s. 189(5) of the amending Act) by Finance Act 2003 (c. 14), s. 189(3)(a); S.I. 2005/1713, art. 2
(4) The Secretary of State shall give a full-exemption certificate in respect of a combined heat and power station where—
(a) an application is made for a certificate under this paragraph in respect of the station, and
(b) it appears to him that such conditions as may be prescribed are satisfied in relation to the station.
For this purpose “prescribed” means prescribed by regulations made by the Treasury.
(5) The Secretary of State shall give a part-exemption certificate in respect of a combined heat and power station where—
(a) an application is made for a certificate under this paragraph in respect of the station, and
(b) his decision on the application is to refuse to give a full-exemption certificate.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 6 para. 148(6) repealed (22.7.2005, with effect in accordance with s. 189(5) of the amending Act) by Finance Act 2003 (c. 14), s. 189(3)(b), Sch. 43 Pt. 4(2); S.I. 2005/1713, art. 2
(7) In prescribing conditions under sub-paragraph (4), the Treasury must have regard to the object of securing that a combined heat and power station will only be a fully exempt combined heat and power station for the purposes of this Schedule if it is one in which electricity or motive power is produced concurrently with heat in a manner that makes efficient use of the commodities used in their production.
(8) A condition prescribed under sub-paragraph (4) may, in particular, relate to any of the following—
(a) a station’s outputs;
(b) the commodities used in the production of such outputs;
(c) the methods of producing such outputs;
(d) the efficiency with which such outputs are produced.
(9) For the purposes of sub-paragraph (8), a station’s “outputs” are any electricity or motive power produced in the station and any of the following supplied from the station, namely—
(a) heat or steam, or
(b) air, or water, that has been heated or cooled.
(10) The Secretary of State may by regulations make provision for or about—
(a) certificates under this paragraph;
(b) applications for such certificates;
(c) the information that is to accompany such applications.
(11) The provision that may be made by virtue of sub-paragraph (10)(a) includes in particular—
(a) provision in respect of the periods for which certificates under this paragraph are to be in force;
(b) provision for the (non-retrospective) variation or revocation of such certificates.

Determination of efficiency percentages for combined heat and power stations
149 (1) The Treasury may by regulations make provision for determining ... the efficiency percentage for a combined heat and power station.
Words in Sch. 6 para. 149(1) repealed (22.7.2005, with effect in accordance with s. 189(5) of the amending Act) by Finance Act 2003 (c. 14), s. 189(4), Sch. 43 Pt. 4(2); S.I. 2005/1713, art. 2
(2) Regulations under this paragraph may, in particular, include—
(a) provision in respect of methods of calculating efficiency percentages;
(b) provision in respect of the measurements and data to be used in calculating such percentages;
(c) provision in respect of the procedures for determining such percentages;
(d) provision in respect of verifying—
(i) calculations by which such percentages are produced, and
(ii) measurements and data used in such calculations;
(e) provision that, so far as framed by reference to any document, is framed by reference to that document as from time to time in force.
(3) In making provision under this paragraph, the Treasury must have regard to the object of securing that the efficiency percentage for a combined heat and power station is (save for any appropriate adjustments) a percentage that reflects a fair assessment of the efficiency with which commodities are transformed in the station into electricity or motive power.

Certification of electricity from fully or partly exempt combined heat and power station
149A (1) The Commissioners may by regulations make provision for the Gas and Electricity Markets Authority, or the Director General of Electricity Supply for Northern Ireland, to certify as respects any quantity of electricity that—
(a) the electricity has been produced in a fully exempt combined heat and power station;
(b) the electricity has been produced in a partly exempt combined heat and power station and supplied from the station without causing the limit referred to in paragraph 16(2) to be exceeded.
(2) Regulations under this paragraph may provide that for any purposes of this Schedule (or any regulations made under it)—
(a) electricity is not to be regarded as having been produced as specified in sub-paragraph (1)(a) unless it has been certified under that provision;
(b) electricity is not to be regarded as having been produced and supplied as specified in sub-paragraph (1)(b) unless it has been certified under that provision.
(3) Regulations under this paragraph may in particular provide that the supply of any electricity does not qualify for the exemption under paragraph 16(2) unless the electricity is certified as specified in sub-paragraph (1)(b).
(4) Regulations under this paragraph may also make provision for determining whether electricity is produced and supplied as specified in sub-paragraph (1)(b).
Sch. 6 para. 149A inserted (24.7.2002) by 2002 c. 23, s. 124

Meaning of “utility"
150 (1) In this Schedule “utility” means an electricity utility or a gas utility.
(2) In this Schedule “electricity utility” means the holder of—
(a) a licence under section 6(1)(d) of the Electricity Act 1989 (supply licences), or
1989 c. 29.
(b) a licence under Article 10(1)(c) or (2) of the Electricity Supply (Northern Ireland) Order 1992,
S.I. 1992/231 (N.I. 1).
except where the holder is acting otherwise than for purposes connected with the carrying on of activities authorised by the licence.
Until the coming into force of the substitution for section 6 of the Electricity Act 1989 provided for by the Utilities Act 2000, paragraph (a) above shall have effect as if the reference to section 6(1)(d) were to section 6(1)(c) or (2).
2000 c. 27.
(3) In this Schedule “gas utility” means the holder of—
(a) a licence under section 7A(1) of the Gas Act 1986 (supply licences), or
1986 c. 44.
(b) a licence under Article 8(1)(c) of the Gas (Northern Ireland) Order 1996,
S.I. 1996/275 (N.I. 2.)
except where the holder is acting otherwise than for purposes connected with the carrying on of activities authorised by the licence.
(4) Sub-paragraphs (1) to (3) have effect subject to—
(a) any direction under paragraph 151(1), and
(b) any regulations under paragraph 151(2).

Person treated as, or as not being, a utility
151 (1) The Commissioners may by direction (a “utility direction”) make, in respect of a person (or persons) specified in the direction, provision authorised by sub-paragraph (3).
(2) The Treasury may by regulations (“utility regulations”) make, in respect of any person of a description specified in the regulations, provision authorised by sub-paragraph (3).
(3) The provision authorised by this sub-paragraph is provision for—
(a) a person who is an unregulated electricity supplier to be treated for levy purposes as being an electricity utility;
(b) a person who is an unregulated gas supplier to be treated for levy purposes as being a gas utility;
(c) a person who is an electricity utility to be treated for levy purposes as not being an electricity utility;
(d) a person who is a gas utility to be treated for levy purposes as not being a gas utility.
(4) References in sub-paragraph (3) to provision for a person to be treated in a particular way for “levy purposes” are to provision for him to be treated in that way for—
(a) the purposes of this Schedule, or
(b) such of those purposes as are specified in the direction or regulations by which the provision is made.
(5) The power to make any provision by a utility direction or utility regulations may be exercised so that the provision applies in relation to a person only to an extent specified in, or determined under, the direction or regulations.
(6) A utility direction cannot take effect until it has been—
(a) given by the Commissioners to each person in respect of whom it makes provision, and
(b) published by the Commissioners.
(7) Paragraph 146(7)(b) and (c) applies to the power to make provision by a utility direction as to a power to make provision by regulations.
(8) In this paragraph—
“unregulated electricity supplier” means a person who—
(a) makes supplies of electricity, and
(b) is not an electricity utility;
“unregulated gas supplier” means a person who—
(a) makes supplies of gas that is in a gaseous state and is of a kind supplied by a gas utility, and
(b) is not a gas utility.

Meaning of “auto-generator"
152 (1) In this Schedule “auto-generator” means a person who produces electricity if the electricity that he produces is primarily for his own consumption.
(2) The Commissioners may by regulations specify requirements to be fulfilled before the electricity that a person produces is, for the purposes of sub-paragraph (1), to be taken as produced primarily for his own consumption.
(3) For the purposes of this paragraph, electricity is for a person’s own consumption if it is for consumption by him or a person connected with him within the meaning of section 1122 of the Corporation Tax Act 2010.
Words in Sch. 6 para. 152(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 314(3) (with Sch. 2)

Meaning of “exempt unlicensed electricity supplier”
152A (1) In this Schedule “exempt unlicensed electricity supplier” means a person—
(a) to whom an exemption from section 4(1)(c) of the Electricity Act 1989 (persons supplying electricity to premises) has been granted by an order under section 5 of that Act, or
(b) to whom an exemption from Article 8(1)(c) of the Electricity Supply (Northern Ireland) Order 1992 has been granted by an order under Article 9 of that Order,
except where the person is acting otherwise than for purposes connected with the carrying on of activities authorised by the exemption.
(2) Sub-paragraph (1) applies subject to—
(a) any direction under paragraph 151(1), and
(b) any regulations under paragraph 151(2).
Sch. 6 paras. 152A, 152B and cross-headings inserted (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 paras. 19, 21

Meaning of “small generating station”
152B (1) In this Schedule “small generating station” means a generating station the capacity of which for producing electricity is no more than 2 megawatts.
(2) Sub-paragraph (3) applies if a relevant station (“station X”) is one of a number of relevant stations which—
(a) are situated in the United Kingdom, and
(b) are owned by P or persons connected with P.
(3) In applying sub-paragraph (1) in relation to station X, the reference to the capacity of a generating station is to be read as a reference to the capacity of station X and all the other relevant stations mentioned in sub-paragraph (2) taken together.
(4) In sub-paragraphs (2) and (3) “relevant station” means a generating station which is neither an exempt CHP station nor a stand-by generator.
(5) For the purposes of sub-paragraph (2)(b)—
(a) “P” is the person who owns station X, and
(b) section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies.
(6) Sub-paragraph (7) applies if the scheme in relation to which the CHPQA certificate of an exempt CHP station (“station Y”) is issued covers other exempt CHP stations as well.
(7) In applying sub-paragraph (1) in relation to station Y, the reference to the capacity of a generating station is to be read as a reference to the capacity of station Y and all the other exempt CHP stations mentioned in sub-paragraph (6) taken together.
(8) In this paragraph “exempt CHP station” means a fully exempt combined heat and power station or a partly exempt combined heat and power station.

Meaning of “levy due for an accounting period"
153 References in this Schedule, in relation to any accounting period, to levy due from any person for that period are references (subject to any regulations made by virtue of paragraph 41(2)(a)) to the levy for which that person is required, in accordance with regulations under paragraph 41, to account by reference to that period.

Meaning of “repayment of levy"
154 References in this Schedule to a repayment of levy or of an amount of levy are references to any repayment of an amount to any person by virtue of—
(a) any tax credit regulations; or
(b) paragraph 63, 87(3) or 110(3).

Interpretation of “in the course or furtherance of a business"
155 (1) Anything done in connection with the termination or intended termination of a business shall, for the purposes of this Schedule, be treated as being done in the course or furtherance of the business.
(2) Where in a disposition of a business as a going concern, or of its assets (whether or not in connection with its reorganisation or winding up), there is a supply of a taxable commodity, that supply shall for the purposes of this Schedule be taken to be made in the course or furtherance of the business.

Meaning of “resident in the United Kingdom"
156 For the purposes of this Schedule a person is resident in the United Kingdom at any time if, at that time—
(a) that person has an established place of business in the United Kingdom;
(b) that person has a usual place of residence in the United Kingdom; or
(c) that person is a firm or unincorporated body which (without having a relevant connection with the United Kingdom by virtue of paragraph (a)) has amongst its partners or members at least one individual with a usual place of residence in the United Kingdom.

References to the Gas and Electricity Markets Authority: transitional provision
157 (1) Until such time as a transfer of functions from the Director General of Electricity Supply to the Gas and Electricity Markets Authority (“the Authority”) has taken effect, references in paragraph 19 to the Authority shall be taken to be references to the Director General.
(2) Until such time as all the functions of the Director General of Electricity Supply have been transferred in accordance with the Utilities Act 2000 (transfer to the Authority) or abolished, references to the Authority in paragraph 137 shall be taken to include the Director General.
2000 c. 27.
(3) Until such time as all the functions of the Director General of Gas Supply have been transferred in accordance with the Utilities Act 2000 (transfer to the Authority) or abolished, references to the Authority in paragraph 137 shall be taken to include the Director General.
(4) The power conferred by paragraph 146(7) includes, in particular, power for regulations under paragraph 19 to make transitional provision in connection with the transfer of functions from the Director General of Electricity Supply to the Authority.
Sch. 6 modified (coming into force in accordance with art. 1 of the amending S.I.) by The Climate Change Levy (Suspension of Recycling Exemption) Order 2011 (S.I. 2011/1023), arts. 1, 2, 3
Sch. 6 modified (retrospective to 26.3.2013) by Finance Act 2013 (c. 29), Sch. 42 para. 1(1)

SCHEDULE 7 Climate change levy: consequential amendments
Section 30.

Provisional Collection of Taxes Act 1968 (c.2)
1 In section 1(1) of the Provisional Collection of Taxes Act 1968 (taxes in relation to which resolutions may have temporary statutory effect), after “value added tax" there shall be inserted “ , climate change levy, ”.

Bankruptcy (Scotland) Act 1985 (c.66)
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 7 paras. 2, 3 repealed (15.9.2003) by Enterprise Act 2002 (c. 40), s. 279, Sch. 26; S.I. 2003/2093, art. 2(1), Sch. 1 (with art. 4)

Insolvency Act 1986 (c.45)
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income and Corporation Taxes Act 1988 (c.1)
4 In section 827 of the Taxes Act 1988 (no deduction for penalties etc.), the following subsection shall be inserted after subsection (1C)—

“(1D) Where a person is liable to make a payment by way of—
(a) any penalty under any provision of Schedule 6 to the Finance Act 2000 (climate change levy),
(b) interest under paragraph 70 of that Schedule (interest on recoverable overpayments etc.),
(c) interest under any of paragraphs 81 to 85 of that Schedule (interest on climate change levy due and on interest), or
(d) interest under paragraph 109 of that Schedule (interest on penalties),
the payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.”

Insolvency (Northern Ireland) Order 1989 (N.I. 19)
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 7 para. 5 repealed (N.I.) (27.3.2006) by The Insolvency (Northern Ireland) Order 2005 (S.I. 2005/1455), art. 1(3), Sch. 9; S.R. 2006/21, art. 2 (subject to S.R. 2006/22, arts. 2-7)

Finance Act 1996 (c.8)
6 In section 197(2) of the Finance Act 1996 (enactments for which interest rates are set under section 197), after paragraph (f) there shall be inserted—

“(g) the following provisions of Schedule 6 to the Finance Act 2000 (interest payable to or by the Commissioners in connection with climate change levy), that is to say, paragraphs 41(2)(f), 62(3)(f), 66, 70(1)(b) and 81(3).”

Finance Act 1997 (c.16)
7 (1) The Finance Act 1997 is amended as follows.
(2) In section 51(5) (indirect taxes in respect of which the Commissioners may make regulations about enforcement by distress), after paragraph (e) insert—

“(f) climate change levy.”

(3) In section 52(5) (enforcement in Scotland of indirect taxes by diligence), after paragraph (e) insert—

“(f) climate change levy.”

(4) Sub-paragraph (3) extends only to Scotland.
SCHEDULE 8

Part I Introductory

Employee share ownership plans

1
(1) In this Schedule an “employee share ownership plan” means a plan established by a company providing—
(a) for shares (“free shares”) to be appropriated to employees without payment, or
(b) for shares (“partnership shares”) to be acquired on behalf of employees out of sums deducted from their salary.
(2) A plan that provides for partnership shares may also provide for shares (“matching shares”) to be appropriated without payment to employees in proportion to the partnership shares acquired by them.
(3) Where a plan contains provision for all, or more than one, of the kinds of shares mentioned in sub-paragraphs (1) and (2), it may leave it for the company to decide when the provisions relating to each kind of share are to have effect.
(4) In this Schedule, in relation to an employee share ownership plan “the company” means the company which established the plan.

Group plans

2
(1) An employee share ownership plan established by a company that controls other companies (a “parent company”) may extend to all or any of those other companies.
In this Schedule a plan established by a parent company which so extends is referred to as a “group plan".
(2) In relation to a group plan a “participating company” means the parent company or any other company to which for the time being the plan is expressed to extend.

Meaning of “award of shares", “participant" etc.

3
(1) For the purposes of this Schedule an award of shares is made under a plan on each occasion when in accordance with the plan—
(a) matching or free shares are appropriated to employees, or
(b) partnership shares are acquired on behalf of employees.
(2) For the purposes of this Schedule an individual participates in an award of free, matching or partnership shares under the plan if shares (“the individual award”) included in that award are—
(a) in the case of an award of free or matching shares, appropriated to him, or
(b) in the case of an award of partnership shares, acquired on his behalf,
and references to shares awarded to an individual are to free or matching shares appropriated to him, or partnership shares acquired on his behalf, under the plan.
(3) In this Schedule “participant”, in relation to a plan, means an individual to whom shares have been awarded under the plan.

Application for approval

4
(1) Where an employee share ownership plan has been established, on the application of the company the Inland Revenue shall approve the plan if they are satisfied that it meets the requirements of this Schedule.
(2) An application for approval must contain such particulars and be supported by such evidence as the Inland Revenue may require.

Appeal against refusal of approval

5
(1) If the Inland Revenue refuse to approve the plan, the company may appeal to the Special Commissioners.
(2) Notice of appeal must be given to the Inland Revenue within 30 days after their decision was notified to the company.
(3) If the Special Commissioners allow the appeal they may direct the Inland Revenue to approve the plan with effect from such date (but not earlier than the application for approval) as the Commissioners may specify.

Part II General requirements

Introduction

6
The plan must meet the requirements of—
paragraph 7 (the purpose of plan);
paragraph 8 (all-employee nature of plan);
paragraph 9 (participation on same terms);
paragraph 10 (no preferential treatment for directors, etc.);
paragraph 11 (no further conditions);
paragraph 12 (no loan arrangements).

The purpose of the plan

7
(1) The purpose of the plan must be to provide benefits to employees in the nature of shares in a company which give them a continuing stake in that company.
(2) The plan must not contain, and the operation of the plan must not involve, features which are neither essential nor reasonably incidental to that purpose.

All-employee nature of plan

8
(1) The plan must provide that every employee who—
(a) meets the requirements mentioned in Part III (eligibility of individuals) in relation to an award of shares under the plan, and
(b) is chargeable to tax under Case I of Schedule E in respect of the employment by reference to which he satisfies the condition in paragraph 14 (the employment requirement),
is eligible to participate in the award, and invited to do so.
(2) The plan must not contain any feature which has or would have the effect of discouraging any description of employees within sub-paragraph (1) from participating in an award of shares under the plan.
This does not apply to any provision required or authorised by this Schedule.
(3) The plan may provide that an employee who—
(a) meets the requirements mentioned in Part III (eligibility of individuals) in relation to an award of shares under the plan, but
(b) is not chargeable to tax as mentioned in sub-paragraph (1)(b),
is eligible to participate in the award, and may be invited to do so.
(4) For the purposes of this Schedule an individual is a “qualifying employee”, in relation to an award of shares, if—
(a) he is eligible to participate in the award, and
(b) either—
(i) he must be invited to participate in the award (see sub-paragraph (1)), or
(ii) under the plan he may be invited to participate in the award (see sub-paragraph (3)) and has been so invited.

Participation on same terms

9
(1) The requirement of this paragraph is—
(a) that every employee who is invited to participate in an award must be invited to participate on the same terms, and
(b) that those who do participate must actually do so on the same terms.
(2) The requirement of this paragraph is infringed by the awarding of free shares by reference to factors other than those mentioned in sub-paragraph (3).
(3) The requirement of this paragraph is not infringed by the awarding of free shares by reference to an employee’s—
(a) remuneration,
(b) length of service, or
(c) hours worked.
This is subject to sub-paragraph (4).
(4) Where the awarding of free shares is by reference to more than one of the factors mentioned in sub-paragraph (3) the requirement of this paragraph is infringed unless—
(a) each factor gives rise to a separate entitlement related to the level of remuneration, length of service or (as the case may be) hours worked, and
(b) the total entitlement is the sum of those separate entitlements.
(5) In the case of an award of free shares which provides for performance allowances, this paragraph has effect as provided in paragraph 29 (performance allowances: method one) or, as the case may be, paragraph 30 (performance allowances: method two).
For this purpose “performance allowance” has the meaning given in paragraph 25(1).

No preferential treatment for directors etc.

10
(1) The first requirement of this paragraph is that no feature of the plan must have or be likely to have the effect of conferring benefits wholly or mainly—
(a) on directors, or
(b) on employees receiving higher levels of remuneration.
(2) The second requirement of this paragraph is that in the case of a plan established by a company that is a member of a group, the identity of the company (or, if it is a group plan, the participating companies) must not be such that the plan has or is likely to have the effect of conferring benefits wholly or mainly—
(a) on employees of companies that are members of the group who receive higher levels of remuneration, or
(b) on directors of such companies.
(3) This paragraph is subject to paragraph 9(3) (award of shares by reference to remuneration etc.).

No further conditions

11
No conditions, other than those required or permitted by this Schedule, may be imposed on an employee’s participation in an award of shares under the plan.

No loan arrangements

12
(1) The arrangements for the plan must not make any provision, or be in any way associated with any provision made, for loans to some or all of the employees of—
(a) the company, or
(b) in the case of a group plan, any participating company,
and the operation of the plan must not be in any way associated with such loans.
(2) For the purposes of sub-paragraph (1) “arrangements” includes any scheme, agreement, undertaking or understanding, whether or not legally enforceable.

Part III Eligibility of individuals

Introduction

13
(1) The plan must provide that an individual may only participate in an award of shares if—
(a) in the case of free shares, he is eligible to participate in the award at the time it is made, and
(b) in the case of partnership or matching shares—
(i) if there is no accumulation period, he is eligible to participate in the award at the time the partnership share money relating to the award is deducted, and
(ii) if there is an accumulation period, he is eligible to participate in the award at the time of the first deduction of partnership share money relating to the award.
(2) For the purposes of sub-paragraph (1), in the case of an award of matching shares the deduction of partnership share money “relating” to the award is the deduction relating to the award of partnership shares to which the matching shares relate.
(3) An individual is eligible to participate in an award of shares under the plan if and only if—
(a) the requirements of the plan are met as to—
(i) employment (see paragraph 14),
(ii) no material interest (see paragraph 15), and
(iii) not participating in other schemes (see paragraph 16), and
(b) in a case where the individual is not within paragraph 8(1) (employees who must be invited to participate in the award), any further eligibility requirements of the plan are met.

The employment requirement

14
(1) The plan must provide that an individual is not eligible to participate in an award of shares unless—
(a) he is an employee of the company or, in the case of a group plan, of a participating company, and
(b) where the plan provides for a qualifying period, he has at all times during that period been an employee of a qualifying company
Words in Sch. 8 para. 14(1) substituted (11.5.2001 with effect as mentioned in Sch. 13 para. 2(2) of the amending Act) by 2001 c. 9, s. 61, Sch. 13 paras. 1, 2(1)(a)(2)
(1A) Except in the case of a group plan, a qualifying company means—
(a) the company, or
(b) a company that when the individual was employed by it was an associated company—
(i) of the company, or
(ii) of another company qualifying under this paragraph.
Sch. 8 para. 14(1A)(1B) inserted (11.5.2001 with effect as mentioned in Sch. 13 para. 2(2) of the amending Act) by 2001 c. 9, S. 61, Sch. 13 paras. 1, 2(1)(b)(2)
(1B) In the case of a group plan, a qualifying company means—
(a) a company that is a participating company at the end of the qualifying period, or
(b) a company that when the individual was employed by it was a participating company, or
(c) a company that when the individual was employed by it was an associated company of—
(i) a company qualifying under paragraph (a) or (b), or
(ii) another company qualifying under this paragraph.
(2) If the plan provides for a qualifying period, that period must be—
(a) in the case of free shares, a period of not more than 18 months ending with the date on which the award is made,
(b) in the case of partnership or matching shares—
(i) if the plan does not provide for an accumulation period, a period of not more than 18 months ending with the deduction of partnership share money relating to the award, and
(ii) if the plan provides for an accumulation period, a period of not more than six months ending with the start of the accumulation period relating to the award.
(3) For the purposes of sub-paragraph (2), in the case of an award of matching shares the deduction of partnership share money or accumulation period “relating” to the award is the deduction or period relating to the award of partnership shares to which the matching shares relate.
(4) In relation to an award, the same qualifying period must apply in relation to all employees of the company or, in the case of a group plan, of the participating companies.
(5) Subject to sub-paragraphs (2) and (4), the plan may authorise the company to specify different qualifying periods in respect of different awards of shares.

The “no material interest" requirement

15
(1) The plan must provide that an individual is not eligible to participate in an award of shares if he has, or has within the preceding twelve months had, a material interest in—
(a) a close company whose shares may be awarded under the plan, or
(b) a company which has control of such a company or is a member of a consortium which owns such a company.
(2) For the purposes of this paragraph an individual is regarded as having a material interest in a company if—
(a) the individual,
(b) the individual together with one or more associates of his, or
(c) any associate of the individual’s, with or without any other such associates,
has a material interest in the company.
(3) This paragraph is supplemented—
(a) as regards the meaning of “material interest”, by paragraphs 17 to 19, and
(b) as regards the meaning of “associate”, by paragraph 20 (read with paragraphs 21 and 22).

The requirement of non-participation in other relevant share schemes

16
(1) The plan must provide that an individual is not to participate in an award of free shares under the plan in a tax year if in that year—
(a) shares have been (or are at the same time to be) appropriated to him in accordance with an approved profit sharing scheme established by the company or a connected company, or
(b) he has participated (or is at the same time to participate) in another employee share ownership plan established by the company or a connected company and approved under this Schedule.
(2) The plan must provide that an individual is not eligible to participate in an award of partnership or matching shares under the plan in any tax year if, in that year, he has participated (or at the same time participates) in an award of shares under another employee share ownership plan established by the company or a connected company and approved under this Schedule.
(3) For the purposes of this paragraph an individual is treated as having participated in an award of free shares under an employee share ownership plan if he would have participated in that award but for his failure to obtain a performance allowance (see paragraph 25).
(4) In this paragraph “connected company” means—
(a) a company which controls or is controlled by the company or which is controlled by a company which also controls the company, or
(b) a company which is a member of a consortium owning the company or which is owned in part by the company as a member of a consortium.

Meaning of “material interest"

17
(1) For the purposes of paragraph 15 (the “no material interest” requirement) a material interest in a company means—
(a) beneficial ownership of, or the ability to control, directly or through the medium of other companies or by any other indirect means, more than 25% of the ordinary share capital of the company; or
(b) where the company is a close company, possession of or entitlement to acquire such rights as would, in the event of the winding up of the company or in any other circumstances, give an entitlement to receive more than 25% of the assets that would then be available for distribution among the participators.
(2) In this paragraph—
“close company” includes a company that would be a close company but for—
(a) section 414(1)(a) of the Taxes Act 1988 (exclusion of companies not resident in the United Kingdom), or
(b) section 415 of that Act (exclusion of certain quoted companies); and
“participator” has the meaning given by section 417(1) of that Act.
(3) This paragraph is supplemented by paragraph 18 (options etc.) and paragraph 19 (shares held by trustees of approved profit sharing scheme etc.).

Material interest: options etc.

18
(1) For the purposes of paragraph 17(1) (meaning of material interest) a right to acquire shares (however arising) is treated as a right to control them.
(2) In any case where—
(a) the shares attributed to an individual consist of or include shares which he or another person has a right to acquire, and
(b) the circumstances are such that if that right were to be exercised the shares acquired would be shares which were previously unissued and which the company is contractually bound to issue in the event of the exercise of the right,
then in determining at any time prior to the exercise of the right whether the number of shares attributed to the individual exceeds a particular percentage of the ordinary share capital of the company, that ordinary share capital shall be taken to be increased by the number of unissued shares referred to in paragraph (b).
(3) The references in sub-paragraph (2) to the shares attributed to an individual are to the shares which in accordance with paragraph 17(1)(a) fall to be brought into account in his case to determine whether their number exceeds a particular percentage of the company’s ordinary share capital.

Material interest: shares held by trustees of approved profit sharing schemes etc.

19
In applying paragraph 17(1) (meaning of material interest) there shall be disregarded—
(a) the interest of the trustees of—
(i) any approved profit sharing scheme, or
(ii) an approved employee share ownership plan,
in any shares held by them in accordance with the scheme or plan but which have not been appropriated to or acquired on behalf of an individual; and
(b) any rights exercisable by those trustees by virtue of any such interest.

Meaning of “associate"

20
(1) In paragraph 15 (the “no material interest” requirement) “associate”, in relation to a person, means—
(a) any relative or partner of that person,
(b) the trustee or trustees of any settlement in relation to which that person, or any relative of his (living or dead), is or was a settlor, and
(c) where that person is interested in any shares or obligations of the company which are subject to any trust, or are part of the estate of a deceased person, the trustee or trustees of the settlement concerned or (as the case may be) the personal representatives of the deceased.
(2) In sub-paragraph (1)(a) and (b) “relative” means husband or wife, parent or remoter forebear, child or remoter issue, or brother or sister.
(3) In sub-paragraph (1)(b) “settlor” and “settlement” have the same meaning as in Chapter IA of Part XV of the Taxes Act 1988 (see section 660G(1) and (2)).

Meaning of “associate": trustees of employee benefit trust

21
(1) This paragraph applies for the purposes of paragraph 20(1)(c) (meaning of “associate”: trustees of settlement) where an individual is interested as a beneficiary of an employee benefit trust in shares or obligations of a company (“the relevant company”) in relation to which it falls to be determined whether that individual has an interest.
(2) The trustees of the employee benefit trust are not regarded as associates of the individual by reason only of his being so interested if neither—
(a) the individual, nor
(b) the individual together with one or more associates of his, nor
(c) any associate of the individual’s, with or without any other such associates,
has at any time on or after 14th March 1989 been the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control, more than 25% of the ordinary share capital of the company.
(3) In this paragraph “employee benefit trust” has the same meaning as in paragraph 7 of Schedule 8 to the Taxes Act 1988.
(4) Sub-paragraphs (9) to (12) of that paragraph apply for the purposes of this paragraph in relation to an individual as they apply for the purposes of that paragraph in relation to an employee.
(5) In sub-paragraph (2)(b) and (c) “associate" does not include the trustees of an employee benefit trust by reason only that the individual has an interest in shares or obligations of the trust.

Meaning of “associate": trustees of discretionary trust

22
(1) This paragraph applies for the purposes of paragraph 20(1)(c) (meaning of “associate”: trustees of settlement) where—
(a) the person in question (“the beneficiary”) is one of the objects of a discretionary trust, and
(b) the property subject to the trust has at any time consisted of, or included, shares or obligations of the company (“the relevant company”) in relation to which it falls to be determined whether that person has an interest.
(2) If—
(a) the beneficiary has ceased to be eligible to benefit under the discretionary trust by reason of—
(i) an irrevocable disclaimer or release executed by him, or
(ii) the irrevocable exercise by the trustees of a power to exclude him from the objects of the trust,
(b) immediately after the beneficiary ceased to be so eligible, no associate of his was interested in the shares or obligations of the relevant company which were subject to the trust, and
(c) during the period of twelve months ending with the date when the beneficiary ceased to be so eligible, neither he nor any associate of his received any benefit under the trust,
the beneficiary is not regarded by reason only of the matters mentioned in sub-paragraph (1) as having been interested in the shares or obligations of the relevant company at any time during the period of twelve months mentioned in paragraph (c).
(3) In sub-paragraph (2) “associate” has the meaning given by paragraph 20, but with the omission of sub-paragraph (1)(c) of that paragraph (trusts and estates).

Part IV Free shares

Introduction

23
If the plan provides for free shares it must comply with the requirements of this Part of this Schedule.

Maximum annual award

24
(1) The plan must provide that the initial market value of the free shares awarded to a participant in any tax year cannot exceed £3,000.
(2) For this purpose the “initial market value” of shares means their market value on the date on which they are awarded.
(3) For the purposes of this paragraph the market value of shares subject to restrictions or risk of forfeiture shall be determined as if there were no such restriction or risk.
For this purpose shares are “subject to risk of forfeiture” if the interest that may be acquired is only conditional within the meaning of section 140C of the Taxes Act 1988.

Performance allowances

25
(1) Sub-paragraph (2) applies if the plan provides for performance allowances, that is for—
(a) whether or not free shares will be awarded to an individual, or
(b) the number or value of free shares awarded,
to be conditional on performance targets being met.
(2) Where this sub-paragraph applies—
(a) the requirements of—
paragraph 26 (performance allowances: general application),
paragraph 27 (performance measures and targets), and
paragraph 28 (performance allowances: information to be given to employees), and
(b) the requirements of either paragraph 29 (method one) or paragraph 30 (method two),
must be complied with.

Performance allowances: general application

26
If the plan provides for performance allowances in relation to an award it must make provision for such allowances for all qualifying employees in relation to that award.

Performance allowances: measures and targets

27
(1) If the plan provides for performance allowances the following requirements must be met with respect to performance measures and performance targets.
(2) The performance measures used must—
(a) be based on business results or other objective criteria, and
(b) be fair and objective measures of the performance of the units to which they are or may be applied.
(3) The performance targets must be set for performance units comprising one or more employees.
(4) For the purposes of an award of free shares under the plan an employee must not be a member of more than one performance unit.

Performance allowances: information to be given to employees

28
(1) If the plan provides for performance allowances in relation to an award of shares, the plan must require the company—
(a) to notify each employee participating in the award of the performance targets and measures which, under the plan, will be used to determine the number or value of free shares awarded to him; and
(b) to notify all qualifying employees of the company or, in the case of a group plan, of any participating company, in general terms, of the performance measures to be used to determine the number or value of free shares to be awarded to each employee participating in the award.
(2) The notices must be given as soon as reasonably practicable.
(3) The company may exclude from the notice mentioned in sub-paragraph (1)(b) any information the disclosure of which the company reasonably considers would prejudice commercial confidentiality.

Performance allowances: method one

29
(1) The requirements of this paragraph are that if the plan provides for performance allowances in relation to an award of shares—
(a) at least 20% of the shares in the award must be awarded without reference to performance in accordance with the requirement of paragraph 9 (participation on same terms),
(b) the remaining shares must be awarded by reference to performance, and
(c) the highest number of shares within paragraph (b) awarded to an individual must be not more than four times the highest number of shares within paragraph (a) awarded to an individual.
(2) In determining for the purposes of sub-paragraph (1)(a) whether the requirement of paragraph 9 (participation on same terms) is met the shares to which sub-paragraph (1)(a) above applies are treated as a separate award of free shares.
(3) Where the plan meets the requirements of sub-paragraph (1), the requirement of paragraph 9 (participation on same terms) does not apply to any provision of the plan relating to the awarding of shares within sub-paragraph (1)(b).
(4) If free shares of different classes are awarded, the requirements of sub-paragraph (1) apply separately in relation to each class.

Performance allowances: method two

30
(1) The requirements of this paragraph are that in relation to an award of free shares under the plan—
(a) some or all of the shares must be awarded by reference to performance; and
(b) the awarding of the shares to qualifying employees who are members of the same performance unit must meet the requirement of paragraph 9 (participation on same terms).
(2) In determining for the purposes of sub-paragraph (1)(b) whether the requirement of paragraph 9 (participation on same terms) is met the free shares awarded in respect of each performance unit are treated as a separate award of free shares.
(3) If this method is used nothing in paragraph 9 (participation on same terms) requires the awarding of shares to members of different performance units to be on the same terms.

The holding period

31
(1) The plan must require the company in respect of each award of free shares to specify a period (“the holding period”) during which a participant is bound by contract with the company—
(a) to permit his free shares to remain in the hands of the trustees, and
(b) not to assign, charge or otherwise dispose of his beneficial interest in the shares.
(2) The holding period—
(a) must be a period of at least three years but not more than five years, beginning with the date on which the shares in question are awarded to the participant, and
(b) must be the same in respect of all shares in the same award.
(3) The plan may authorise the company to specify different holding periods from time to time.
But it must prevent the company from increasing the holding period specified in respect of free shares that have been awarded under the plan.
(4) The participant’s obligations with respect to the holding period—
(a) come to an end if during the period he ceases to be in relevant employment, and
(b) are subject to—
paragraph 32 (power to authorise trustees to accept general offers etc.);
paragraph 73 (meeting PAYE obligations); and
paragraph 121(5) (termination of plan: early removal of shares with participant’s consent).

Holding period: power to authorise trustees to accept general offers etc.

32
A participant may direct the trustees to do any of the following during the holding period—
(a) to accept an offer for any of his free shares (“the original shares”) if the acceptance or agreement will result in a new holding being equated with the original shares for the purposes of capital gains tax; or
(b) to accept an offer of a qualifying corporate bond (whether alone or with other assets or cash or both) for his free shares if the offer forms part of such a general offer as is mentioned in paragraph (c); or
(c) to accept an offer of cash, with or without other assets, for his free shares if the offer forms part of a general offer which is made to holders of shares of the same class as his or of shares in the same company and which is made in the first instance on a condition such that if it is satisfied the person making the offer will have control of that company, within the meaning of section 416 of the Taxes Act 1988; or
(d) to agree to a transaction affecting his free shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting—
(i) all the ordinary share capital of the company or, as the case may be, all the shares of the class in question, or
(ii) all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in an approved employee share ownership plan.

Part V Partnership shares

Introduction

33
If the plan provides for partnership shares it must comply with the requirements of this Part of this Schedule.

Partnership share agreements

34
The plan must provide for qualifying employees to enter into agreements with the company (“partnership share agreements”) under which—
(a) the employee authorises the company to deduct part of his salary for the purchase of partnership shares, and
(b) the company undertakes to arrange for partnership shares to be awarded to the employee in accordance with the plan.

Deductions from salary

35
(1) The plan must provide for a partnership share agreement to be given effect by deductions from the employee’s salary.
Amounts so deducted are referred to in this Part of this Schedule as “partnership share money".
(2) The partnership share agreement must specify—
(a) what amounts are to be deducted, and
(b) at what intervals.
This does not prevent the employee and the company agreeing to vary those amounts or intervals.
(3) For the purposes of sub-paragraph (2)(a) the agreement may specify a percentage of the employee’s salary.
(4) The plan must require the employer company to calculate the amounts and intervals having regard to the provisions of paragraph 36 (maximum amount of deductions from salary).
For this purpose “the employer company" is the company by reference to which the employee meets the requirement of paragraph 14 (the employment requirement) in relation to the plan.

Maximum amount of deductions

36
(1) The amount of partnership share money deducted from an employee’s salary must not exceed—
(a) £125 in any month, or
(b) where the salary is not paid at monthly intervals, such amount as bears to £125 the same proportion as the pay interval in question bears to one month.
(2) The amount of partnership share money deducted from an employee’s salary must not exceed 10% of the employee’s salary.
This means—
(a) if the plan does not provide for an accumulation period, 10% of the salary payment from which the deduction is made;
(b) if the plan provides for an accumulation period, 10% of the total of the employee’s salary payments over that period.
(3) The plan may authorise the company to specify lower limits than those specified in sub-paragraphs (1) and (2).
Different limits may be specified in relation to different awards of shares.
(4) Any amount deducted in excess of that allowed by sub-paragraph (1) or (2), or any lower limit in the plan, must be paid over to the employee as soon as practicable.

Minimum amount of deductions

37
(1) The plan may provide that the amount to be deducted in pursuance of a partnership share agreement in any month must not be less than a minimum amount specified in the plan.
(2) The specified minimum amount must not be greater than £10.
(3) Sub-paragraphs (1) and (2) apply whatever the intervals at which the employee is paid.

Notice of possible effect of deductions on benefit entitlement

38
(1) The plan must provide that the company may not enter into a partnership share agreement with an employee unless the agreement contains a notice under this paragraph.
(2) A notice under this paragraph is a notice in a prescribed form containing prescribed information as to the possible effect of deductions on an employee’s entitlement to social security benefits, statutory sick pay and statutory maternity pay.
(3) In this paragraph “prescribed” means prescribed by regulations made by the Board.

Partnership share money held for employee

39
(1) The plan must provide that partnership share money deducted in accordance with a partnership share agreement is—
(a) paid to the trustees as soon as practicable, and
(b) held by them on behalf of the employee until such time as it is applied by them in acquiring partnership shares on the employee’s behalf.
This is subject to paragraphs 40(4)(b) and 42(5)(b) and (6) (obligations to pay money to employee).
(2) References in this Schedule to the trustees acquiring partnership shares on behalf of an employee include their appropriating to an employee shares already held by them.
(3) The plan must provide for the trustees to keep any money required to be held by them under this paragraph in an account (interest bearing or otherwise) with—
(a) a person falling within section 840A(1)(b) of the Taxes Act 1988,
Sch. 8 para 39(3)(a) substituted (1.12.2001) by S.I. 3629, art. 107(a)
(b) a building society, or
(c) a firm falling within section 840A(1)(c) of that Act,
Sch. 8 para. 39(3)(c) substituted (1.12.2001) by S.I. 3629, art. 107(b)
(4) If the partnership share money held on behalf of an employee is held in an interest bearing account the plan must provide for the trustees to account to the employee for the interest.

Plan with no accumulation period

40
(1) If the plan does not provide for an accumulation period, it must provide for partnership share money to be applied by the trustees in acquiring partnership shares on behalf of the employee on the acquisition date.
(2) For this purpose “the acquisition date” means the date set by the trustees in relation to the award of partnership shares, being a date within 30 days after the last date on which the partnership share money to be applied in acquiring the shares was deducted.
(3) The number of shares awarded to each employee must be determined in accordance with the market value of the shares on the acquisition date.
(4) Any surplus partnership share money remaining after the acquisition of shares by the trustees—
(a) may with the agreement of the employee be carried forward and added to the amount of the next deduction, and
(b) in any other case must be paid over to the employee as soon as practicable.
(5) This paragraph is subject to paragraph 43 (restriction imposed on number of shares awarded).

Plan with accumulation period

41
(1) The plan may provide for accumulation periods not exceeding twelve months.
(2) Where it does so—
(a) the partnership share agreement must specify when each accumulation period begins and ends (the beginning of the first period being not later than the date on which the first deduction is made), and
(b) the accumulation period which applies in relation to each award of partnership shares must be the same for all individuals who are eligible to participate in the award.
(3) The partnership share agreement may specify that an accumulation period comes to an end on the occurrence of a specified event.
This is subject to sub-paragraph (2)(b).
(4) Where the plan provides for accumulation periods, it may also provide that if—
(a) during an accumulation period, a transaction occurs in relation to any of the shares (“the original holding”) to be acquired under a partnership share agreement which results in a new holding of shares being equated with the original holding for the purposes of capital gains tax, and
(b) the employee gives his consent for the purposes of this sub-paragraph,
the partnership share agreement shall have effect after the time of that transaction as if it were an agreement for the purchase of shares comprised in the new holding.

Application of money deducted in accumulation period

42
(1) This paragraph applies if the plan provides for one or more accumulation periods.
(2) The plan must provide for the partnership share money deducted in each period to be applied by the trustees in acquiring partnership shares on behalf of the employee on the acquisition date.
This is subject to sub-paragraphs (6) and (7).
(3) In sub-paragraph (2) “the acquisition date” means the date set by the trustees in relation to the award of partnership shares, being a date within 30 days after the end of the accumulation period which applies in relation to the award.
(4) The number of shares awarded to each employee must be determined in accordance with the lower of—
(a) the market value of the shares at the beginning of the accumulation period, and
(b) the market value of the shares on the acquisition date.
(5) Any surplus partnership share money remaining after the acquisition of shares by the trustees—
(a) may with the agreement of the employee be carried forward to the next accumulation period, and
(b) in any other case must be paid over to the employee as soon as practicable.
(6) The plan must provide that where—
(a) partnership share money has been deducted in an accumulation period, and
(b) the employee ceases to be in relevant employment during that period,
the partnership share money is paid over to the individual as soon as practicable.
(7) The partnership share agreement may provide that, where an accumulation period comes to an end on the occurrence of a specified event, the partnership share money deducted in that period must be paid over to the individual as soon as practicable instead of being applied in acquiring shares.
(8) This paragraph is subject to paragraph 43 (restriction imposed on number of shares awarded).

Restriction imposed on number of shares awarded

43
(1) The plan may authorise the company to specify the maximum number of shares (“the award maximum”) to be included in an award of partnership shares.
A different number may be specified in relation to different awards.
(2) If the plan so authorises the company, it must require partnership share agreements to contain an undertaking by the company to notify the employee of any restriction on the number of shares to be included in an award.
(3) The plan must require the notice to be given—
(a) if there is no accumulation period, before the deduction of the partnership share money relating to the award, and
(b) if there is an accumulation period, before the beginning of the accumulation period relating to the award.
(4) The plan must provide that where the award maximum in respect of an award of partnership shares is smaller than the number of shares which would otherwise be included in the award, the number of partnership shares included in each individual award under paragraph 40(1) or 42(2) shall be reduced proportionately.

Stopping and re-starting deductions

44
(1) The plan must provide that an employee may at any time give notice in writing to the company to stop deductions in pursuance of a partnership share agreement.
(2) The plan must also provide that an employee who has stopped deductions may subsequently give notice in writing to the company to re-start deductions in pursuance of the agreement, but may not make up deductions that have been missed.
(3) If the plan makes provision for one or more accumulation periods, it may prevent an employee re-starting deductions more than once in any accumulation period.
(4) The plan must provide that unless a later date is specified in the notice—
(a) the company must within 30 days of receiving a notice within sub-paragraph (1), ensure that no further deductions are made by it under the partnership share agreement;
(b) the company must on receiving a notice within sub-paragraph (2) re-start deductions under the partnership share agreement not later than the re-start date.
(5) For the purposes of sub-paragraph (4)(b) “the re-start date” is the date of the first deduction due under the partnership share agreement more than 30 days after receipt of the notice within sub-paragraph (2).

Withdrawal from partnership share agreement

45
(1) The plan must provide that an employee may withdraw from a partnership share agreement at any time by notice in writing to the company.
(2) The plan must provide that, unless a later date is specified in the notice, a notice of withdrawal takes effect 30 days after it is received by the company.
(3) The plan must provide that where an employee withdraws from a partnership share agreement, any partnership share money held on his behalf is to be paid over to him as soon as practicable.

Repayment of partnership share money on withdrawal of approval or termination

46
(1) The plan must provide that where—
(a) the approval of the plan is withdrawn (see paragraph 118), or
(b) a plan termination notice is issued in respect of the plan (see paragraph 120),
any partnership share money held on behalf of an employee is paid over to him.
(2) The plan must require the payment to be made—
(a) in a case within sub-paragraph (1)(a), as soon as practicable after notice of the withdrawal is given to the company, and
(b) in a case within sub-paragraph (1)(b), as soon as practicable after the plan termination notice is notified to the trustees under paragraph 120(2).

Access to partnership shares

47
(1) The plan must provide that when partnership shares have been awarded to an employee, the employee may at any time withdraw any or all of the partnership shares from the plan.
(2) There may be a charge to tax under paragraph 86 (charge on partnership shares ceasing to be subject to plan).

Meaning of “salary"

48
References in this Part of this Schedule to an employee’s “salary" are to such of the emoluments of the employment by reference to which he is eligible to participate in the plan as are liable to be paid under deduction of tax pursuant to section 203 of the Taxes Act 1988 (PAYE)[or which would be if that individual were within the scope of Schedule E], after deducting amounts included by virtue of Chapter II of Part V of that Act (expenses and benefits in kind) or which would have been had the individual been within the scope of Schedule E, or would be so liable apart from this Schedule.
Words in Sch. 8 para. 48 inserted (11.5.2001 with effect as mentioned in Sch. 13 para. 3(2)(3) of the amending Act) by 2001 c. 9, s. 61, Sch. 13 paras. 1, 3(1)(a)(2)(3)
Words in Sch. 8 para. 48 added (11.5.2001 with effect as mentioned in Sch. 13 para. 2(2)(3) of the amending Act) by 2001 c. 9, s. 61, Sch. 13 paras. 1, 3(1)(b)(2)(3)

Part VI Matching shares

Introduction

49
If the plan provides for matching shares it must comply with the requirements of this Part of this Schedule.

General requirements for matching shares

50
(1) The plan must provide for the matching shares—
(a) to be shares of the same class and carrying the same rights as the partnership shares to which they relate;
(b) to be awarded on the same day as the partnership shares to which they relate are awarded; and
(c) to be awarded to all employees who participate in the award on exactly the same basis.
(2) Sub-paragraph (1) is subject to paragraph 65 (permitted restrictions: provision for forfeiture).

Ratio of matching shares to partnership shares

51
(1) The partnership share agreement must specify—
(a) the ratio of matching shares to partnership shares for the time being offered by the company, and
(b) the circumstances and manner in which the ratio may be changed by the company.
(2) The ratio must not exceed 2:1 and must be applied by reference to the number of shares.
(3) A partnership share agreement must provide for the employee to be informed by the company if the ratio offered by the company changes before partnership shares are awarded to him under the agreement.

Application of provisions relating to holding period etc.

52
The provisions of paragraphs 31 and 32 as to the holding period and related matters apply in relation to matching shares as they apply to free shares.

Part VII Reinvestment of cash dividends

Reinvestment

53
(1) The plan may provide that where the company so directs—
(a) all cash dividends in respect of plan shares held on behalf of participants must be applied in acquiring further shares on their behalf, or
(b) all cash dividends in respect of plan shares held on behalf of participants who elect to reinvest their dividends must be applied in acquiring further shares on their behalf.
This is referred to in this Part of this Schedule as “reinvestment" and the further plan shares acquired are referred to in this Schedule as “dividend shares".
(2) The company may revoke a direction.
(3) Where cash dividends in respect of plan shares held on behalf of a participant are not required to be reinvested under the plan, the plan must require the dividends to be paid over to the participant as soon as practicable.
(4) This paragraph is subject to paragraph 54 (limit on amount reinvested).

Limit on amount reinvested

54
(1) The plan must provide that the total dividend reinvestment in respect of any participant cannot exceed £1,500 in any tax year.
(2) For this purpose “the total dividend reinvestment" in respect of a participant is the sum of—
(a) the amount applied by the trustees in acquiring dividend shares on behalf of the participant under the plan, and
(b) the amount applied by the trustees of other employee share ownership plans that are—
(i) established by the company or an associated company, and
(ii) approved under this Schedule,
in acquiring dividend shares on his behalf.
(3) If the amounts received by the trustees exceed the limit in sub-paragraph (1), the plan must provide for the balance to be paid over to the participant as soon as practicable.

General requirements for dividend shares

55
The plan must provide that dividend shares are shares—
(a) of the same class and carrying the same rights as the shares in respect of which the dividend is paid, and
(b) which are not subject to any provision for forfeiture.

Acquisition of dividend shares

56
(1) The plan must provide that in exercising their powers in relation to the acquisition of dividend shares the trustees must treat participants fairly and equally.
(2) The plan must provide for the trustees to apply a cash dividend in acquiring further shares on behalf of participants on the acquisition date.
This does not affect the carrying forward under paragraph 58 of any such amount as is mentioned in sub-paragraph (1) of that paragraph (amounts remaining after acquisition of shares).
(3) For this purpose “the acquisition date” means the date set by the trustees in relation to the acquisition of dividend shares, being a date within 30 days after the dividend is received by them.
(4) The number of dividend shares acquired on behalf of each participant must be determined in accordance with the market value of the shares on the acquisition date.
(5) References in this Part of this Schedule to the trustees acquiring dividend shares on behalf of a participant include their appropriating to a participant shares already held by them.

Holding period for dividend shares

57
The provisions of paragraphs 31 and 32 (holding period and related matters) apply in relation to dividend shares as they apply to free shares, except that the holding period must be three years.

Certain amounts not reinvested to be carried forward

58
(1) Any amount that is not reinvested—
(a) because the amount of the cash dividend to which the participant is entitled is not sufficient to acquire a share, or
(b) because there is an amount remaining after acquiring one or more dividend shares on the participant’s behalf,
may be retained by the trustees and carried forward to be added to the amount of the next cash dividend to be reinvested, but shall be held by them so as to be separately identifiable for the purposes of sub-paragraphs (2) and (3).
(2) An amount retained under this paragraph shall be paid over to the participant—
(a) if or to the extent that it is not reinvested within the period of three years beginning with the date on which the dividend was paid, or
(b) if during that period the participant ceases to be in relevant employment, or
(c) if during that period a plan termination notice is issued in respect of the plan.
(3) An amount required to be paid over to the participant under sub-paragraph (2) shall be paid over as soon as practicable.
(4) For the purposes of this paragraph an amount carried forward under this paragraph derived from an earlier cash dividend is treated as reinvested before an amount derived from a later cash dividend.

Part VIII Types of share that may be used

Introduction

59
The requirements of the following paragraphs must be met with respect to any shares that may be awarded under the plan (“eligible shares”)—
paragraph 60 (must be ordinary share capital);
paragraph 61 (requirement as to listing etc.);
paragraph 62 (shares must be fully paid up and not redeemable);
paragraph 63 (only certain kinds of restriction allowed);
paragraph 67 (prohibited companies).

Must be ordinary share capital

60
Eligible shares must form part of the ordinary share capital of—
(a) the company; or
(b) a company which has control of the company; or
(c) a company which either is, or has control of, a company which is a member of a consortium owning either the company or a company having control of the company.

Requirement as to listing etc.

61
Eligible shares must be—
(a) shares of a class listed on a recognised stock exchange; or
(b) shares in a company which is not under the control of another company; or
(c) shares in a company which is under the control of a company (other than a company which is, or would if resident in the United Kingdom be, a close company) whose shares are listed on a recognised stock exchange.

Shares must be fully paid up and not redeemable

62
(1) Eligible shares must be—
(a) fully paid up, and
(b) not redeemable.
(2) Shares are not regarded as fully paid up for the purposes of sub-paragraph (1)(a) if there is any undertaking to pay cash to the company at a future date.
(3) For the purposes of sub-paragraph (1)(b) “redeemable” shares include shares that may become redeemable at a future date.
(4) Sub-paragraph (1)(b) does not apply in relation to shares in a co-operative.
(5) In sub-paragraph (4) “co-operative” means a registered industrial and provident society which is a co-operative society.
For this purpose—
“registered industrial and provident society” means a society registered or deemed to be registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969; and
“co-operative society” has the same meaning as in section 1 of the 1965 Act or, as the case may be, the 1969 Act.
1965 c. 22.
1969 c. 24 (N.I.).

Only certain kinds of restriction allowed

63
(1) Eligible shares must not be subject to any restrictions other than—
(a) those involved in there being a holding period (see paragraphs 31, 52 and 57); or
(b) those affecting all ordinary shares in the company; or
(c) those permitted by—
paragraph 64 (voting rights),
paragraph 65 (provision for forfeiture), or
paragraph 66 (pre-emption conditions).
(2) For this purpose there is a restriction if there is any contract, agreement, arrangement or condition—
(a) by which a person’s freedom to dispose of the shares or of any interest in them or of the proceeds of their sale or to exercise any right conferred by them is restricted, or
(b) by which such a disposal or exercise may result in any disadvantage to him or to a person connected with him,
subject to sub-paragraphs (3) and (4).
(3) Any discretion of the directors under the articles of association of the company to refuse to accept the transfer of shares shall be disregarded for the purposes of this paragraph if the directors—
(a) have undertaken to the Inland Revenue not to exercise it in such a way as to discriminate against participants, and
(b) have notified all qualifying employees of the existence of the undertaking.
(4) There shall also be disregarded for the purposes of this paragraph so much of any contract, agreement, arrangement or condition as contains provisions similar in purpose and effect to any of the provisions of the Model Code as (for the time being) set out in the listing rules issued by the competent authority for listing in the United Kingdom under section 74(4) of the Financial Services and Markets Act 2000.
2000 c. 8.

Permitted restrictions: voting rights

64
Eligible shares may be shares carrying no voting rights or limited voting rights.

Permitted restrictions: provision for forfeiture

65
(1) Free or matching shares may be subject to provision for forfeiture in the following circumstances.
(2) Provision may be made for forfeiture—
(a) on the participant ceasing to be in relevant employment at any time in the forfeiture period,
(b) on the participant withdrawing the shares from the plan in that period, or
(c) in the case of matching shares, on the participant withdrawing the partnership shares in respect of which those shares were awarded from the plan within that period,
otherwise than by reason of an event within paragraph 87(2) (circumstances in which there is no charge to tax on shares ceasing to be subject to plan).
(3) In sub-paragraph (2) “the forfeiture period” means the forfeiture period specified in the plan being a period of not more than three years beginning with the date on which the shares were awarded to the participant.
(4) Forfeiture may not be linked to the performance of any person or persons.
(5) The same provision for forfeiture must apply in relation to all free or matching shares included in the same award under the plan.
(6) In this Schedule “provision for forfeiture” means any provision to the effect that a participant shall cease to be beneficially entitled to the shares on the occurrence of certain events, and references to forfeiture shall be construed accordingly.

Permitted restrictions: pre-emption conditions

66
(1) If the requirements of this paragraph are met, eligible shares may be subject to provision requiring shares—
(a) that were awarded to an employee under the plan, and
(b) that are held by an employee or a permitted transferee,
to be offered for sale on the employee ceasing to be in relevant employment.
(2) For the purposes of sub-paragraph (1)(b) a “permitted transferee” means a person to whom, under the articles of association of the company, the employee is permitted to transfer the shares.
(3) The requirements of this paragraph are that under the articles of association of the company—
(a) the same provision applies to all employees of the company or, in the case of a parent company, to all employees of that company or any company of which that company has control;
(b) the shares are required to be offered for sale at a specified consideration; and
(c) anyone disposing of shares of the same class (whether or not as an employee) is required to offer the shares for sale on no better terms.

Prohibited companies

67
(1) Eligible shares must not be shares—
(a) in an employer company, or
(b) in a company that—
(i) has control of an employer company, and
(ii) is under the control of a person or persons within sub-paragraph (2)(b)(i) in relation to an employer company.
(2) For the purposes of this paragraph a company is “an employer company” if—
(a) the business carried on by it consists substantially in the provision of the services of persons employed by it, and
(b) the majority of those services are provided to—
(i) a person who has, or two or more persons who together have, control of the company, or
(ii) a company associated with the company.
(3) For the purposes of sub-paragraph (2)(b)(ii) a company shall be treated as associated with another company if both companies are under the control of the same person or persons.
(4) For the purposes of sub-paragraphs (1) to (3)—
(a) references to a person include a partnership, and
(b) where a partner, alone or together with others, has control of a company, the partnership shall be treated as having like control of that company.
(5) For the purposes of this paragraph the question whether a person controls a company shall be determined in accordance with section 416(2) to (6) of the Taxes Act 1988.

Part IX The trustees

Establishment of trustees

68
(1) The plan must provide for the establishment of a body of persons resident in the United Kingdom (“the trustees”) who are required by the plan—
(a) in the case of free or matching shares, to acquire shares and appropriate them to employees in accordance with the plan;
(b) in the case of partnership shares, to apply partnership share money in acquiring shares on behalf of employees in accordance with the plan; and
(c) in the case of dividend shares, to apply cash dividends in acquiring shares on behalf of participants in accordance with the plan.
(2) The functions of the trustees with respect to shares held by them must be regulated by a trust (“the plan trust”)—
(a) which is constituted under the law of a part of the United Kingdom, and
(b) the terms of which are embodied in an instrument which complies with the requirements of this Part of this Schedule.
(3) The instrument must not contain any terms which are neither essential nor reasonably incidental to complying with the requirements of this Part of this Schedule.

Power of trustees to borrow

69
The trust instrument may provide that the trustees have power to borrow—
(a) to acquire shares for the purposes of the plan, and
(b) for such other purposes as may be specified in the trust instrument.

Duty to give notice of award of shares etc.

70
(1) The trust instrument must make the following provision regarding notices.
(2) It must provide that, as soon as practicable after any free or matching shares have been awarded to an employee, the trustees shall give him notice of the award—
(a) specifying the number and description of those shares,
(b) stating their market value on the date on which they were awarded to him, and
(c) stating the holding period applicable to them.
(3) It must provide that, as soon as practicable after any partnership shares have been awarded to an employee, the trustees shall give him notice of the award—
(a) specifying the number and description of those shares, and
(b) stating—
(i) the amount of partnership share money applied by the trustees in acquiring the shares on his behalf, and
(ii) their market value on the acquisition date (within the meaning of paragraph 40(2) or, if there is an accumulation period, paragraph 42(3)).
(4) It must provide that, as soon as practicable after any dividend shares have been acquired on behalf of a participant, the trustees shall give him notice of the acquisition—
(a) specifying the number and description of those shares,
(b) stating their market value on the acquisition date (within the meaning of paragraph 56(3)),
(c) stating the holding period applicable to them, and
(d) informing him of any amount carried forward under paragraph 58 (certain amounts not reinvested).
(5) It must provide that, where any foreign cash dividend is received in respect of plan shares held on behalf of a participant, the trustees shall give him notice of the amount of any foreign tax deducted from the dividend before it was paid.

General duties of trustees

71
(1) The trust instrument must require the trustees—
(a) to dispose of a participant’s plan shares, and
(b) to deal with any right conferred in respect of any of his plan shares to be allotted other shares, securities or rights of any description,
only pursuant to a direction given by or on behalf of the participant.
This is subject to sub-paragraph (3) and to any provision made in the plan in accordance with paragraph 73 (meeting PAYE obligations).
(2) The plan may provide for participants to give such general directions, to such effect and in such terms, as are specified in the plan.
(3) The trust instrument must, in the case of a participant’s plan shares that are free, matching or dividend shares, prohibit the trustees from disposing of any of those shares (whether to the participant or otherwise) at any time during the holding period, unless the participant has at that time ceased to be in relevant employment.
This is subject to—
paragraph 32 (holding period: power to authorise trustees to accept general offers etc.);
paragraph 72 (power of trustees to raise funds to subscribe for rights issue);
paragraph 73 (meeting PAYE obligations);
paragraph 121(5) (termination of plan: early removal of shares with participant’s consent).
(4) The trust instrument must require the trustees to pay over to the participant as soon as practicable any money or money’s worth received by them in respect of or by reference to any of his shares, other than money’s worth consisting of new shares within the meaning of paragraph 115 (company reconstructions).
This is subject to—
(a) the provisions of Part VII (reinvestment of cash dividends);
(b) the trustees’ obligations under paragraphs 95 and 96 (PAYE: shares ceasing to be subject to the plan and capital receipts); and
(c) the trustees’ PAYE obligations.

Power of trustees to raise funds to subscribe for rights issue

72
(1) The trustees may dispose of some of the rights arising under a rights issue in order to be able to obtain sufficient funds to exercise other such rights.
This power is subject to paragraph 71(1) (duty to act in accordance with participant’s directions).
(2) In this paragraph references to rights arising under a rights issue are to rights conferred in respect of a participant’s plan shares to be allotted, on payment, other shares or securities or rights of any description in the same company.

Meeting PAYE obligations

73
(1) The plan must make provision to ensure that, where a PAYE obligation is imposed on the trustees as a result of any of a participant’s plan shares ceasing to be subject to the plan, the trustees are able to meet that obligation—
(a) by disposing of—
(i) any of those shares, or
(ii) any of the participant’s remaining plan shares (if any), or
(b) by virtue of the participant paying to the trustees a sum equal to the amount required to discharge the obligation.
(2) In sub-paragraph (1) the reference to a PAYE obligation includes an obligation under paragraph 95 (PAYE: shares ceasing to be subject to the plan).
(3) In sub-paragraph (1)(a) the reference to disposing of shares includes the acquisition of the shares by the trustees for the purposes of the trust.
(4) A disposal of any of the participant’s plan shares in accordance with provision made under sub-paragraph (1)(a)(ii) may give rise to a charge to tax under—
paragraph 81 (charge on free or matching shares ceasing to be subject to plan);
paragraph 86 (charge on partnership shares ceasing to be subject to plan); or
paragraph 93 (charge on dividend shares ceasing to be subject to plan).

Deemed disposal by trustees on disposal of beneficial interest

74
(1) If at any time the participant’s beneficial interest in any of his shares is disposed of, the shares in question shall be treated for the purposes of this Schedule as having been disposed of at that time by the trustees for the like consideration as was obtained for the disposal of the beneficial interest.
(2) For this purpose there is no disposal of the participant’s beneficial interest if and at the time when—
(a) in England and Wales or Northern Ireland, that interest becomes vested in any person on the insolvency of the participant or otherwise by operation of law, or
(b) in Scotland, that interest becomes vested in a judicial factor, in a trustee of the participant’s sequestrated estate or in a trustee for the benefit of the participant’s creditors.
(3) If a disposal of shares falling within this paragraph is not at arm’s length, the proceeds of the disposal shall be taken for the purposes of this Schedule to be equal to the market value of the shares at the time of the disposal.

Duties of trustees in relation to tax liabilities

75
(1) The trust instrument must require the trustees—
(a) to maintain such records as may be necessary for the purposes of—
(i) their own PAYE obligations, or
(ii) the PAYE obligations of the employer company so far as they relate to the plan,
(b) where the participant becomes liable to income tax under Case V of Schedule D, Schedule E or Schedule F by reason of the occurrence of any event, to inform him of any facts relevant to determining that liability.
(2) For the purposes of this paragraph—
“employer company” has the same meaning as in paragraph 95 (PAYE: shares ceasing to be subject to the plan); and
“PAYE obligations” includes obligations conferred on the trustees by paragraphs 95 and 96 (PAYE: shares ceasing to be subject to plan and capital receipts).

Acquisition by trustees of shares from employee share ownership trust

76
(1) The trust instrument must provide that, where there is a qualifying transfer of shares to the trustees, those shares—
(a) must not be awarded to participants under the plan as partnership shares, and
(b) must be included in any award of free or matching shares made after the date of the transfer in priority to other shares available for inclusion in that award.
(2) For the purposes of this paragraph there is a qualifying transfer of shares to the trustees if relevant shares—
(a) are transferred to them by the trustees of an employee share ownership trust, and
(b) the transfer is a qualifying transfer within section 69(3AA) of the Finance Act 1989 (transfer of shares in, or shares purchased from money in, an employee share ownership trust immediately before 21st March 2000).
1989 c. 26.

Part X Income tax

Introduction

77
(1) The provisions of this Part of this Schedule apply for income tax purposes in relation to an approved employee share ownership plan.
This is subject to sub-paragraph (2).
(2) Nothing in this Part applies to an individual if, at the time of the award in question, he is not chargeable to tax under Schedule E in respect of the employment by reference to which he meets the requirement of paragraph 14 (the employment requirement) in relation to the plan.

No charge on award of shares etc.

78
(1) Notwithstanding that the beneficial interest in the shares passes to the employee—
(a) on the award to him of free, matching or partnership shares under the plan, or
(b) on the acquisition on his behalf of dividend shares under the plan,
the value of that interest at the time of the award or acquisition is not treated as income of his chargeable to tax.
(2) An employee is not chargeable to tax under Schedule E by virtue of section 162(1) of the Taxes Act 1988 (deemed loan in case of shares acquired at an under-value) in respect of the award to him of shares under the plan.
This does not affect any charge to tax under section 162(6) of that Act (stop-loss provision).
(3) Incidental expenditure of the trustees or the employer in operating the plan is not treated as giving rise to any charge to income tax on employees.
Sch 8. para. 78(3) inserted (11.5.2001 with effect as mentioned in Sch. 13 para. 4(2) of the amending Act) by 2001 c. 9, Sch. 13 para. 4

Capital receipts in respect of participant’s shares

79
(1) Where—
(a) a capital receipt is received by a participant in respect of or by reference to any of his plan shares, and
(b) the plan shares in respect of or by reference to which it is received are—
(i) free, matching or partnership shares that were awarded to the participant fewer than five years before he received the capital receipt, or
(ii) dividend shares that were acquired on his behalf fewer than three years before he received that receipt,
the participant is chargeable to income tax under Schedule E for the tax year in which the capital receipt is received by him on the amount or value of the receipt.
(2) For the purposes of this paragraph any money or money’s worth is a “capital receipt” subject to the following provisions.
(3) Money or money’s worth is not a capital receipt for the purposes of this paragraph to the extent that—
(a) it constitutes income in the hands of the recipient for the purposes of income tax (or would do so but for this Part of this Schedule), or
(b) it consists of the proceeds of disposal of the shares, or
(c) it consists of new shares within the meaning of paragraph 115 (company reconstructions).
(4) If, pursuant to a direction given by or on behalf of the participant for the purposes of paragraph 72(1), the trustees—
(a) dispose of some of the rights under a rights issue, and
(b) use the proceeds of that disposal to exercise other such rights,
the money or money’s worth that constitutes the proceeds of that disposal is not a capital receipt for the purposes of this paragraph.
The references in this sub-paragraph to rights under a rights issue are to rights, conferred in respect of a participant’s plan shares, to be allotted, on payment, other shares or securities or rights of any description in the same company.
(5) This paragraph does not apply in relation to a capital receipt referable to the shares of a participant if it is received by the participant’s personal representative after his death.

Exclusion of certain charges in relation to participant’s shares

80
(1) There is no charge to tax on the participant under—
(a) section 140A of the Taxes Act 1988 (charge on conditional acquisition of shares), or
1988 c. 39.
(b) section 78 of the Finance Act 1988 (charge on removal of restriction),
when any provision for forfeiture to which the shares are subject, in accordance with paragraph 65 (permitted restrictions: provision for forfeiture), is varied or removed.
(2) A participant is not chargeable to tax under Schedule E by virtue of section 78 of the Finance Act 1988 (charge on removal of restriction) if the chargeable event (within the meaning of that section) is the ending of the holding period in relation to his free, matching or dividend shares.
(3) A participant is not chargeable to tax under Schedule E by virtue of section 79 of that Act (charge on chargeable increase in value) in respect of any shares of his that are subject to the plan at the end of the period for which the chargeable increase is determined for the purposes of that section.

Charge on free or matching shares ceasing to be subject to plan

81
(1) When free or matching shares cease to be subject to the plan, income tax may be chargeable depending on the period that has elapsed between—
(a) the date on which the shares were awarded to the participant, and
(b) the date on which they cease to be subject to the plan.
(2) If the period is less than three years, the participant is chargeable to tax under Schedule E on the market value of the shares when they cease to be subject to the plan.
(3) If the period is three years or more but less than five years, the participant is chargeable to tax under Schedule E on—
(a) the market value of the shares at the date they were awarded to him, or
(b) the market value of the shares when they cease to be subject to the plan,
whichever is less.
(4) Where the participant is charged to tax under sub-paragraph (3)(a) the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.
(5) There is no charge to tax under this paragraph on the forfeiture of free or matching shares.
(6) This paragraph has effect subject to—
paragraph 82 (charge to tax on disposal of beneficial interest in shares during the holding period); and
paragraph 87 (circumstances in which there is no charge to tax on shares ceasing to be subject to plan).
(7) Except as provided by this paragraph and paragraph 82 there is no charge to tax on free or matching shares ceasing to be subject to the plan.

Charge on disposal of beneficial interest during the holding period

82
(1) Where free or matching shares cease to be subject to the plan by virtue of a participant, in breach of his obligations under paragraph 31(1)(b), assigning, charging or otherwise disposing of his beneficial interest in those shares—
(a) paragraph 81 does not apply, and
(b) the participant is chargeable to income tax under Schedule E on the market value of the shares when they cease to be subject to the plan.
(2) Where the participant is charged to tax under sub-paragraph (1) the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.
Sch. 8 para. 82(2) repealed (retrospectively) by 2001 c. 9, ss. 61, 110, Sch. 13 para. 5(1), Sch. 33 Pt. 2(2)

Partnership share money deducted before tax

83
(1) Partnership share money deducted from an employee’s salary in accordance with a partnership share agreement is not regarded as income of the employee chargeable to tax under Schedule E.
(2) The deduction of partnership share money shall be disregarded for the purpose of ascertaining the amount of—
(a) the employee’s remuneration for the purposes of Chapter I of Part XIV of the Taxes Act 1988 (retirement benefit schemes), or
(b) the employee’s relevant earnings for the purposes of Chapter III or IV of that Part (retirement annuities or personal pension schemes).

Charge on partnership share money paid over to employee

84
(1) An individual is chargeable to income tax under Schedule E on any amount paid over to him under—
paragraph 36(4) (deductions in excess of permitted maximum amount);
paragraph 40(4)(b) or 42(5)(b) (surplus partnership share money remaining after acquisition of shares);
paragraph 42(6) (partnership share money paid over on individual leaving relevant employment);
paragraph 42(7) (partnership share money paid over where accumulation period brought to an end by event specified in plan);
paragraph 45(3) (partnership share money paid over on withdrawal from partnership share agreement); or
paragraph 46 (partnership share money paid over on withdrawal of plan approval or termination of plan).
(2) A charge to tax under sub-paragraph (1) arises at the time the amount is paid over.

Charge on cancellation payments in respect of partnership share agreement

85
An individual is chargeable to tax under Schedule E on the amount or value of any money or money’s worth received by him in respect of the cancellation of a partnership share agreement entered into by him.

Charge on partnership shares ceasing to be subject to plan

86
(1) When partnership shares cease to be subject to the plan, income tax may be chargeable depending on the period that has elapsed between—
(a) the acquisition date in respect of those shares (as defined by paragraph 40(2) or, as the case may be, 42(3)), and
(b) the date on which they cease to be subject to the plan.
(2) If the period is less than three years, the employee is chargeable to income tax under Schedule E on an amount equal to the market value of the shares when they cease to be subject to the plan.
(3) If the period is three years or more but less than five years, the employee is chargeable to income tax under Schedule E on—
(a) the amount of partnership share money used to acquire the shares, or
(b) the market value of the shares when they cease to be subject to the plan,
whichever is less.
(4) Where the participant is charged to tax under sub-paragraph (3)(a) the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.
(5) This paragraph has effect subject to paragraph 87 (circumstances in which there is no charge on shares ceasing to be subject to plan).
(6) Except as provided by this paragraph, there is no charge to income tax on the employee on partnership shares ceasing to be subject to the plan.

Circumstances in which there is no charge on shares ceasing to be subject to plan

87
(1) There is no charge to tax on shares ceasing to be subject to the plan on the occurrence of any of the following events.
(2) Those events are the participant ceasing to be in relevant employment—
(a) because of injury or disability;
(b) on being dismissed by reason of redundancy;
(c) by reason of a transfer to which the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply;
S.I. 1981/1794.
(d) by reason of a change of control or other circumstances ending the associated company status of the company by which he is employed;
(e) by reason of his retirement on or after he reaches retirement age; or
(f) on his death.
(3) In sub-paragraph (2)(b) “redundancy” has the same meaning as in the Employment Rights Act 1996 or the Employment Rights (Northern Ireland) Order 1996.
1996 c. 18.
SI. 1996/1919 (N.I. 16).
(4) In sub-paragraph (2)(e) “retirement age” means the retirement age specified in the plan, which—
(a) must be the same for men and women, and
(b) must be not less than 50.

Dividends etc. in respect of unappropriated shares

88
(1) This paragraph applies to income of the trustees consisting of dividends or other distributions in respect of shares held by them in relation to which the requirements of Part VIII are met.
(2) Income to which this paragraph applies is income to which section 686 of the Taxes Act 1988 (accumulation and discretionary trusts: special rates of tax) applies only if and when—
(a) the period applicable to the shares under the following provisions comes to an end without the shares being awarded to a participant in accordance with the plan, or
(b) if earlier, the shares are disposed of by the trustees.
(3) Subject to sub-paragraph (4), the period applicable to the shares is the period of two years beginning with the date on which the shares were acquired by the trustees.
(4) If at the time of the acquisition of the shares by the trustees none of the shares in the company in question are readily convertible assets, the period within which the shares must be awarded is—
(a) five years beginning with the date on which the shares were acquired by the trustees, or
(b) if within that period the shares in question become readily convertible assets, two years beginning with the date on which they did so,
whichever ends first.
(5) For the purposes of determining whether shares are awarded to a participant within the period applicable under the above provisions, shares acquired by the trustees at an earlier time are taken to be awarded to a participant before shares of the same class acquired by the trustees at a later time.
(6) For the purposes of this paragraph shares which are subject to provision for forfeiture are treated as acquired by the trustees if and when the forfeiture occurs.
(7) In this paragraph references to the shares being awarded include references to shares being acquired on behalf of a participant as dividend shares.

Reinvestment of cash dividend on behalf of participant

89
(1) The amount applied by the trustees in acquiring dividend shares on behalf of a participant is not treated as income of the participant for any tax purposes.
(2) The participant has no entitlement to a tax credit in respect of the amounts of dividends so applied.
(3) Sub-paragraphs (1) and (2) do not affect—
(a) any charge under paragraph 93(1) (charge on dividend shares ceasing to be subject to plan), or
(b) any entitlement to a tax credit in respect of the amount so charged.
(4) Section 234A(4) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall not apply in relation to any amount applied by the trustees in acquiring dividend shares on behalf of a participant.
This is subject to paragraph 93(4).

Repayment of excess cash dividend

90
Section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall apply in relation to the balance of any cash dividend paid over to the participant under paragraph 54(3) as if it were a payment to which subsection (4)(b) of that section applies.

Treatment of cash dividend retained for reinvestment

91
(1) An amount retained under paragraph 58(1) (amount of cash dividend not reinvested) shall not be treated as income of the participant for any tax purposes.
(2) The participant has no entitlement to a tax credit in respect of any such amount.
(3) This paragraph does not affect any charge—
(a) under paragraph 92 (treatment of cash dividend retained and then later paid out), or
(b) paragraph 93 (charge on dividend shares ceasing to be subject to plan),
or any tax credit in respect of an amount so charged.

Treatment of cash dividend retained and then later paid out

92
(1) Where a cash dividend is paid over to a participant under paragraph 58(2) (cash dividend paid over if not reinvested), the participant is chargeable to tax on that amount—
(a) under Schedule F, or
(b) to the extent that the dividend is a foreign cash dividend, under Case V of Schedule D,
for the tax year in which the dividend is paid over to him.
(2) For the purposes of determining the tax credit (if any) to which the participant is entitled under section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions), the reference in subsection (1) of that section to the tax credit fraction in force when the distribution is made shall be read as a reference to the fraction in force when the dividend is paid over to him.
(3) Section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall apply in relation to an amount paid under paragraph 58(2) as if—
(a) it were a payment to which subsection (4)(b) of that section applies, and
(b) the cash dividend had been paid when the payment was paid over to the participant under paragraph 58(2).

Charge on dividend shares ceasing to be subject to plan

93
(1) If dividend shares cease to be subject to the plan before the end of the period of three years beginning with the date on which the shares were acquired on his behalf, the participant is chargeable to tax on the amount of the relevant dividend—
(a) under Schedule F, or
(b) to the extent that the amount represents a foreign cash dividend, under Case V of Schedule D,
for the tax year in which the shares cease to be subject to the plan.
For this purpose “the relevant dividend" is the cash dividend applied to acquire those shares on the participant’s behalf.
(2) For the purposes of determining the tax credit (if any) to which the participant is entitled under section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions), the reference in subsection (1) of that section to the tax credit fraction in force when the distribution is made shall be read as a reference to the fraction in force[when the shares cease to be subject to the plan].
Words in Sch. 8 para. 93(2) substituted (retrospectively) by 2001 c. 9, s. 62 Sch. 13 para. 7
(3) Where the participant is charged to tax under this paragraph the tax due shall be reduced by the amount or aggregate amount of any tax paid on any capital receipts within paragraph 79 in respect of those shares.
For this purpose “the tax due” means the amount of tax due after deduction of the tax credit determined under sub-paragraph (2).
(4) Section 234A(4) to (11) of the Taxes Act 1988 (information relating to distributions to be provided by nominee) shall apply in relation to the relevant dividend as if it were a payment to which subsection (4)(b) of that section applies.
(5) This paragraph has effect subject to paragraph 87 (circumstances in which there is no charge on shares ceasing to be subject to plan).
(6) Except as provided by this paragraph there is no charge to tax on dividend shares ceasing to be subject to the plan.

PAYE: shares ceasing to be subject to plan

94
Where as a result of shares ceasing to be subject to the plan a participant is chargeable to tax under this Part of this Schedule
(a) section 203F of the Taxes Act 1988 (PAYE: readily convertible assets) shall have effect as if the participant were being provided with assessable income in the form of those shares—
(i) at the time the shares cease to be subject to the plan, and
(ii) in respect of the relevant employment in which the participant is employed at that time (or, if he is not employed in relevant employment at that time, the relevant employment in which he was last employed before that time), and
(b) subsection (3) of that section
shall have effect as if the reference in that subsection to the amount of income likely to be chargeable to tax under Schedule E in respect of the provision of the asset were a reference to the amount on which tax is likely to be chargeable under this Part of this Schedule by virtue of the shares ceasing to be subject to the plan.

PAYE: shares ceasing to be subject to the plan

95
(1) Sub-paragraphs (2) to (5) apply where as a result of any shares (“the relevant shares”) ceasing to be subject to the plan—
(a) a participant is chargeable to income tax under Schedule E in accordance with this Part of this Schedule, and
(b) an obligation to make a PAYE deduction arises in respect of that charge.
(2) The trustees must pay to the employer company a sum which is sufficient to enable the employer company to discharge that obligation.
This is subject to sub-paragraphs (3) and (7).
(3) Sub-paragraph (2) only applies where, or to the extent that, the plan does not require the participant to pay the employer company a sum that is sufficient to discharge the obligation mentioned in sub-paragraph (1)(b).
(4) Section 203J(1) of the Taxes Act 1988 (sections 203B to 203I: accounting for tax) shall have effect as if it required the deduction of income tax to be made from any sum or sums received by the employer—
(a) from the trustees under sub-paragraph (2), or
(b) from the participant in accordance with the plan, as mentioned in sub-paragraph (3).
(5) After making the necessary PAYE deduction from the sum or sums received as mentioned in sub-paragraph (4), the employer company shall pay any remaining amounts to the participant.
(6) For the purposes of this paragraph “the employer company” means the company which employs the participant in relevant employment at the time when the shares cease to be subject to the plan (or, if the participant is not employed in relevant employment at that time, the company which last employed him in relevant employment before that time), provided that that company is one to whom the PAYE regulations (within the meaning of section 203L(3) of the Taxes Act 1988) at that time apply.
Words in Sch. 8 para. 95(6) substituted (24.7.2002 with effect as mentioned in s. 39(7) of the amending Act) by 2002 c.23, s. 39(3)(7)
(7) Where, as a result of any shares ceasing to be subject to the plan, a participant is chargeable to income tax under Schedule E in accordance with this Part and either—
(a) there is no company which falls within sub-paragraph (6), or
(b) the Inland Revenue are of the opinion that it is impracticable for the company which falls within that sub-paragraph to make a PAYE deduction and accordingly direct that this sub-paragraph shall apply,
then sub-paragraph (2) shall not apply and the trustees shall make a PAYE deduction in respect of an amount equal to that on which income tax is payable as if the participant were a former employee of the trustees.
(8) In a case where sub-paragraph (7) applies, section 203C of the Taxes Act 1988 (PAYE: employee of non-UK employer) does not apply.
(9) Where—
(a) a participant disposes of his beneficial interest in any of his plan shares to the trustees, and
(b) the trustees are deemed by virtue of paragraph 74 to have disposed of the shares in question,
this paragraph shall apply as if the consideration payable by the trustees to the participant on the disposal had been received by the trustees as the proceeds of disposal of plan shares.
(10) For the purposes of this paragraph “PAYE deduction” means a deduction required by regulations under section 203 of the Taxes Act 1988.

PAYE: capital receipts

96
(1) Where the trustees receive a sum of money which constitutes (or forms part of) a capital receipt in respect of which a participant is chargeable to income tax under Schedule E, in accordance with this Part of this Schedule, when it is received by him—
(a) the trustees shall pay out of that sum of money to the employer company an amount equal to that on which income tax is so payable, and
(b) the employer company shall then pay over that amount to the participant, but in so doing shall make a PAYE deduction.
This is subject to sub-paragraph (3).
(2) For the purposes of this paragraph “the employer company” means the company which employs the participant in relevant employment at the time the trustees receive the sum of money referred to in sub-paragraph (1) (or, if the participant is not employed in relevant employment at that time, the company which last employed him in relevant employment before that time), provided that that company is one to whom the PAYE regulations (within the meaning of section 203L(3) of the Taxes Act 1988) at that time apply
Words in Sch. 8 para. 96(2) substituted (24.7.2002 with effect as mentioned in s. 39(7) of the amending Act) by 2002 c. 23, s. 39(4)(7)
(3) Where the trustees receive a sum of money to which sub-paragraph (1) applies but—
(a) there is no company which falls within sub-paragraph (2), or
(b) the Inland Revenue are of the opinion that it is impracticable for the company which falls within that sub-paragraph to make a PAYE deduction and accordingly direct that this sub-paragraph shall apply,
then, in paying over to the participant the capital receipt, the trustees shall make a PAYE deduction in respect of an amount equal to that on which income tax is payable as mentioned in sub-paragraph (1) as if the participant were a former employee of the trustees.
(4) In a case where sub-paragraph (3) applies, section 203C of the Taxes Act 1988 (PAYE: employee of non-UK employer) does not apply.
(5) For the purposes of this paragraph “PAYE deduction” means a deduction required by regulations under section 203 of the Taxes Act 1988.

Part XI Capital gains tax

Introduction

97
The provisions of this Part apply for capital gains tax purposes in relation to an approved employee share ownership plan.

Gains accruing to trustees

98
(1) Any gain accruing to the trustees is not a chargeable gain if the shares—
(a) are shares in relation to which the requirements of Part VIII are met, and
(b) are awarded to employees, or acquired on their behalf as dividend shares, in accordance with the plan within the relevant period.
(2) If the shares are readily convertible assets at the time they are acquired by the trustees, the relevant period is the period of two years beginning with the date on which the shares are acquired by the trustees.
(3) If at the time of their acquisition by the trustees the shares are not readily convertible assets, the relevant period is—
(a) the period of five years beginning with the date on which the shares were acquired, or
(b) if within that period the shares in question become readily convertible assets, the period of two years beginning with the date on which they did so,
whichever ends first.
(4) For the purposes of determining whether shares are awarded to employees within the relevant period, shares acquired by the trustees at an earlier time are taken to be awarded to employees before shares of the same class acquired by the trustees at a later time.
This is subject to paragraph 76(1) (treatment of shares acquired from an employee share ownership trust).

Participant absolutely entitled as against trustees

99
(1) A participant is treated for capital gains tax purposes as absolutely entitled as against the trustees to any shares awarded to him under the plan.
(2) This applies notwithstanding anything in the plan or the trust instrument.

Different classes of shares

100
(1) For the purposes of Chapter I of Part IV of the Taxation of Chargeable Gains Act 1992 (identification of shares etc.) a participant’s plan shares are treated, so long as they are subject to the plan, as of a different class from any shares (which would otherwise be treated as of the same class) that are not plan shares.
1992 c. 12.
(2) For the purposes of that Chapter, any shares transferred to the trustees of the plan trust by a qualifying transfer that have not been awarded to participants under the plan shall (notwithstanding that they would otherwise fall to be treated as of the same class) be treated as of a different class from any shares held by the trustees that were not transferred to them by a qualifying transfer.
(3) In sub-paragraph (2) “qualifying transfer” has the meaning given in paragraph 76 (acquisition by trustees of shares from employee share ownership trust).

No chargeable gain on shares ceasing to be subject to the plan

101
(1) Shares which cease to be subject to the plan are treated as having been disposed of and immediately reacquired by the participant at market value.
(2) Any gain accruing on that disposal is not a chargeable gain.

Treatment of forfeited shares

102
(1) If any of the participant’s plan shares are forfeited, they are treated as having been disposed of by the participant and acquired by the trustees at market value at the date of forfeiture.
(2) Any gain accruing on that disposal is not a chargeable gain.

Acquisition by trustees of shares from profit sharing scheme

103
(1) Where the trustees acquire shares from the trustees of an approved profit sharing scheme, the disposal and the acquisition by the trustees are treated as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal.
(2) In such a case the relevant period for the purposes of paragraph 98 is determined as if the shares had been acquired by the trustees at the time they were acquired by the trustees of the other trust.
This does not affect the date on which the trustees are treated as acquiring the shares for the purposes of taper relief.

Disposal of rights under rights issue

104
(1) Any gain accruing on the disposal of rights under paragraph 72 (power of trustees to raise funds to subscribe for rights issue) is not a chargeable gain.
(2) Sub-paragraph (1) does not apply to a disposal of rights unless similar rights are conferred in respect of all ordinary shares in the company.

Part XII Corporation tax deductions

Introduction

105
References in this Part of this Schedule to deductions are to deductions by a company in calculating for the purposes of corporation tax the profits of a trade carried on by it.
This is subject to paragraph 114 (application of provisions to expenses of management of investment companies etc.).

Deduction for providing free or matching shares

106
(1) Where, under an approved employee share ownership plan, shares are awarded to employees as free or matching shares by reason of their employment with a company, a deduction is allowed under this paragraph to that company.
(2) Any such deduction—
(a) is of an amount equal to the market value of the shares at the time they are acquired by the trustees, and
(b) must be made for the period of account in which the shares are awarded to employees in accordance with the plan.
(3) Except as provided by sub-paragraph (1), no deduction may be made by that company or any associated company in respect of the provision of those shares.
This is subject to paragraphs 111 (deduction for costs of setting up the plan) and 112 (deductions for contributions to running expenses of plan).
(4) Where the shares are awarded under a group plan, the market value of the shares at the time they are acquired by the trustees shall for the purposes of this paragraph be taken to be the relevant proportion of the total market value of the shares included in the award.
For this purpose “the relevant proportion” means the proportion that the number of shares in the award awarded to the employees of the company concerned bears to the total number of shares in the award.
(5) In determining the market value of any shares for the purposes of this paragraph, if shares have been acquired by the trustees on different days it shall be assumed that those acquired on an earlier day are awarded to employees under the plan before those acquired by the trustees on a later day.
(6) If a deduction is made under this paragraph by a company, no deduction may be made by any other company under this paragraph in respect of the provision of the shares.
(7) This paragraph has effect subject to paragraph 108 (cases in which no deduction is allowed).

Deduction for additional expenses in providing partnership shares

107
(1) Where under an approved employee share ownership plan—
(a) partnership shares are awarded to employees by reason of their employment with a company, and
(b) the market value of those shares at the time they are acquired by the trustees exceeds the partnership share money paid by the participants to acquire those shares,
a deduction is allowed under this paragraph to that company.
(2) Any such deduction—
(a) is of an amount equal to the amount of the excess referred to in sub-paragraph (1)(b), and
(b) must be made for the period of account in which the shares are awarded to employees in accordance with the plan.
(3) Except as provided by sub-paragraph (1), no deduction may be made by that company or any associated company in respect of the provision of those shares.
This is subject to paragraphs 111 (deduction for costs of setting up the plan) and 112 (deductions for contributions to running expenses of plan).
(4) If a deduction is made under this paragraph by a company, no deduction may be made by any other company under this paragraph in respect of the provision of the shares.
(5) This paragraph has effect subject to paragraph 108 (cases in which no deduction is allowed).

Cases in which no deduction is allowed

108
(1) No deduction is allowed under paragraph 106 or 107 in the following cases.
(2) No deduction is allowed in respect of shares awarded to an individual who is not a Schedule E taxpayer at the date the shares are awarded to him under the plan.
A “Schedule E taxpayer” means an individual who—
(a) is chargeable to tax under Schedule E in respect of emoluments from the employment by reference to which he is eligible to participate in the award, or
(b) would be so chargeable if any such emoluments were remitted to the United Kingdom.
(3) No deduction is allowed in respect of shares that are liable to depreciate substantially in value for reasons that do not apply generally to shares in the company.
(4) No deduction is allowed if a deduction has been made—
(a) by the company, or
(b) by an associated company of the company,
in respect of the provision of the same shares for this or another trust.
This applies whatever the nature or purpose of the other trust and whatever the basis on which the deduction was made.
(5) For the purposes of determining whether the same shares have been provided to more than one trust, if shares have been acquired by the trustees of the plan trust on different days it shall be assumed that those acquired on an earlier day are awarded under the plan before those acquired by the trustees on a later day.

No deduction for expenses in providing dividend shares

109
(1) No deduction is allowed for expenses in providing shares that are acquired on behalf of individuals under an approved employee share ownership plan as dividend shares.
(2) This is subject to paragraph 112 (deductions for contributions to running expenses of plan).

Treatment of forfeited shares

110
If any of a participant’s plan shares are forfeited—
(a) the shares are treated for the purposes of this Part as acquired by the trustees—
(i) when the forfeiture occurs, and
(ii) for no consideration, and
(b) no deduction is allowed under paragraph 106 or 107 in respect of any subsequent award of those shares under the plan.

Deduction for costs of setting up the plan

111
(1) A deduction is allowed under this paragraph for expenses incurred by a company in establishing an employee share ownership plan which is approved by the Inland Revenue.
(2) No deduction may be made under this paragraph if—
(a) any employee acquires rights under the plan, or
(b) the trustees acquire any shares for the purposes of the plan,
before the Inland Revenue approve the plan.
(3) If Inland Revenue approval of the plan is given more than nine months after the end of that period of account in which the expenses are incurred, the expenses are treated for the purposes of this paragraph as incurred in the period in which the approval is given.
(4) No other deduction is allowed in respect of expenses for which a deduction is allowed under this paragraph.

Deductions for contributions to running expenses of plan

112
(1) Nothing in this Part of this Schedule affects any deduction for expenses incurred by a company in contributing to the expenses of the trustees in operating an approved employee share ownership plan.
(2) For this purpose the expenses of the trustees in operating the plan—
(a) do not include expenses in acquiring shares for the purposes of the trust, other than incidental acquisition costs, but
(b) do include the payment of interest on money borrowed by them for that purpose.
(3) In sub-paragraph (2)(a) “incidental acquisition costs” means any fees, commission, stamp duty and similar incidental costs attributable to the acquisition of the shares.

112A Deduction for contribution to plan trust
(1) A deduction is allowed to a company under this paragraph where—
(a) on or after the day on which this paragraph comes into force the company makes a payment to the trustees of an approved employee share ownership plan in order to enable them to acquire shares in the company or a company which controls it,
(b) the payment is applied by the trustees to acquire such shares,
(c) the shares are not acquired from a company, and
(d) the condition in sub-paragraph (2) is met in relation to the company in which the shares are acquired.
(2) The condition in this sub-paragraph is that, at the end of the period of twelve months beginning with the date of the acquisition, the trustees hold shares in the company for the plan trust that—
(a) constitute not less than 10 per cent of the ordinary share capital of the company; and
(b) carry rights to not less than 10 per cent of—
(i) any profits available for distribution to shareholders of the company;
(ii) any assets of that company available for distribution to its shareholders in the event of a winding-up.
(3) For the purposes of sub-paragraph (2), shares that have been appropriated to, and acquired on behalf of, an individual under the plan shall continue to be treated as held by the trustees of the plan trust for the beneficiaries of that trust until such time as they cease to be subject to the plan (within the meaning of this Schedule).
(4) A deduction allowed under this paragraph—
(a) is of an amount equal to the amount of the payment referred to in sub-paragraph (1), and
(b) must be made for the period of account in which the condition in sub-paragraph (2) is met.
(5) No other deduction is allowed for any amount in respect of which a deduction has been made under this paragraph (except as specified in paragraph 112B(3)).
Sch. 8 para. 112A, inserted (6.4.2003) by 2002 c. 34, ss. 1(3), 5

112B Withdrawal of deduction under paragraph 112A
(1) The Inland Revenue may by notice direct that the benefit of a deduction made under paragraph 112A is withdrawn where—
(a) 30 per cent of the shares acquired by virtue of the payment in respect of which the deduction is made have not been awarded under the plan before the end of the period of five years beginning with the date of acquisition, or
(b) all the shares acquired by virtue of that payment have not been so awarded before the end of the period of ten years beginning with that date.
(2) The effect of a direction under sub-paragraph (1)(a) or (b) is that the amount of the deduction is treated as a trading receipt of the company for the period of account in which the direction is given.
(3) However, where—
(a) the Inland Revenue give a direction under sub-paragraph (1)(a) or (b) in respect of any deduction, and
(b) at any time after the giving of the direction, all the shares acquired by virtue of the payment in respect of which the deduction was made are awarded under the plan,
a further deduction is allowed under this sub-paragraph to the company which made the payment.
(4) A deduction under sub-paragraph (3)—
(a) is of an amount equal to the amount of the payment referred to in that sub-paragraph, and
(b) must be made for the period of account in which sub-paragraph (3)(b) is first satisfied.
(5) No other deduction is allowed in respect of any amount for which a deduction has been made under sub-paragraph (3).
(6) Where—
(a) a deduction is made under paragraph 112A or sub-paragraph (3) in respect of a payment for the acquisition of shares, but
(b) shares are awarded under the plan to an individual who at the time is not a Schedule E taxpayer (as defined by paragraph 108(2)),
an amount equal to the appropriate proportion of the deduction is treated as a trading receipt of the company for the period of account in which the shares are so awarded.
(7) For the purposes of sub-paragraph (6), the appropriate proportion of the deduction is the proportion which the number of shares awarded to the individual bears to the total number of shares acquired by virtue of the payment.
(8) For the purposes of this paragraph, where shares are acquired by the trustees on different days, it shall be assumed that those acquired on an earlier day are awarded to employees under the plan before those acquired by the trustees on a later day.
Sch. 8 para. 112B inserted (6.4.2003) by 2002 c. 34, ss. 1(4), 5

Withdrawal of deductions on withdrawal of approval

113
(1) If approval of an employee share ownership plan is withdrawn the Inland Revenue may by notice to a company direct that the benefit of any deductions under paragraph 106 (deduction for providing free or matching shares) or 107 (deduction for contributing to additional expenses in providing partnership shares) in relation to the plan is also withdrawn.
(2) The effect of the direction is that the aggregate amount of the deductions is treated as a trading receipt of that company for the period of account in which the Inland Revenue give notice of the withdrawal of approval.

Application of provisions to expenses of management of investment companies etc.

114
(1) The provisions of this Part apply in relation to—
(a) investment companies, and
(b) companies to which section 75 of the Taxes Act 1988 (management expenses) applies by virtue of section 76 of that Act (insurance companies),
in accordance with the following provisions.
(2) The provisions of this Part which allow a deduction in calculating the profits of a trade apply to treat amounts as disbursed as expenses of management.
(3) Paragraph 113(2) (effect of direction as to withdrawal of deductions) applies as if the reference to a trading receipt for the period of account in which the Inland Revenue give notice of the withdrawal of approval were a reference to profits or gains chargeable to tax under Case VI of Schedule D arising when the Inland Revenue give notice of the withdrawal.

Part XIII Supplementary provisions

Company reconstructions

115
(1) This paragraph applies where there occurs in relation to any of the participant’s plan shares (“the original holding”)—
(a) a transaction which results in a new holding being equated with the original holding for the purposes of capital gains tax, or
(b) a transaction that would have that result but for the fact that what would be the new holding consists of or includes a qualifying corporate bond,
other than a transaction within sub-paragraph (2).
A transaction in relation to which this paragraph applies is referred to below as a “company reconstruction".
(2) Where an issue of shares of any of the following descriptions (in respect of which a charge to income tax arises) is made as part of a company reconstruction, those shares shall be treated for the purposes of this paragraph as not forming part of the new holding—
(a) redeemable shares or securities issued as mentioned in section 209(2)(c) of the Taxes Act 1988;
(b) share capital issued in circumstances such that section 210(1) of that Act applies;
(c) share capital to which section 249 of that Act applies.
(3) In this paragraph—
“corresponding shares”, in relation to any new shares, means the shares in respect of which the new shares are issued or which the new shares otherwise represent;
“new shares” means shares comprised in the new holding which were issued in respect of, or otherwise represent, shares comprised in the original holding;
“original holding” has the meaning given by sub-paragraph (1).
(4) Subject to the following provisions of this paragraph, in relation to an employee share ownership plan, references in this Schedule to a participant’s plan shares shall be construed, after the time of the company reconstruction, as being or, as the case may be, as including references to any new shares.
(5) For the purposes of this Schedule—
(a) a company reconstruction shall be treated as not involving a disposal of shares comprised in the original holding,
(b) the date on which any new shares are to be treated as having been awarded to the participant shall be that on which the corresponding shares were awarded,
(c) the conditions in Part VIII shall be treated as fulfilled with respect to any new shares if they were (or were treated as) fulfilled with respect to the corresponding shares, and
(d) the provisions of Part X (income tax) and Part XI (capital gains tax) shall apply in relation to the new shares as they would have applied to the corresponding shares.
Where the corresponding shares were dividend shares, the reference in paragraph (b) to the shares being awarded shall be read as a reference to the shares being acquired on behalf of the participant.
(6) Sub-paragraphs (4) and (5) are subject to paragraph 116 (treatment of shares acquired under rights issue).
(7) For the purposes of this Schedule if, as part of a company reconstruction, trustees become entitled to a capital receipt, their entitlement to the capital receipt shall be taken to arise before the new holding comes into being.
(8) In the context of a new holding, any reference in this Schedule to shares includes securities and rights of any description which form part of the new holding for the purposes of Chapter II of Part IV of the Taxation of Chargeable Gains Act 1992.
1992 c. 12.

Treatment of shares acquired under rights issue

116
(1) Where the trustees exercise rights under a rights issue conferred in respect of a participant’s plan shares, any shares or securities or rights allotted as a result shall be treated for the purposes of this Schedule as if they were plan shares—
(a) identical to the shares in respect of which the rights were conferred, and
(b) appropriated to, or acquired on behalf of, the participant under the plan in the same way and at the same time as those shares.
This is subject to sub-paragraphs (2) to (4).
(2) Where the funds used by the trustees to exercise rights under a rights issue are provided otherwise than by virtue of the exercise by the trustees of their powers under paragraph 72 (power of trustees to raise funds to subscribe for rights issue)—
(a) any shares, securities or rights allotted are not plan shares, and
(b) sections 127 to 130 of the Taxation of Chargeable Gains Act 1992 shall not apply in relation to them.
(3) Sub-paragraph (1) does not apply in relation to rights arising under a rights issue unless similar rights are conferred in respect of all ordinary shares in the company.
(4) Where sub-paragraph (1) does not apply by virtue of sub-paragraph (3)—
(a) any shares, securities or rights allotted are not plan shares, and
(b) sections 127 to 130 of the Taxation of Chargeable Gains Act 1992 shall not apply in relation to them.
(5) In this paragraph references to rights arising under a rights issue are to be construed in accordance with paragraph 72(2).

116A Exemptions from stamp duty and stamp duty reserve tax
Where, under an approved employee share ownership plan, partnership shares or dividend shares are transferred by the trustees to an employee—
(a) no ad valorem stamp duty is chargeable on any instrument by which the transfer is made, and
(b) no stamp duty reserve tax is chargeable on any agreement by the trustees to make the transfer.
Section S. 116A inserted (11.5.2001 with effect as mentioned in s. 95(3) of the amending Act) by 2001 c. 9, S. 95

Power to require information

117 Exemptions from stamp duty and stamp duty reserve tax
(1) The Inland Revenue may by notice require any person to provide them with such information as they reasonably require for the performance of their functions under this Schedule and as the person to whom the notice is addressed has or can reasonably obtain.
(2) The power conferred by this paragraph extends, in particular, to—
(a) information to enable the Inland Revenue—
(i) to decide whether to approve an employee share ownership plan or withdraw an approval already given, or
(ii) to determine the liability to tax, including capital gains tax, of any person who has participated in a plan; and
(b) information about the administration of a plan and any proposed alteration of the terms of a plan.
(3) The notice must require the information to be provided within a specified time, which must not be less than three months.
(4) In section 98 of the Taxes Management Act 1970 (penalties in connection with returns, etc.), in the first column of the table, after the final entry insert— “ paragraph 117 of Schedule 8 to the Finance Act 2000 ”.
1970 c. 9.

Withdrawal of approval

118
(1) If any disqualifying event occurs in relation to an approved employee share ownership plan, the Inland Revenue may by notice to the company withdraw the approval with effect from the time at which the disqualifying event occurred or such later time as the Inland Revenue may specify.
(2) The following are disqualifying events—
(a) a contravention in relation to the operation of the plan of any of the requirements of this Schedule, the plan itself or the plan trust;
(b) any alteration being made in a key feature of the plan, or in the terms of the plan trust, without the approval of the Inland Revenue;
(c) if the plan provides for performance allowances in accordance with paragraph 30 (method two), the setting, in respect of an award of shares, of performance targets that, at the time they are set in accordance with the plan, cannot reasonably be viewed as being comparable;
(d) any alteration being made in the share capital of the company whose shares are the subject of the plan, or in the rights attaching to any shares of that company, that materially affects the value of participants’ plan shares;
(e) shares of a class of which shares have been awarded to participants receiving different treatment in any respect from the other shares of that class;
(f) the trustees, the company or, in the case of a group plan, a company which is or has been a participating company failing to furnish any information which they are or it is required to furnish under paragraph 117.
(3) For the purposes of sub-paragraph (2)(b)—
(a) an alteration is an alteration of a “key feature" of the plan if it relates to a provision that is necessary in order to meet the requirements of this Schedule; and
(b) the Inland Revenue shall not withhold their approval unless it appears to them that the plan as proposed to be altered would not now be approved on an application under paragraph 4.
(4) For the purposes of sub-paragraph (2)(c) performance targets are comparable if they are comparable in terms of the likelihood of their being met by the performance units to which they apply.
(5) Sub-paragraph (2)(e) applies, in particular, to different treatment in respect of—
(a) the dividend payable;
(b) repayment;
(c) the restrictions attaching to the shares; or
(d) any offer of substituted or additional shares, securities or rights of any description in respect of the shares.
This is subject to sub-paragraph (6).
(6) Sub-paragraph (2)(e) does not apply—
(a) where the difference in treatment arises from—
(i) a key feature of the plan, or
(ii) any of the participants’ shares being subject to provision for forfeiture, or
(b) on the ground only that shares which have been newly issued receive, in respect of dividends payable with respect to a period beginning before the date on which they were issued, treatment less favourable than that accorded to shares issued before that date.
(7) The withdrawal of approval of an employee share ownership plan does not affect the operation of this Schedule in relation to shares awarded to participants in the plan before the time with effect from which approval was withdrawn.
References in this Schedule to an approved employee share ownership plan in relation to such shares are to a plan that was approved at the time the shares were awarded.

Appeal against withdrawal of approval

119
(1) The company may appeal against a decision of the Inland Revenue—
(a) to withdraw approval of an employee share ownership plan, or
(b) to give a direction under paragraph 113 (withdrawal of corporation tax deductions on withdrawal of approval), or
(c) to refuse approval under paragraph 118(2)(b) (approval of alteration of plan or plan trust).
(2) The appeal lies to the Special Commissioners.
(3) Notice of appeal must be given to the Inland Revenue within 30 days after notice of their decision is given to the company.

Termination of plan

120
(1) The plan may provide for the company to issue a plan termination notice in respect of the plan in such circumstances as are specified in the plan.
(2) The plan must provide that, where a plan termination notice is issued, a copy of the notice is to be given, without delay, to—
(a) the Inland Revenue,
(b) the trustees, and
(c) each individual—
(i) who has plan shares, or
(ii) who has entered a partnership share agreement which was in force immediately before the notice was issued.

Effect of plan termination notice

121
(1) This paragraph applies where the company has issued a plan termination notice under paragraph 120.
(2) No further shares may be awarded to individuals under the plan.
(3) The trustees must remove the plan shares from the plan as soon as practicable after—
(a) the end of the notice period, or
(b) if later, the first date on which the shares may be removed from the plan without giving rise to a charge to income tax under Part X of this Schedule on the participant on whose behalf they are held.
Paragraph 46 (repayment of partnership share money) and paragraph 58(2) (cash dividend paid over if not reinvested) provide for the payment to employees of money held on their behalf.
(4) In sub-paragraph (3) “the notice period” means the period of three months beginning with the date on which the requirements imposed by the plan in accordance with paragraph 120(2) (copy of termination notice to Inland Revenue, participants etc.) are met in respect of the plan termination notice.
(5) The trustees may remove the participant’s shares from the plan at an earlier date with the participant’s consent.
(6) Any consent given by the participant before he receives a copy of the plan termination notice shall be disregarded for this purpose.
(7) The trustees must as soon as practicable after the plan termination notice is issued pay to an individual any money held on his behalf.
(8) In this paragraph references to the trustees removing the plan shares from the plan are to their—
(a) transferring the shares to the participant on behalf of whom they are held, or to another person, at his direction, or
(b) disposing of the shares and accounting (or holding themselves ready to account) for the proceeds to the participant or to another person at his direction.
(9) Where the participant has died, the references in sub-paragraph (8) to the participant shall be read as references to his personal representatives.

Meaning of shares being withdrawn from or ceasing to be subject to plan

122
(1) For the purposes of this Schedule shares are withdrawn from the plan when—
(a) they are transferred by the trustees to the participant, or another person, on the direction of the participant,
(b) the participant assigns, charges or otherwise disposes of his beneficial interest in the shares, or
(c) they are disposed of by the trustees, on the direction of the participant, in circumstances where the trustees account (or hold themselves ready to account) for the proceeds to the participant or to another person.
(2) Where the participant has died, the references in sub-paragraph (1) to the participant shall be read as references to his personal representatives.
(3) For the purposes of this Schedule plan shares cease to be subject to the plan when—
(a) they are withdrawn from the plan,
(b) the participant to whom the shares were awarded ceases to be in relevant employment at a time when the shares are subject to the plan, or
(c) the trustees dispose of the shares under provision made in accordance with paragraph 73 (meeting PAYE obligations).
(4) Where an individual participates in an award of partnership shares, if he ceases to be in relevant employment at any time during the acquisition period relating to that award, he shall be treated for the purposes of sub-paragraphs (3) and (7) as ceasing to be in such employment immediately after the shares are awarded to him.
(5) In sub-paragraph (4) “the acquisition period” in relation to an award means—
(a) where there was no accumulation period, the period beginning with the deduction of the partnership share money and ending with the acquisition date (within the meaning of paragraph 40(2)); and
(b) where there was an accumulation period, the period beginning with the end of that period and ending immediately before the acquisition date (within the meaning of paragraph 42(3)).
(6) For the purposes of determining the charge to income tax (if any) arising on any of the participant’s shares ceasing to be subject to the plan—
(a) shares shall be taken to cease to be subject to the plan in the order in which they were awarded to the participant under the plan,
(b) where shares are awarded to the participant on the same day, the shares shall be treated as ceasing to be subject to the plan in the order which gives rise to the lowest charge to income tax on the participant.
(7) Where a participant ceases to be in relevant employment his plan shares shall be treated as ceasing to be subject to the plan on the date of leaving.

Meaning of participant ceasing to be in relevant employment

123
(1) This paragraph explains what is meant by a participant ceasing to be in relevant employment.
(2) Relevant employment means employment by the company or any associated company.
(3) A participant does not cease to be in relevant employment if he remains in the employment of the company or any associated company.

Exercise of functions conferred on “the Inland Revenue"

124
References in this Schedule to “the Inland Revenue" are to any officer of the Board.

Determination of market value

125
(1) For the purposes of this Schedule the “market value” of shares has the same meaning as, for the purposes of the Taxation of Chargeable Gains Act 1992, it has by virtue of Part VIII of that Act.
This is subject to paragraph 24(3) (determination of value of shares subject to restriction or risk of forfeiture).
1992 c. 12.
(2) Where for the purposes of this Schedule the market value of shares on any date falls to be determined, the Inland Revenue and the trustees may agree that it shall be determined by reference to such date or dates, or to an average of the values on a number of dates, as may be provided in the agreement.

Meaning of “associated company"

126
(1) For the purposes of this Schedule one company is an “associated company” of another company if—
(a) one has control of the other, or
(b) both are under the control of the same person or persons.
(2) For the purposes of this paragraph the question of whether a person controls a company shall be determined in accordance with section 416(2) to (6) of the Taxes Act 1988.
(3) This paragraph is subject to paragraph 67(3).

Jointly owned companies

127
(1) For the purposes of the provisions of this Schedule relating to group plans, each joint owner of a jointly owned company is treated as controlling—
(a) the jointly owned company, and
(b) any company controlled by that company.
This paragraph does not apply for the purposes of paragraph 61(b) (requirement that plan shares are in a company not under another company’s control).
(2) A “jointly owned company” means a company—
(a) of which 50% of the issued share capital is owned by one person and 50% by another, and
(b) which is not controlled by any one person.
(3) A jointly owned company may not be a participating company in more than one group plan.
(4) A company controlled by a jointly owned company may not—
(a) be a participating company in more than one group plan, or
(b) if the jointly owned company or any other company controlled by it is a participating company in a group plan, be a participating company in a different group plan.
Sch. 8 para. 127(4) inserted (24.7.2002 with effect as mentioned in s. 39(7) of the amending Act) by 2002 c. 23, s. 39(5)(7)

Meaning of “readily convertible asset"

128
(1) For the purposes of this Schedule “readily convertible asset” has the same meaning as in section 203F of the Taxes Act 1988 (PAYE: tradeable assets).
This is subject to sub-paragraph (2).
(2) In determining for the purposes of this Schedule (and that section in its application in relation to shares which cease to be subject to a plan) whether shares are readily convertible assets any market for the shares that—
(a) is created by virtue of the trustees acquiring shares for the purposes of the plan, and
(b) exists solely for the purposes of the plan,
shall be disregarded.
Words in Sch.8 para. 128(2) inserted (24.7.2002 with effect as mentioned in s. 39(7) of the amending Act) by 2002 c. 23, s. 39(6)(7)

Minor definitions

129
(1) In this Schedule—
“approved employee share ownership plan” means an employee share ownership plan approved under this Schedule;
“approved profit sharing scheme” means a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988;
“articles of association”, in relation to a company, includes any other written agreement between the shareholders of the company;
“company” means a body corporate;
“control”, unless otherwise indicated, has the same meaning as in section 840 of the Taxes Act 1988;
“foreign cash dividend” means a cash dividend paid in respect of plan shares in a company not resident in the United Kingdom;
“group of companies” means a company and any other companies of which it has control, and “group company” has a corresponding meaning;
“ordinary share capital” has the meaning given in section 832(1) of the Taxes Act 1988;
“participant’s plan shares”, in relation to an employee share ownership plan, means plan shares that have been awarded to an individual participant;
“PAYE obligations” means obligations of any person under—
(a) sections 203 to 203L of the Taxes Act 1988, or
(b) regulations under section 203 of that Act;
“plan shares”, in relation to a plan, means—
(a) free, partnership or matching shares that have been awarded to participants under the plan,
(b) dividend shares that have been acquired on behalf of participants under the plan, and
(c) shares in relation to which paragraph 115(5) applies (company reconstructions: new shares)),
that remain subject to the plan;
“qualifying corporate bond” has the meaning given by section 117 of the Taxation of Chargeable Gains Act 1992;
“tax year” means a year of assessment.
1992 c. 12.
(2) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule.
(3) For the purposes of this Schedule references to “shares” include fractions of shares forming part of the share capital of a company registered in a foreign country the law of which recognises such fractions.
(4) For the purposes of this Schedule a company is a member of a consortium owning another company if it is one of a number of companies—
(a) which between them beneficially own not less than three-quarters of the other company’s ordinary share capital, and
(b) each of which beneficially owns not less than one-twentieth of that capital.

Index of defined expressions

130
In this Schedule the following expressions are defined or otherwise explained by the provisions indicated—
approved employee share ownership plan	paragraph 129(1) (and see paragraph 118(7))
approved profit sharing scheme	paragraph 129(1)
articles of association	paragraph 129(1)
associated company	paragraph 126 (and see paragraph 67(3))
award of shares	paragraph 3(1)
ceasing to be in relevant employment (in relation to a participant)	paragraph 123
ceasing to be subject to plan (in relation to shares)	paragraph 122
company	paragraph 129(1)
the company (in relation to an employee share ownership plan)	paragraph 1(4)
connected person	paragraph 129(2)
consortium (member of)	paragraph 129(4)
control	paragraph 129(1) (and see paragraph 127)
deduction (in Part XII)	paragraph 105
dividend shares	paragraph 53(1)
eligible shares (in Part VIII)	paragraph 59
employee share ownership plan	paragraph 1(1)
foreign cash dividend	paragraph 129(1)
forfeiture (provision for)	paragraph 65(6)
free shares	paragraph 1(1)(a)
group of companies	paragraph 129(1)
group plan	paragraph 2(1)
holding period	paragraph 31
the Inland Revenue	paragraph 124
market value (of shares)	paragraph 125
matching shares	paragraph 1(2)
ordinary share capital	paragraph 129(1)
parent company	paragraph 2(1)
participant (in relation to an employee share ownership plan)	paragraph 3(3)
participant’s plan shares	paragraph 129(1) (and see paragraph 115(4))
participating company (in relation to a group plan)	paragraph 2(2)
participation in an award of shares	paragraph 3(2)
partnership share agreement	paragraph 34
partnership shares	paragraph 1(1)(b)
PAYE obligations	paragraph 129(1)
performance allowance	paragraph 25
plan shares	paragraph 129(1) (and see paragraphs 115 and 116)
the plan trust	paragraph 68(2)
qualifying corporate bond	paragraph 129(1)
qualifying employee	paragraph 8(4)
readily convertible asset	paragraph 128
reinvestment (in Part VII)	paragraph 53(1)
relevant employment	paragraph 123(2)
salary (in Part V)	paragraph 48
shares	paragraph 129(3) (and in the context of a new holding paragraph 115(8))
tax year	paragraph 129(1)
the trustees	paragraph 68(1)
withdrawal of shares from plan	paragraph 122(1)
Sch. 8 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

SCHEDULE 9 New Schedule 7C to the Taxation of Chargeable Gains Act 1992
Section 48.

The Schedule inserted after Schedule 7B to the Taxation of Chargeable Gains Act 1992 is as follows—

“Schedule 7C Relief for transfers to approved share plans

Introductory
1 (1) A person (“the claimant”) who makes a disposal of shares (“the disposal”) to the trustees of the plan trust of an employee share ownership plan (“the plan”) is entitled to claim relief under paragraph 5 if—
(a) the conditions in paragraph 2 are fulfilled, and
(b) paragraph 3(1) or (2) applies.
(2) Sub-paragraph (1) does not apply to a company that makes a disposal of shares.
(3) In this paragraph the references to a disposal of shares include a disposal of an interest in shares.

Conditions relating to the disposal
2 (1) The first condition is that, at the time of the disposal, the plan is approved under Schedule 8 to the Finance Act 2000.
(2) The second condition is that the relevant shares meet the requirements in Part VIII of that Schedule (types of shares that may be used in plan) in relation to the plan.
For this purpose that Part applies as if paragraph 61(a) and (c) (listed shares and shares in a company under the control of a company whose shares are listed) were omitted.
(3) The third condition is that, at any time in the entitlement period, the trustees hold, for the beneficiaries of the plan trust, shares in the relevant company that—
(a) constitute not less than 10% of the ordinary share capital of the company, and
(b) carry rights to not less than 10% of—
(i) any profits available for distribution to shareholders of the company, and
(ii) any assets of that company available for distribution to its shareholders in the event of a winding up.
(4) For the purposes of sub-paragraph (3), shares that have been appropriated to, or acquired on behalf of, an individual under the plan shall continue to be treated as held by the trustees of the plan trust for the beneficiaries of that trust until such time as they cease to be subject to the plan (within the meaning of Schedule 8 to the Finance Act 2000).
(5) The fourth condition is that, at all times in the proscribed period, there are no unauthorised arrangements under which the claimant or a person connected with him may be entitled to acquire (directly or indirectly) from the trustees of the plan trust any shares, or an interest in or right deriving from any shares.
(6) For the purposes of this paragraph—
“ordinary share capital” has the meaning given in section 832(1) of the Taxes Act;
“the relevant company” means the company of whose share capital the relevant shares form part; and
“the relevant shares” means the shares that are, or an interest in which is, the subject of the disposal.

Reinvestment of disposal proceeds
3 (1) This sub-paragraph applies if the claimant obtains consideration for the disposal and, at any time in the acquisition period, all of the amount or value of the consideration is applied by him in making an acquisition of assets or an interest in assets (“replacement assets”) which—
(a) are, immediately after the time of the acquisition, chargeable assets in relation to the claimant, and
(b) are not shares in, or debentures issued by, the relevant company or a company which is (at the time of the acquisition) in the same group as the relevant company;
but the preceding provisions of this sub-paragraph shall have effect without the words “, at any time in the acquisition period," if the acquisition is made pursuant to an unconditional contract entered into in the acquisition period.
(2) This sub-paragraph applies if—
(a) sub-paragraph (1) would have applied but for the fact that part only of the amount or value mentioned in that sub-paragraph is applied as there mentioned, and
(b) all the amount or value so mentioned except for a part which is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal is so applied.
(3) In sub-paragraph (1)(b)—
“the relevant company” has the meaning given in paragraph 2(6); and
“group” shall be construed in accordance with section 170.

Provision supplementary to paragraphs 2 and 3
4 (1) This paragraph applies for the purposes of paragraphs 2 and 3.
(2) The entitlement period is the period beginning with the disposal and ending on the expiry of 12 months beginning with the date of the disposal.
(3) The acquisition period is the period beginning with the disposal and ending on the expiry of six months beginning with—
(a) the date of the disposal, or
(b) if later, the date on which the third condition (set out in paragraph 2(3)) is first fulfilled.
(4) The proscribed period is the period beginning with the disposal and ending on—
(a) the date of the acquisition, or
(b) if later, the date on which the third condition (set out in paragraph 2(3)) is first fulfilled.
(5) All arrangements are unauthorised unless they only allow shares to be appropriated to or acquired on behalf of an individual under the plan.

The relief
5 (1) Where the claimant is entitled to claim relief under this paragraph and paragraph 3(1) applies, he shall, on making a claim in the period of 2 years beginning with the acquisition, be treated for the purposes of this Act—
(a) as if the consideration for the disposal were (if otherwise of a greater amount or value) of such amount as would secure that on the disposal neither a gain nor a loss accrues to him, and
(b) as if the amount or value of the consideration for the acquisition were reduced by the excess of the amount or value of the actual consideration for the disposal over the amount of the consideration which the claimant is treated as receiving under paragraph (a).
(2) Where the claimant is entitled to claim relief under this paragraph and paragraph 3(2) applies, he shall, on making a claim in the period of 2 years beginning with the acquisition, be treated for the purposes of this Act—
(a) as if the amount of the gain accruing on the disposal were reduced to the amount of the part mentioned in paragraph 3(2)(b), and
(b) as if the amount or value of the consideration for the acquisition were reduced by the amount by which the gain is reduced under paragraph (a) above.
(3) Nothing in sub-paragraph (1) or (2) shall affect the treatment for the purposes of this Act of the other party to the disposal or of the other party to the acquisition.
(4) The provisions of this Act fixing the amount of the consideration deemed to be given for a disposal or acquisition shall be applied before the preceding provisions of this paragraph are applied.

Dwelling-houses: special provision
6 (1) Sub-paragraph (2) applies where—
(a) a claim is made under paragraph 5,
(b) immediately after the time of the acquisition mentioned in paragraph 3 and apart from this paragraph, any replacement asset was a chargeable asset in relation to the claimant,
(c) the asset is a dwelling-house or part of a dwelling-house or land, and
(d) there was a time in the period beginning with the acquisition and ending with the time when paragraph 5(1) or (2) falls to be applied such that, if the asset (or an interest in it) were disposed of at that time, it would be within section 222(1) and the individual there mentioned would be the claimant or the claimant’s spouse.
(2) In such a case the asset shall be treated as if, immediately after the time of the acquisition mentioned in paragraph 3, it was not a chargeable asset in relation to the claimant.
(3) Sub-paragraph (4) applies where—
(a) the provisions of paragraph 5(1) or (2) have been applied,
(b) any replacement asset which, immediately after the time of the acquisition mentioned in paragraph 3 and apart from this paragraph, was a chargeable asset in relation to the claimant consists of a dwelling-house or part of a dwelling-house or land, and
(c) there is a time after paragraph 5(1) or (2) has been applied such that, if the asset (or an interest in it) were disposed of at that time, it would be within section 222(1) and the individual there mentioned would be the claimant or the claimant’s spouse.
(4) In such a case—
(a) the asset shall be treated as if, immediately after the time of the acquisition mentioned in paragraph 3, it was not a chargeable asset in relation to the claimant and adjustments shall be made accordingly, but
(b) any gain treated as accruing in consequence of the application of paragraph (a) shall be treated as accruing at the time mentioned in sub-paragraph (3)(c) or, if there is more than one such time, at the earliest of them.
(5) Sub-paragraph (6) applies where—
(a) a claim is made under paragraph 5,
(b) immediately after the time of the acquisition mentioned in paragraph 3 and apart from this paragraph, any replacement asset was a chargeable asset in relation to the claimant,
(c) the asset was an option to acquire (or to acquire an interest in) a dwelling-house or part of a dwelling-house or land,
(d) the option has been exercised, and
(e) there was a time in the period beginning with the exercise of the option and ending with the time when paragraph 5(1) or (2) falls to be applied such that, if the asset acquired on exercise of the option were disposed of at that time, it would be within section 222(1) and the individual there mentioned would be the claimant or the claimant’s spouse.
(6) In such a case the option shall be treated as if, immediately after the time of the acquisition mentioned in paragraph 3, it was not a chargeable asset in relation to the claimant.
(7) Sub-paragraph (8) applies where—
(a) the provisions of paragraph 5(1) or (2) have been applied,
(b) any replacement asset which, immediately after the time of the acquisition mentioned in paragraph 3 and apart from this paragraph, was a chargeable asset in relation to the claimant consisted of an option to acquire (or to acquire an interest in) a dwelling-house or part of a dwelling-house or land,
(c) the option has been exercised, and
(d) there is a time after paragraph 5(1) or (2) has been applied such that, if the asset acquired on exercise of the option were disposed of at that time, it would be within section 222(1) and the individual there mentioned would be the claimant or the claimant’s spouse.
(8) In such a case—
(a) the option shall be treated as if, immediately after the time of the acquisition mentioned in paragraph 3, it was not a chargeable asset in relation to the claimant and adjustments shall be made accordingly, but
(b) any gain treated as accruing in consequence of the application of paragraph (a) shall be treated as accruing at the time mentioned in sub-paragraph (7)(d) or, if there is more than one such time, at the earliest of them.
(9) References in this paragraph to an individual include a person entitled to occupy under the terms of a settlement.

Shares: special provision
7 (1) Sub-paragraph (2) applies where—
(a) a claim is made under paragraph 5,
(b) immediately after the time of the acquisition mentioned in paragraph 3 and apart from this paragraph, any replacement asset was a chargeable asset in relation to the claimant,
(c) the asset consists of shares, and
(d) relief is claimed under Chapter III of Part VII of the Taxes Act (enterprise investment scheme) at any time in the period beginning with the acquisition and ending when paragraph 5(1) or (2) falls to be applied.
(2) In such a case the asset shall be treated as if, immediately after the time of the acquisition mentioned in paragraph 3, it was not a chargeable asset in relation to the claimant.
(3) Sub-paragraph (4) applies where—
(a) the provisions of paragraph 5(1) or (2) have been applied,
(b) any replacement asset which, immediately after the time of the acquisition mentioned in paragraph 3 and apart from this paragraph, was a chargeable asset in relation to the claimant consists of shares, and
(c) at any time after paragraph 5(1) or (2) has been applied relief is claimed in respect of the asset under Chapter III of Part VII of the Taxes Act (enterprise investment scheme).
(4) In such a case the asset shall be treated as if, immediately after the time of the acquisition mentioned in paragraph 3, it was not a chargeable asset in relation to the claimant and adjustments shall be made accordingly.

Meaning of “chargeable asset"
8 For the purposes of this Schedule an asset is a chargeable asset in relation to the claimant at a particular time if, were the asset to be disposed of at that time, any gain accruing to him on the disposal would be a chargeable gain, and either—
(a) at that time he is resident or ordinarily resident in the United Kingdom, or
(b) he would be chargeable to capital gains tax under section 10(1) (non-resident with United Kingdom branch or agency) in respect of the gain,
unless (were he to dispose of the asset at that time) the claimant would fall to be regarded for the purposes of any double taxation relief arrangements as not liable in the United Kingdom to tax on any gains accruing to him on the disposal.”

.
1992 c. 12.
SCHEDULE 10

Introduction

1
Chapter II of Part V of the Taxes Act 1988 (provisions relating to the Schedule E charge: benefits in kind, etc.) is amended as follows.

Accommodation, supplies or services used in performing duties of employment

2
(1) After section 155 (exceptions from the general charge) insert—

“155ZA Accommodation, supplies or services used in performing duties of employment.
(1) Section 154 does not apply to a benefit consisting in the provision of accommodation, supplies or services used by the employee in performing the duties of his employment if the following conditions are met.
(2) Where the benefit is provided on premises occupied by the employer or other person providing it, the only condition is that any use of it for private purposes by the employee or members of his family or household is not significant.
(3) Where the benefit is provided otherwise than on premises occupied by the employer or other person providing it, the conditions are—
(a) that the sole purpose of providing the benefit is to enable the employee to perform the duties of his employment,
(b) that any use of it for private purposes is not significant, and
(c) that it is not an excluded benefit.
(4) The Treasury may make provision by regulations as to what is an excluded benefit for the purposes of subsection (3)(c) above.
The regulations may provide that a benefit is an excluded benefit only if such conditions as may be prescribed are met as to the terms on which, and persons to whom, it is provided.
(5) Subject to any such regulations, the provision of any of the following is an excluded benefit (whatever the terms and whoever it is provided to)—
(a) a motor vehicle, boat or aircraft;
(b) a benefit that involves—
(i) the extension, conversion or alteration of any living accommodation, or
(ii) the construction, extension, conversion or alteration of a building or other structure on land adjacent to and enjoyed with such accommodation.
(6) For the purposes of this section—
(a) use “for private purposes” means any use that is not use in performing the duties of the employee’s employment; and
(b) use that is at the same time use in performing the duties of an employee’s employment and use for private purposes counts as use for private purposes.”

.
(2) In section 154(2) and (3), after “155" insert “ , 155ZA ”.

Power to provide by regulations for exemption of minor benefits

3
(1) After section 155ZA (inserted by paragraph 2(1) above), insert—

“155ZB Power to provide for exemption of minor benefits.
(1) The Treasury may make provision by regulations for exempting from section 154 such minor benefits as may be specified in the regulations.
(2) Any exemption conferred by regulations under this section is conditional on the benefit being made available to the employer’s employees generally on similar terms.”

.
(2) In section 154(2), after “155ZA," (inserted by paragraph 2(2) above) insert “ 155ZB, ”.

Beneficial loans: exception of loan where whole of interest qualifies for relief

4
(1) After section 161 (exceptions from the charge to tax on beneficial loan arrangements), insert—

“161A Treatment of qualifying loans.
(1) In this Chapter a “qualifying loan" means a loan made to a person where, assuming interest is paid on the loan (whether or not it is in fact paid), the whole or part of the interest paid on it for the year—
(a) is eligible for relief under section 353 or would be so eligible but for subsection (2) of that section, or
(b) is deductible in computing the amount of the profits to be charged—
(i) under Case I or II of Schedule D in respect of a trade, profession or vocation carried on by him, or
(ii) under Schedule A in respect of a Schedule A business carried on by him.
(2) Section 160(1) does not apply to a loan in any year in which, on the assumption mentioned in subsection (1) above, the whole of the interest paid on it is eligible for relief or deductible as mentioned in that subsection.”

.
(2) In section 160—
(a) subsection (1C) shall cease to have effect, and
(b) in subsection (5), after “161" insert “ , 161A ”.

Beneficial loans: loans on ordinary commercial terms

5
(1) After section 161A (inserted by paragraph 4(1) above) insert—

“161B Beneficial loans: loans on ordinary commercial terms.
(1) Section 160(1) does not apply to a loan on ordinary commercial terms.
(2) Schedule 7A to this Act has effect as to what is meant by a loan on ordinary commercial terms.”

.
(2) After Schedule 7 insert—

“SCHEDULE 7A Beneficial loans: loans on ordinary commercial terms

Introduction
1 For the purposes of section 161B(1) a loan “on ordinary commercial terms” means a loan—
(a) made by a person (“the lender”) in the ordinary course of a business carried on by him which includes—
(i) the lending of money, or
(ii) the supplying of goods or services on credit, and
(b) in relation to which the requirements of paragraph 2, 3 or 4 below are met.

Requirements relating to original loan
2 (1) This paragraph applies to any loan and the relevant time for the purposes of this paragraph is the time the loan was made.
(2) The requirements of this paragraph are—
(a) that at the relevant time comparable loans were available to all those who might be expected to avail themselves of the services provided by the lender in the course of his business;
(b) that a substantial proportion of the relevant loans were made to members of the public;
(c) that the loan in question and comparable loans generally made by the lender at or about the relevant time to members of the public are held on the same terms; and
(d) that if those terms differ from those applicable immediately after the relevant time they were imposed in the ordinary course of the lender’s business.
(3) For the purposes of this paragraph a loan is comparable to another loan if it is made for the same or similar purposes and on the same terms and conditions.
(4) The relevant loans for the purposes of sub-paragraph (2)(b) are—
(a) the loan in question, and
(b) comparable loans made by the lender at or about the relevant time.
(5) In determining for the purposes of this paragraph whether any loans made by any person before 1st June 1994 are made on the same terms or conditions, or held on the same terms, there shall be left out of account any amounts, by way of fees, commission or other incidental expenses, incurred for the purpose of obtaining any of those loans by the persons to whom they are made.

Requirements relating to loan varied before 6th April 2000
3 (1) This paragraph applies to a loan that has been varied before 6th April 2000 and the relevant time for the purposes of this paragraph is the time of the variation.
(2) The requirements of this paragraph are—
(a) that a substantial proportion of the relevant loans were made to members of the public;
(b) that the loan in question and relevant loans generally made by the lender at or about the relevant time to members of the public are held on the same terms; and
(c) that if those terms differ from those applicable immediately after the relevant time they were imposed in the ordinary course of the lender’s business.
(3) The relevant loans for the purposes of sub-paragraph (2)(a) are—
(a) the loan in question;
(b) any existing loans which were varied at or about the time of the variation of the loan in question so as to be held on the same terms as that loan after it was varied;
(c) any new loans made by the lender, at or about that time, which are held on those terms.

Requirements relating to loan varied on or after 6th April 2000
4 (1) The requirements of this paragraph apply to a loan that has been varied on or after 6th April 2000 and the relevant time for the purposes of this paragraph is the time of the variation.
(2) The first requirement is that at the relevant time members of the public that had loans from the lender for similar purposes had a right to vary their loans on the same terms and conditions as applied in relation to the variation of the loan in question.
(3) The second requirement is that any existing loans so varied and the loan in question as varied are held on the same terms.
(4) The third requirement is that if those terms differ from the terms applicable immediately after the relevant time, they were imposed in the ordinary course of the lender’s business.
(5) The fourth requirement is that a substantial proportion of the relevant loans were made to members of the public.
(6) The relevant loans for the purposes of sub-paragraph (5) are—
(a) the loan in question;
(b) any existing loans which were varied at or about the time of the variation of the loan in question so as to be held on the same terms as that loan after it was varied;
(c) any new loans made by the lender, at or about that time, which are held on those terms.

Disregard of certain penalties, fees, etc.
5 Amounts incurred by the person to whom a loan is made—
(a) on penalties or interest or similar amounts incurred as a result of varying the loan, and
(b) on fees, commission or other incidental expenses, incurred for the purpose of obtaining the loan,
shall be left out of account in determining for the purposes of paragraph 3 or 4 whether rights to vary loans are exercisable on the same terms and conditions or loans are held on the same terms.

Meaning of 'member of the public’
6 For the purposes of this Schedule a “member of the public” means a member of the public at large with whom the lender deals at arm’s length.”

.
(3) In section 160(5)—
(a) after “161A" (inserted by paragraph 4(2)) insert “ , 161B ”, and
(b) for “Schedule 7" substitute “ Schedules 7 and 7A ”.
(4) In section 161, subsections (1A) and (1B) shall cease to have effect.

Beneficial loans: apportionment of benefit in case of joint loan etc.

6
In Schedule 7 to the Taxes Act 1988 (taxation of benefit from loans obtained by reason of employment), after paragraph 5 insert—

“5A Apportionment of cash equivalent in case of joint loan etc.
(1) Where in any year there are two or more employees chargeable to tax in respect of the same loan—
(a) the cash equivalent of the benefit of the loan (determined in accordance with this Schedule) shall be apportioned between them in a fair and reasonable manner, and
(b) the portion allocated to each employee shall be treated as the cash equivalent of the benefit of the loan so far as he is concerned.
(2) For the purposes of determining the cash equivalent in such a case, the references in paragraph 5 above to the employee shall be construed as references to all the chargeable employees.”

.
Sch. 10 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)
SCHEDULE 11

1
(1) Schedule 6 to the Taxes Act 1988 (taxation of directors and others in respect of cars) is amended as follows.
(2) For paragraphs 1 to 5 (which make provision for determining the cash equivalent of the benefit) substitute—

“1 Cash equivalent
(1) The cash equivalent of the benefit is the appropriate percentage for the year of the price of the car as regards the year.
(2) This is subject to paragraphs 6 and 7 below (reductions for periods when car unavailable and payments for use of car).

2 The appropriate percentage
The appropriate percentage for the year is determined in accordance with paragraphs 3 to 5G below.

3 Car with CO2 emissions figure
(1) This paragraph applies where—
(a) the car—
(i) is first registered on or after 1st January 1998 but before 1st October 1999, and
(ii) when so registered conformed to a vehicle type with an EC type-approval certificate, or had a UK approval certificate, that specifies a CO2 emissions figure in terms of grams per kilometre driven, or
(b) the car—
(i) is first registered on or after 1st October 1999, and
(ii) is so registered on the basis of an EC certificate of conformity or UK approval certificate that specifies a CO2 emissions figures in terms of grams per kilometre driven.
(2) In this paragraph references to “the applicable CO2 emissions figure” are—
(a) if the car is within sub-paragraph (1)(a) above, to the figure mentioned in paragraph (ii) of that sub-paragraph, and
(b) if the car is within sub-paragraph (1)(b) above—
(i) where the EC certificate of conformity or UK approval certificate specifies only one CO2 emissions figure, that figure, and
(ii) where it specifies more than one, the figure specified as the CO2 emissions (combined) figure.
This is subject to paragraph 5 (bi-fuel cars) and paragraph 5A (disabled drivers).
(3) Where the applicable CO2 emissions figure does not exceed the lower threshold for the year the appropriate percentage for the year is 15% (“the basic percentage”).
(4) Where the applicable CO2 emissions figure exceeds the lower threshold for the year, the appropriate percentage for the year is whichever is the smaller of—
(a) the basic percentage increased by 1% for each 5 grams per kilometre by which the applicable CO2 emissions figure exceeds the lower threshold for the year, and
(b) 35%.
(5) This paragraph is subject to paragraph 5D (diesel car supplement) and any regulations under paragraph 5E (power to provide for discounts).

4 The lower threshold
(1) For the purposes of paragraph 3 above the lower threshold is ascertained from the following Table—

Table
Year of assessment	Lower threshold (in g/km)
2002-03	165
2003-04	155
2004-05 and subsequent years of assessment	145
(2) The Treasury may by order provide for a lower threshold different from that provided for in the Table in sub-paragraph (1) above to apply for years of assessment beginning on or after 6th April 2005 or such later date as may be specified in the order.
(3) For the purposes of paragraph 3 above the applicable CO2 emissions figure (if it is not a multiple of five) is rounded down to the nearest multiple of five.

5 Bi-fuel cars
Where the car—
(a) is first registered on or after 1st January 2000, and
(b) is so registered on the basis of an EC certificate of conformity, or UK approval certificate, that specifies separate CO2 emissions figures in terms of grams per kilometre driven for different fuels,
then, for the purposes of paragraph 3 above, “the applicable CO2 emissions figure” is the lowest figure specified or, if there is more than one figure specified in relation to each fuel, the lowest CO2 emissions (combined) figure specified.

5A Automatic cars made available to disabled drivers
(1) Sub-paragraph (2) below applies where—
(a) paragraph 3 above (car with CO2 emissions figure) applies to the car,
(b) the car has automatic transmission,
(c) at any time in the year when the car is available to the employee, he holds a disabled person’s badge, and
(d) by reason of his disability he must, if he wants to drive a car, drive a car that has automatic transmission.
For this purpose the car is not at any time available to the employee by reason only of its being made available to a member of his family or household.
(2) If the applicable CO2 figure for the car (“the relevant car”) is more than it would have been if the car had been an equivalent manual car, paragraph 3 above shall have effect as if the applicable CO2 emissions figure in relation to the relevant car were the same as that in relation to an equivalent manual car.
(3) For this purpose “an equivalent manual car” means a car that—
(a) is first registered at or about the same time as the relevant car, and
(b) does not have automatic transmission, but otherwise is the closest variant available of the make and model of the relevant car.
(4) For the purposes of this paragraph a car has automatic transmission if—
(a) the driver of the car is not provided with any means whereby he may vary the gear ratio between the engine and the road wheels independently of the accelerator and the brakes, or
(b) he is provided with such means, but they do not include a clutch pedal or lever that he may operate manually.
(5) In this paragraph—
“the applicable CO2 emissions figure” has the same meaning as in paragraph 3 above; and
“disabled person’s badge” has the meaning given in section 168AA(3).

5B “EC certificate of conformity", “EC type-approval certificate" and “UK approval certificate"
In this Schedule—
“EC certificate of conformity” means a certificate of conformity issued by a manufacturer under any provision of the law of a Member State implementing Article 6 of Council Directive 70/156/EEC, as amended;
“EC type-approval certificate” means a type-approval certificate issued under any provision of the law of a Member State implementing Council Directive 70/156/EEC, as amended; and
“UK approval certificate” means a certificate issued under—
(a) section 58(1) or (4) of the Road Traffic Act 1988, or
1988 c. 52.
(b) Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981.
S.I. 1981/154 (N.I. 1).

5C Car with no CO2 emissions figure
(1) This paragraph applies where—
(a) the car is first registered on or after 1st January 1998, and
(b) paragraph 3 above does not apply.
(2) If the car has an internal combustion engine with one or more reciprocating pistons, the appropriate percentage for the year is ascertained from the following Table—

Table
Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	15%
More than 1,400 but not more than 2,000	25%
More than 2,000	35%
For this purpose a car’s cylinder capacity is the capacity of its engine calculated as for the purposes of the Vehicle Excise and Registration Act 1994.
(3) If sub-paragraph (2) above does not apply the appropriate percentage for the year is—
(a) 15%, if the car is an electrically propelled vehicle, and
(b) 35%, in any other case.
(4) This paragraph is subject to paragraph 5D (diesel car supplement) and any regulations under paragraph 5E (power to provide for discounts) below.

5D Diesel car supplement
(1) This paragraph applies where the car—
(a) is propelled solely by diesel, and
(b) is first registered on or after 1st January 1998.
(2) The appropriate percentage for the year is whichever is the smaller of—
(a) the percentage which is 3% greater than the appropriate percentage for the year ascertained in accordance with paragraphs 2 to 5C above, and
(b) 35%.
(3) In sub-paragraph (1) “diesel” means any diesel fuel within the definition in Article 2 of Directive 98/70/EC of the European Parliament and of the Council.
(4) This paragraph is subject to any regulations under paragraph 5E below (power to provide for discounts).

5E Discounts
The Treasury may by regulations provide for the value of the appropriate percentage as determined in accordance with paragraphs 2 to 5D above to be reduced by such amount as may be prescribed in the regulations, in such circumstances and subject to such conditions as may be so prescribed.

5F Car registered before 1st January 1998
(1) This paragraph applies where the car was first registered before 1st January 1998.
(2) Where the car has an internal combustion engine with one or more reciprocating pistons, the appropriate percentage for the year is ascertained from the following Table—
Table
Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	15%
More than 1,400 but not more than 2,000	22%
More than 2,000	32%
For this purpose a car’s cylinder capacity is the capacity of its engine calculated as for the purposes of the Vehicle Excise and Registration Act 1994.
(3) Where sub-paragraph (2) above does not apply, the appropriate percentage for the year is—
(a) 15%, if the car is an electrically propelled vehicle, and
(b) 32%, in any other case.

5G Electrically propelled vehicle
For the purposes of this Schedule, a vehicle is not an electrically propelled vehicle unless—
(a) it is propelled solely by electrical power, and
(b) that power is derived from—
(i) a source external to the vehicle, or
(ii) an electrical storage battery which is not connected to any source of power when the vehicle is in motion.”

(3) In paragraph 6 (reduction for periods when car is unavailable) for the words from “(“the full"" to the end substitute—

“multiplied by the fraction—
AB
where—
A is the number of days in the year on which the car is available; and
B is the number of days in the year.”

.
(4) At the end of paragraph 10 (general interpretation) add—

“This is subject to paragraph 5A(1) above.”

2
In section 168AB of the Taxes Act 1988 (equipment etc. to enable car to run on road fuel gas), after subsection (3) insert—

“(4) This section does not apply in relation to cars to which paragraph 5 of Schedule 6 to this Act applies (bi-fuel cars taxed by reference to CO2 emissions figure).”

.
Sch.11 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

SCHEDULE 12 Provision of services through an intermediary
Section 60.

Part I Application of this Schedule

Engagements to which this Schedule applies
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Worker treated as receiving Schedule E income
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Conditions of liability where intermediary is a company
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Conditions of liability where intermediary is a partnership
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Conditions of liability where intermediary is an individual
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Exception of certain payments subject to deduction of tax
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Part II The deemed Schedule E payment

Calculation of deemed Schedule E payment
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

7A Reimbursed expenses
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

7B Treatment of mileage allowances
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Treatment of payments made under construction industry scheme
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Apportionments
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Application of Schedule E rules
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Application of Income Tax Acts in relation to deemed Schedule E payment
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Part III Supplementary provisions

Earlier date of deemed Schedule E payment in certain cases
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Relief in case of distributions by intermediary
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Provisions applicable to multiple intermediaries
14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Multiple intermediaries: avoidance of double-counting
15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Multiple intermediaries: joint and several liability for PAYE deductions
16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Calculation of profits of intermediary: deduction for deemed Schedule E payment
17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 para. 17 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 467, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

Calculation of profits of intermediary: special rules for partnerships
18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 para. 18 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 467, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

Meaning of “associate"
19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Meaning of “the Inland Revenue"
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Interpretation
21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Transitional provisions: general
22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Transitional provisions: deemed discontinuance of business
23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

Saving for provisions relating to agency workers
24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 12 paras. 1-16, 19-24 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

SCHEDULE 13 Occupational and personal pension schemes
Section 61.

Part I Amendments of the Taxes Act 1988

Introductory
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exception of certain life policies from chargeable events legislation
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No charge to tax under section 591C on conversion under Schedule 23ZA
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definition of “retirement benefits scheme"
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Chapter 4IV of Part XIV
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Approval of personal pension schemes
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conversion of certain approved retirement benefits schemes
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Eligibility to make contributions
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Insurance against risks relating to non-payment of contributions
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income withdrawals: the relevant date
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income withdrawals: purchase of two or more annuities
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income withdrawals after death of member
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other restrictions on approval
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Multiple pension dates Et ceteralaetc
14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax relief on member’s contributions
15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum amount of deductions
16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-back of contributions
17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Election for contributions to be treated as paid in previous year
18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Abolition of carry-forward of relief
19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings from pensionable employment
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “net relevant earnings"
21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Presumption of same level of relevant earnings Et ceteralaetc for 5 years
22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Higher level contributions after cessation of actual relevant earnings: modification of section 646B
23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appeals
24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Old transitional provisions
25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefits under approved pension arrangements not to be income of settlor
26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conversion of certain approved retirement benefits schemes
27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II Transitional provisions

Schemes approved before 6th April 2001 deemed to contain certain provisions
28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deemed requisite evidence for the presumptions
29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Applications for approval
30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 13 repealed (22.7.2004) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3
SCHEDULE 14

Part I Introductory

Qualifying options

1
(1) In this Schedule a “qualifying option” means an option—
(a) in relation to which the requirements of this Schedule are met at the time the option is granted, and
(b) of which notice is given to the Inland Revenue in accordance with paragraph 2.
(2) The requirements of this Schedule are—
(a) the general requirements in Part II of this Schedule,
(b) that the company whose shares are the subject of the option is a qualifying company (see Part III of this Schedule),
(c) that the individual to whom the option is granted is an eligible employee in relation to that company (see Part IV of this Schedule),
(d) that the option is granted to the employee by reason of his employment—
(i) with that company, or
(ii) if that company is a parent company, with that company or another group company, and
(e) the requirements of Part V of this Schedule as to the terms of the option, the circumstances in which it is granted and other matters.
(3) In this Schedule, in relation to an option—
(a) references to “the relevant company" are to the company whose shares are the subject of the option, and
(b) references to “the employer company" are to the company by reference to which the requirement in sub-paragraph (2)(d) is met.

Notice of option to be given to Inland Revenue

2
(1) For an option to be a qualifying option notice of the option must be given to the Inland Revenue within 30 days[92 days]after the grant of the option.
Words in Sch. 14 para. 2 substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(1) of the amending Act) by 2001 c. 9, s. 63, Sch. 14 paras. 1, 2, 13(1).
(2) The notice must—
(a) be given by the employer company, and
(b) be in a form required or authorised by the Inland Revenue.
(3) The notice must contain, or be supported by, such information as the Inland Revenue may require for the purpose of determining whether the requirements of this Schedule are met.
(4) The notice must also contain—
(a) a declaration by a director, or the secretary, of the employer company—
(i) that in his opinion the requirements of this Schedule are met in relation to the option, and
(ii) that the information provided is to the best of his knowledge correct and complete, and
(b) a declaration by the individual to whom the option was granted that he meets the requirement of paragraph 29 (commitment of working time) in relation to the option.

Correction of notice by Revenue

3
(1) The Inland Revenue may amend a notice given under paragraph 2 so as to correct obvious errors or omissions in the notice.
(2) A correction under this paragraph is made by notice to the employer company.
(3) No such correction may be made more than nine months after the day on which the notice under paragraph 2 was given to the Inland Revenue.
(4) A correction under this paragraph is of no effect if the employer company within three months from the date of issue of the notice of correction gives notice rejecting the correction.

Notice of enquiry

4
(1) The Inland Revenue may enquire into an option of which notice is given under paragraph 2 if they give notice to the employer company of their intention to do so in accordance with this paragraph.
(2) Where notice is given under paragraph 2, the Inland Revenue may enquire into whether paragraph 29 (commitment of working time) is met by the individual to whom the option was granted if they give him notice of their intention to do so in accordance with this paragraph.
(3) The Inland Revenue shall give a copy of any notice under sub-paragraph (2) to the employer company.
(4) Notice of enquiry may be given at any time within the period of 12 months beginning with the end of the period of 30 days[92 days]mentioned in paragraph 2(1) (the period within which notice under that paragraph must be given).
Words in Sch. 14 para. 4(4) substituted (11.5.2001 with effect as mentioned in para. 13(1) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 para. 3
(5) Notice of enquiry may be given at any time if the Inland Revenue discover that any of the information provided in or in connection with the notice under paragraph 2 was false or misleading in a material particular.
(6) An option that has been the subject of one notice of enquiry under sub-paragraph (1) or (2) may not be the subject of another notice under the same sub-paragraph, unless it is given by virtue of sub-paragraph (5).

Completion of enquiry

5
(1) An enquiry under paragraph 4(1) is completed when the Inland Revenue by notice inform the employer company that they have completed their enquiry and state their decision whether the requirements of this Schedule are met in relation to the option.
(2) If the Inland Revenue conclude that the requirements of this Schedule are not met, they must also give notice of that decision to the individual to whom the option was granted.
(3) An enquiry under paragraph 4(2) is completed when the Inland Revenue by notice inform the individual concerned and the employer company that they have completed their enquiry and state their decision whether the requirement of paragraph 29 (commitment of working time) is met by that individual in relation to the option.
(4) References in this Part to a “closure notice" are to a notice under sub-paragraph (1) or (3).
(5) A closure notice takes effect when it is issued.
(6) An application may be made by—
(a) the employer company, or
(b) in a case within paragraph 4(2), the individual concerned,
for a direction that the Inland Revenue give a closure notice within a specified period.
(7) An application under sub-paragraph (6) must be made to the General Commissioners or, if the applicant so elects (in accordance with section 46(1) of the Taxes Management Act 1970), to the Special Commissioners.
1970 c. 9.
(8) Any such application shall be heard and determined in the same way as an appeal.
(9) The Commissioners hearing the application shall give a direction unless they are satisfied that the Inland Revenue have reasonable grounds for not giving a closure notice within a specified period.

Effect of enquiry

6
(1) If the Inland Revenue do not give notice of enquiry, the requirements of this Schedule are taken to be met in relation to the option.
(2) If the Inland Revenue do give notice of enquiry, their decision stated in the closure notice is conclusive as to whether the requirements of this Schedule are met in relation to the option, subject—
(a) if their decision is that the requirements are not met, to the outcome of any appeal against that decision;
(b) if their decision is that the requirements are met, to the outcome of any further enquiry under paragraph 4(5) (enquiry arising from discovery of false or misleading information).
(3) This paragraph does not affect the provisions of paragraphs 47 to 53 (which relate to disqualifying events).

Appeals

7
(1) The employer company may appeal against a decision of the Inland Revenue—
(a) that notice of the grant of the option was not given in accordance with paragraph 2, or
(b) that the requirements of this Schedule are not met in relation to the option.
(2) An individual may appeal against a decision of the Inland Revenue that he does not meet the requirement of paragraph 29 (commitment of working time).
(3) Notice of the appeal must be given to the Inland Revenue within 30 days after the closure notice is given to the employer company or individual.
(4) The appeal lies to the General Commissioners or, if the employer company or individual so elects (in accordance with section 46(1) of the Taxes Management Act 1970), to the Special Commissioners.
1970 c. 9.

Part II General requirements

Introduction

8
An option is not a qualifying option unless the requirements of this Part of this Schedule are met as to—
(a) the purpose for which the option is granted (see paragraph 9),
(b) the maximum entitlement of an employee (see paragraph 10), and
(c) the maximum value of the relevant company’s shares in respect of which unexercised options can exist (see paragraph 11).
Words in Sch. 14 para. 8(c) substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(1) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 4, 13

Purpose of granting the option

9
An option is a qualifying option only if it is granted for commercial reasons in order to recruit or retain[an]employee in a company, 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.
Word in Sch. 14 para. 9 substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(1) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 5, 13

Maximum entitlement of employee

10
(1) An employee may not hold unexercised qualifying options which—
(a) are in respect of shares with a total value of more than £100,000, and
(b) were granted by reason of his employment—
(i) with one company, or
(ii) with two or more companies which are members of the same group.
(2) An option is not a qualifying option if the limit in sub-paragraph (1) is already exceeded at the time it is granted.
(3) If the grant of an option causes that limit to be exceeded, the option is not a qualifying option so far as it relates to the excess.
(4) Where by reason of his employment with one company, an employee has been granted qualifying options in respect of shares with a total value of £100,000 (whether or not they have been exercised or released), any further option granted by reason of his employment with—
(a) that company, or
(b) if it is a member of a group, any company that is a member of that group,
within three years of the date of the grant of the last qualifying option is not a qualifying option.
(5) Where, by reason of his employment with two or more companies which are members of the same group, an employee has been granted qualifying options in respect of shares with a total value of £100,000 (whether or not they have been exercised or released), any further option granted, by reason of his employment with any member of that group, within three years of the date of the grant of the last qualifying option is not a qualifying option.
(6) Where, at the time an option is granted to an employee, he holds unexercised CSOP options granted by reason of his employment with—
(a) the employer company, or
(b) if that company is a member of a group, any member of that group,
those options shall be treated for the purposes of this paragraph as if they were unexercised qualifying options.
For this purpose a “CSOP option" is an option to acquire shares under a scheme approved under Schedule 9 to the Taxes Act 1988 by reference to the requirements of Part IV of that Schedule (non-savings-related share option schemes).
(7) For the purposes of this paragraph—
(a) the value of shares means the market value at the time the option is granted of shares of the same class as those that may be acquired by exercise of the option; and
(b) an option is treated as granted in respect of the maximum number of shares that may be acquired under it.
(8) For the purposes of this paragraph the market value of shares subject to restrictions or risk of forfeiture shall be determined as if there were no such restriction or risk.
For this purpose shares are “subject to risk of forfeiture” if the interest that may be acquired is only conditional within the meaning of section 140C of the Taxes Act 1988.

Number of employees who may hold qualifying options

11 Maximum value of options in respect of relevant company’s shares
(1) The total value of shares in the relevant company in respect of which unexercised qualifying options exist must not exceed £3 million.
(2) An option is not a qualifying option if the limit in sub-paragraph (1) is already exceeded at the time it is granted.
(3) If the grant of an option causes that limit to be exceeded the option is not a qualifying option so far as it relates to the excess.
(4) Where the grant of two or more options at the same time causes that limit to be exceeded, then, for the purpose of determining which part of each option relates to that excess, the amount of the excess shall be divided pro rata among the options according to the value of the shares in respect of which each option was granted.
(5) Sub-paragraphs (7) and (8) of paragraph 10 (determination of value of shares) apply for the purposes of this paragraph as they apply for the purposes of that paragraph.
Sch. 14 para. 11 substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(1) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 6, 13(1)

Part III Qualifying companies

Introduction

12
A qualifying company is a company in relation to which the requirements of this Part of this Schedule are met as to—
(a) independence (see paragraph 13),
(b) having only qualifying subsidiaries (see paragraph 14),
(c) gross assets (see paragraph 16), and
(d) trading activities (see paragraph 17).

The independence requirement

13
(1) The independence requirement is that the company is not—
(a) a 51% subsidiary of another company, or
(b) under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company,
and that no arrangements are in existence by virtue of which the company could become such a subsidiary or fall under such control.
(2) For the purposes of this requirement arrangements with a view to a qualifying exchange of shares (within the meaning of paragraph 60) shall be disregarded.
(3) In this paragraph “control” has the meaning given by section 840 of the Taxes Act 1988.

The qualifying subsidiaries requirement

14
(1) A company that has one or more subsidiaries is not a qualifying company unless every subsidiary of the company is a qualifying subsidiary.
(2) For this purpose—
(a) “subsidiary” means any company which the company controls, either on its own or together with any person connected with it, and
(b) the question whether a person controls a company shall be determined in accordance with section 416(2) to (6) of the Taxes Act 1988.

Meaning of “qualifying subsidiary"

15
(1) A company ( “the subsidiary”) is a qualifying subsidiary of another company ( “the company”) if the following conditions are met.
(2) The conditions are—
(a) that the company or another of its subsidiaries possesses not less than 75% of the issued share capital of, and not less than 75% of the voting power in, the subsidiary;
(b) that the company or another of its subsidiaries would—
(i) in the event of a winding up of the subsidiary, or
(ii) in any other circumstances,
be beneficially entitled to receive not less than 75% of the assets of the subsidiary which would then be available for distribution to the shareholders of the subsidiary;
(c) that the company or another of its subsidiaries is beneficially entitled to not less than 75% of any profits of the subsidiary which are available for distribution to the shareholders of the subsidiary;
(d) that no person other than the company or another of its subsidiaries has control of the subsidiary within the meaning of section 840 of the Taxes Act 1988; and
(e) that no arrangements are in existence by virtue of which the conditions in paragraphs (a) to (d) would cease to be met.
(3) The subsidiary shall not be regarded, at a time when it or another company is being wound up, as having ceased on that account to be a company in relation to which the conditions in sub-paragraph (2) are met if—
(a) the conditions in that sub-paragraph would be met apart from the winding up, and
(b) the winding up is for commercial reasons and is not part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax.
(4) The subsidiary shall not be regarded, at any time when arrangements are in existence for the disposal by the company or (as the case may be) by another subsidiary of the company of all its interest in the subsidiary in question, as having ceased on that account to be a qualifying subsidiary if the disposal is to be for commercial reasons and not part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax.

The gross assets requirement

16
(1) The gross assets requirement in the case of a single company is that the value of the company’s gross assets does not exceed £30 million .
Words in Sch. 14 para. 16(1)(2) substituted (1.1.2002) by S.I. 2001/3799, arts. 2, 3
(2) The gross assets requirement in the case of a parent company is that the consolidated value of the group assets does not exceed £30 million .
(3) The consolidated value of the group assets means the aggregate value of the gross assets of the group, disregarding any that consist in rights against, or shares in or securities of, another company in the group.

The trading activities requirement

17
(1) The trading activities requirement in the case of a single company is that the company—
(a) disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and
(b) is carrying on a qualifying trade or preparing to do so.
(2) The trading activities requirement in the case of a parent company is that—
(a) the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities, and
(b) at least one group company—
(i) disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and
(ii) is carrying on a qualifying trade or preparing to do so.
(3) The business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
(4) For the purposes of determining whether a company falls within sub-paragraph (1)(a) or (2)(b)(i), the purposes for which it exists shall be disregarded to the extent that they consist in the carrying on of the following activities—
(a) in the case of a single company, the holding and managing of property used by the company for one or more qualifying trades carried on by it, and
(b) in the case of a group company, any activities within sub-paragraph (5).
(5) For the purposes of determining the business of a group, activities of a group company shall be disregarded to the extent that they consist in—
(a) the holding of shares in or securities of, or the making of loans to, another group company; or
(b) the holding and managing of property used by a group company for the purposes of one or more qualifying trades carried on by a group company; or
(c) incidental activities of a company which meets the trading activities requirement for a single company.
(6) In sub-paragraph (2)(a) “non-qualifying activities” means—
(a) excluded activities other than—
(i) the letting of ships to which paragraph 21 applies (ships other than oil rigs or pleasure craft) in circumstances where the requirements of sub-paragraph (2) of that paragraph are met; or
(ii) the receiving of royalties or licence fees within paragraph 22 in circumstances where the requirements mentioned in sub-paragraph (2) of that paragraph are met; or
(b) activities carried on otherwise than in the course of a trade.
(7) In this paragraph—
(a) “incidental purposes” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the company’s activities; and
(b) “incidental activities” means activities carried on in pursuance of incidental purposes.

Meaning of “qualifying trade"

18
(1) A trade is a qualifying trade if—
(a) it is carried on wholly or mainly in the United Kingdom,
(b) it is conducted on a commercial basis and with a view to the realisation of profits, and
(c) it does not consist wholly or as to a substantial part in the carrying on of excluded activities.
(2) The carrying on of activities of research and development from which it is intended that a connected qualifying trade will be derived or benefit is treated as the carrying on of a qualifying trade.
But preparing to carry on such activities does not count as preparing to carry on a qualifying trade.
(3) For the purposes of sub-paragraph (2) a “connected qualifying trade” means a qualifying trade carried on—
(a) by the company carrying on the activities of research and development, or
(b) if that company is a member of a group, by any other group company.

Excluded activities

19
(1) The following are excluded activities—
(a) dealing in land, in commodities or futures or in shares, securities or other financial instruments;
(b) dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution;
(c) banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities;
(d) leasing (including letting ships on charter or other assets on hire) or receiving royalties or licence fees;
(e) providing legal or accountancy services;
(f) property development;
(g) farming or market gardening;
(h) holding, managing or occupying woodlands, any other forestry activities or timber production;
(i) operating or managing hotels or comparable establishments, or managing property used as a hotel or comparable establishment; and
(j) operating or managing nursing homes or residential care homes, or managing property used as a nursing home or residential care home.
(2) Sub-paragraph (1) is supplemented by the following provisions—
paragraph 20 (wholesale and retail distribution);
paragraph 21 (leasing of ships);
paragraph 22 (receipt of royalties and licence fees);
paragraph 23 (property development);
paragraph 24 (hotels and comparable establishments);
paragraph 25 (nursing homes and residential care homes); and
paragraph 26 (provision of facilities for another business).

Excluded activities: wholesale and retail distribution

20
(1) This paragraph supplements paragraph 19(1)(b).
(2) A trade of wholesale distribution is one in which the goods are offered for sale and sold to persons for resale by them, or for processing and resale by them, to members of the general public for their use or consumption.
(3) A trade of retail distribution is one in which the goods are offered for sale and sold to members of the general public for their use or consumption.
(4) A trade is not an ordinary trade of wholesale or retail distribution if—
(a) it consists, to a substantial extent, in dealing in goods of a kind which are collected or held as an investment, or in that activity and any other excluded activity taken together, and
(b) a substantial proportion of those goods are held by the company for a period which is significantly longer than the period for which a vendor would reasonably be expected to hold them while endeavouring to dispose of them at their market value.
(5) In determining whether a trade carried on by any person is an ordinary trade of wholesale or retail distribution, regard shall be had to the extent to which it has the following features—
(a) the goods are bought by that person in quantities larger than those in which he sells them;
(b) the goods are bought and sold by that person in different markets;
(c) that person employs staff and incurs expenses in the trade in addition to the cost of the goods and, in the case of a trade carried on by a company, to any remuneration paid to any person connected with it;
(d) there are purchases or sales from or to persons who are connected with that person;
(e) purchases are matched with forward sales or vice versa;
(f) the goods are held by that person for longer than is normal for goods of the kind in question;
(g) the trade is carried on otherwise than at a place or places commonly used for wholesale or retail trade;
(h) that person does not take physical possession of the goods;
(6) The features specified in sub-paragraph (5)(a) to (c) are indications that the trade is such an ordinary trade.
Those in sub-paragraph (5)(d) to (h) are indications of the contrary.

Excluded activities: leasing of ships

21
(1) This paragraph supplements paragraph 19(1)(d) so far as it relates to the leasing of ships other than oil rigs or pleasure craft.
(2) A trade shall not be treated as not being a qualifying trade by reason only of its consisting in letting such ships on charter if the following requirements are met—
(a) every ship let on charter by the company carrying on the trade is beneficially owned by the company;
(b) every ship beneficially owned by the company is registered in the United Kingdom;
(c) the company is solely responsible for arranging the marketing of the services of its ships; and
(d) the conditions mentioned in sub-paragraph (3) are satisfied in relation to every letting of a ship on charter by the company.
(3) The conditions are that—
(a) the letting is for a period not exceeding 12 months and no provision is made at any time (whether in the charterparty or otherwise) for extending it beyond that period otherwise than at the option of the charterer;
(b) during the period of the letting there is no provision in force (whether by virtue of being contained in the charterparty or otherwise) for the grant of a new letting to end, otherwise than at the option of the charterer, more than 12 months after that provision is made;
(c) the letting is by way of a bargain made at arm’s length between the company and a person who is not connected with it;
(d) under the terms of the charter the company is responsible as principal—
(i) for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry; and
(ii) for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period;
and
(e) no arrangements exist by virtue of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) on behalf of the company.
(4) In relation to any letting between one company and another where—
(a) one of those companies is the company carrying on the trade and the other is a qualifying subsidiary of that company, or
(b) both companies are qualifying subsidiaries of the company carrying on the trade,
sub-paragraph (3) has effect with the omission of paragraph (c).
(5) Where any of the requirements in sub-paragraph (2) are not met in relation to any lettings, the trade shall not thereby be treated as not a qualifying trade if those lettings and any other excluded activities do not, taken together, amount to a substantial part of the trade.
(6) In this paragraph—
“oil rig” means any ship which is an offshore installation for the purposes of the Mineral Workings (Offshore Installations) Act 1971; and
“pleasure craft” means any ship of a kind primarily used for sport or recreation.
1971 c. 61.

Excluded activities: receipt of royalties and licence fees

22
(1) This paragraph supplements paragraph 19(1)(d) so far as it relates to the receipt of royalties and licence fees.
(2) A trade shall not be regarded as not being a qualifying trade by reason only that it consists to a substantial extent in the receiving of royalties or licence fees if the royalties and licence fees (or all but for a part that is not a substantial part in terms of value) are attributable to the exploitation of relevant intangible assets.
(3) For this purpose an intangible asset is a “relevant intangible asset” if the whole or greater part (in terms of value) of it has been created—
(a) by the company carrying on the trade, or
(b) by a company which at all times during which it created the asset was—
(i) the parent company of the company carrying on the trade, or
(ii) a qualifying subsidiary of that parent company.
(4) In this paragraph “intangible asset” means any asset which falls to be treated as an intangible asset in accordance with generally accepted accounting practice.
. . .
Words in Sch. 14 para. 22(4) substituted (24.7.2002) by 2002 c. 23, s. 103(4)(f)
Words in Sch. 14 para. 22(4) repealed (24.7.2002) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(16)
(5) In the case of a relevant asset that is intellectual property, references in this paragraph to the creation of the asset by a company are to its creation in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others).
(6) In sub-paragraph (5) “intellectual property” means—
(a) any patent, trade mark, registered design, copyright, design right, performer’s right or plant breeder’s right; and
(b) any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a).

Excluded activities: property development

23
(1) This paragraph supplements paragraph 19(1)(f).
(2) “Property development” means the development of land—
(a) by a company which has, or at any time has had, an interest in the land, and
(b) with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed.
(3) For this purpose “interest in land” means, subject to sub-paragraph (4)—
(a) any estate, interest or right in or over land, including any right affecting the use or disposition of land, or
(b) any right to obtain such an estate, interest or right from another which is conditional on the other’s ability to grant it.
(4) References in this paragraph to an interest in land do not include—
(a) the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an agreement for a mortgage or a charge of any kind over land, or
(b) in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.

Excluded activities: hotels and comparable establishments

24
(1) This paragraph supplements paragraph 19(1)(i).
(2) The reference to a comparable establishment is to a guest house, hostel or other establishment the main purpose of maintaining which is the provision of facilities for overnight accommodation (with or without catering services).
(3) The activities of a person shall not be taken to fall within paragraph 19(1)(i) unless that person has an estate or interest in, or is in occupation of, the hotel or comparable establishment in question.

Excluded activities: nursing homes and residential care homes

25
(1) This paragraph supplements paragraph 19(1)(j).
(2) “Nursing home” means an establishment that exists wholly or mainly for the provision of nursing care—
(a) for persons suffering from sickness, injury or infirmity, or
(b) for women who are pregnant or have given birth to children.
(3) “Residential care home” means an establishment that exists wholly or mainly for the provision of residential accommodation, together with board and personal care, for persons in need of personal care by reason of—
(a) old age,
(b) mental or physical disability,
(c) past or present dependence on alcohol or drugs,
(d) any past illness, or
(e) past or present mental disorder.
(4) The activities of a person shall not be taken to fall within paragraph 19(1)(j) unless that person has an estate or interest in, or is in occupation of, the nursing home or residential care home in question.

Excluded activities: provision of facilities for another business

26
(1) Providing services or facilities for a business carried on by another person is an excluded activity if—
(a) the business consists to a substantial extent in excluded activities within paragraph 19(1), and
(b) a controlling interest in the business is held by a person (other than a company of which the company providing the services or facilities is a subsidiary) who also has a controlling interest in the business carried on by the company providing the services or facilities.
(2) Sub-paragraphs (3) to (5) define what is meant by a controlling interest in a business for the purposes of sub-paragraph (1)(b).
(3) In the case of a business carried on by a company, a person has a controlling interest if—
(a) he controls the company,
(b) the company is a close company and he or an associate of his, being a director of the company, either—
(i) is the beneficial owner of more than 30% of the ordinary share capital of the company, or
(ii) is able, directly or through the medium of other companies or by any other indirect means, to control more than 30% of that share capital,
or
(c) not less than half of the business could, in accordance with section 344(2) of the Taxes Act 1988, be regarded as belonging to him for the purposes of section 343 of that Act.
(4) In any other case, a person has a controlling interest in a business if he is entitled to not less than half of the assets used for, or of the income arising from, the business.
(5) For the purposes of sub-paragraph (3)(a) the question whether a person controls a company shall be determined in accordance with section 416(2) to (6) of the Taxes Act 1988.
(6) For the purposes of this paragraph there shall be attributed to any person any rights or powers of any other person who is an associate of his.
(7) In this paragraph—
“associate” has the meaning given in section 417(3) and (4) of the Taxes Act 1988, except that in those subsections as they apply for the purposes of this paragraph “relative” does not include a brother or sister;
“business” includes any trade, profession or vocation; and
“director” shall be construed in accordance with section 417(5) of the Taxes Act 1988.

Part IV Eligible employees

Introduction

27
An individual is an eligible employee in relation to the relevant company if the requirements of this Part of this Schedule are met as to—
(a) employment (see paragraph 28),
(b) commitment of working time (see paragraph 29), and
(c) no material interest (see paragraph 30).

The employment requirement

28
An employee is an eligible employee in relation to the relevant company only if he is an employee—
(a) of that company, or
(b) if that company is a parent company, of that company or a qualifying subsidiary of that company.

The requirement as to commitment of working time

29
(1) An employee is an eligible employee in relation to the relevant company only if his committed time amounts to—
(a) at least 25 hours a week, or
(b) if less, 75% of his working time.
(2) An employee’s “committed time” means the time that he is required as an employee in relevant employment to spend—
(a) on the business of the relevant company, or
(b) if the relevant company is a parent company, on the business of the group.
(3) It includes any time which the employee would have been required to spend as mentioned in sub-paragraph (2) but for—
(a) injury, ill-health or disability,
(b) pregnancy, childbirth, maternity or paternity leave or parental leave,
(c) reasonable holiday entitlement, or
(d) not being required to work during a period of notice of termination of employment.
(4) For the purposes of this paragraph an employee is in “relevant employment” if he is employed—
(a) by the relevant company, or
(b) where the relevant company is a parent company, by any group company.
References to an employee beginning or ceasing to be in relevant employment are to his becoming or no longer being so employed.
(5) In sub-paragraph (1)(b) “working time” means—
(a) time spent on remunerative work as an employee or self-employed person, or
(b) time which would have been so spent but for any of the reasons specified in sub-paragraph (3)(a) to (d).
(6) In sub-paragraph (5)(a) “remunerative work” means—
(a) work the income from which is chargeable to tax under Case I of Schedule E, and
(b) work undertaken with a view to profit the profits (if any) from which are (or would be) chargeable to tax under Case I or II of Schedule D,
or, in either case, which would be so chargeable if the employee were resident and ordinarily resident in the United Kingdom.

The “no material interest" requirement

30
(1) An individual is not an eligible employee in relation to the relevant company if he has a material interest in—
(a) that company, or
(b) if that company is a parent company, any group company.
(2) For the purposes of this paragraph an individual is regarded as having a material interest in a company if—
(a) the individual,
(b) the individual together with one or more associates of his, or
(c) any associate of the individual’s, with or without any other such associates,
has a material interest in the company.
(3) No account shall be taken for the purposes of this paragraph of shares that an individual may acquire under a qualifying option, but once such shares have been acquired they are taken into account.
(4) This paragraph is supplemented—
(a) as regards the meaning of “material interest”, by paragraphs 31 to 33; and
(b) as regards the meaning of “associate”, by paragraph 34 (read with paragraphs 35 and 36).

Meaning of “material interest"

31
(1) For the purposes of paragraph 30 a material interest in a company means—
(a) beneficial ownership of, or the ability to control, directly or through the medium of other companies or by any other indirect means, more than 30% of the ordinary share capital of the company; or
(b) where the company is a close company, possession of or entitlement to acquire such rights as would, in the event of the winding up of the company or in any other circumstances, give an entitlement to receive more than 30% of the assets that would then be available for distribution among the participators.
(2) In this paragraph—
“close company” includes a company that would be a close company but for—
(a) section 414(1)(a) of the Taxes Act 1988 (exclusion of companies not resident in the United Kingdom), or
(b) section 415 of that Act (exclusion of certain quoted companies);
“participator” has the meaning given by section 417(1) of that Act.
(3) This paragraph is supplemented by paragraph 32 (options etc.) and paragraph 33 (shares held by trustees of approved profit-sharing schemes).

Material interest: options etc.

32
(1) For the purposes of paragraph 31 (meaning of “material interest”) a right to acquire shares (however arising) is treated as a right to control them.
(2) In any case where—
(a) the shares attributed to an individual consist of or include shares which he or another person has a right to acquire, and
(b) the circumstances are such that if that right were to be exercised the shares acquired would be shares which were previously unissued and which the company is contractually bound to issue in the event of the exercise of the right,
then in determining at any time prior to the exercise of the right whether the number of shares attributed to the individual exceeds a particular percentage of the ordinary share capital of the company, that ordinary share capital shall be taken to be increased by the number of unissued shares referred to in paragraph (b).
(3) The references in sub-paragraph (2) to the shares attributed to an individual are to the shares which in accordance with paragraph 31(1)(a) fall to be brought into account in his case to determine whether their number exceeds a particular percentage of the company’s ordinary share capital.

Material interest: shares held by trustees of approved profit-sharing schemes etc.

33
In applying paragraph 31 (meaning of “material interest”) there shall be disregarded—
(a) the interest of the trustees of—
(i) any profit-sharing scheme approved under Schedule 9 to the Taxes Act 1988, or
(ii) any employee share ownership plan approved under Schedule 8 to this Act,
in any shares which are held by them in accordance with the scheme or plan but which have not been appropriated to, or acquired on behalf of, an individual; and
(b) any rights exercisable by those trustees by virtue of any such interest.

Meaning of “associate"

34
(1) In paragraph 30 (the “no material interest” requirement) “associate”, in relation to an individual, means—
(a) any relative or partner of that individual,
(b) the trustee or trustees of any settlement in relation to which that individual, or any relative of his (living or dead), is or was a settlor, and
(c) where that individual is interested in any shares or obligations of the company which are subject to any trust, or are part of the estate of a deceased person, the trustee or trustees of the settlement concerned or, as the case may be, the personal representatives of the deceased.
(2) In sub-paragraph (1)(a) and (b) “relative” means husband or wife, parent or remoter forebear, or child or remoter issue.
(3) In sub-paragraph (1)(b) “settlor” and “settlement” have the same meaning as in Chapter IA of Part XV of the Taxes Act 1988 (see section 660G(1) and (2)).

Meaning of “associate": trustees of employee benefit trust

35
(1) This paragraph applies for the purposes of paragraph 34(1)(c) (meaning of “associate”: trustees of settlement) where an individual is interested as a beneficiary of an employee benefit trust in shares or obligations of a company (“the company”) in relation to which it falls to be determined whether that individual has an interest.
(2) The trustees of the employee benefit trust are not regarded as associates of the individual by reason only of his being so interested if neither—
(a) the individual, nor
(b) the individual together with one or more associates of his, nor
(c) any associate of the individual’s, with or without any other such associates,
has at any time on or after 14th March 1989 been the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control, more than 30% of the ordinary share capital of the company.
(3) In this paragraph “employee benefit trust” has the same meaning as in paragraph 7 of Schedule 8 to the Taxes Act 1988.
(4) Sub-paragraphs (9) to (12) of that paragraph apply for the purposes of this paragraph in relation to an individual as they apply for the purposes of that paragraph in relation to an employee.
(5) In sub-paragraph (2)(b) and (c) “associate" does not include the trustees of an employee benefit trust by reason only that the individual has an interest in shares or obligations of the trust.

Meaning of “associate": trustees of discretionary trust

36
(1) This paragraph applies for the purposes of paragraph 34(1)(c) (meaning of “associate”: trustees of settlement) where—
(a) an individual (“the beneficiary”) is one of the objects of a discretionary trust, and
(b) the property subject to the trust has at any time consisted of or included shares or obligations of the company (“the company”) in relation to which it falls to be determined whether that individual has an interest.
(2) If—
(a) the beneficiary has ceased to be eligible to benefit under the discretionary trust by reason of—
(i) an irrevocable disclaimer or release executed by him, or
(ii) the irrevocable exercise by the trustees of a power to exclude him from the objects of the trust,
(b) immediately after the beneficiary ceased to be so eligible, no associate of his was interested in the shares or obligations of the company which were subject to the trust, and
(c) during the period of twelve months ending with the date when the beneficiary ceases to be so eligible, neither he nor any associate of his received any benefit under the trust,
the beneficiary is not regarded by reason only of the matters mentioned in sub-paragraph (1) as having been interested in the shares or obligations of the company at any time during the period of twelve months mentioned in paragraph (c) above.
(3) In sub-paragraph (2) “associate” has the meaning given by paragraph 34, but with the omission of sub-paragraph (1)(c) of that paragraph (trusts and estates).

Part V Requirements as to terms of option etc.

Introduction

37
An option is not a qualifying option unless the requirements of this Part of this Schedule are met as to—
(a) the type of shares that may be acquired (see paragraph 38);
(b) when the option is capable of being exercised (see paragraph 39);
(c) the terms being agreed in writing (see paragraph 40); and
(d) the non-assignability of rights (see paragraph 41).

Type of shares that may be acquired

38
(1) The option must confer a right to acquire shares that—
(a) form part of the ordinary share capital of the relevant company,
(b) are fully paid up, and
(c) are not redeemable.
(2) Shares are not fully paid up for the purposes of sub-paragraph (1)(b) if there is any undertaking to pay cash to the relevant company at a future date.
(3) For the purposes of sub-paragraph (1)(c) “redeemable” shares include shares that may become redeemable at a future date.

Option to be capable of exercise within 10 years

39
(1) The option must be capable of being exercised within the period of ten years beginning with the date on which it is granted.
(2) Where the exercise of the option is dependent on the fulfilment of conditions, it is taken to be capable of being exercised within the period mentioned in sub-paragraph (1) if the conditions may be fulfilled within that period.

Terms of option to be agreed in writing

40
(1) The option must take the form of a written agreement between the person granting the option and the employee which meets the following requirements.
(2) The agreement must state—
(a) the date on which the option is granted;
(b) that it is granted under the provisions of this Schedule;
(c) the number, or maximum number, of shares that may be acquired;
(d) the price (if any) payable by the employee to acquire them, or the method by which that price is to be determined; and
(e) when and how the option may be exercised.
(3) The agreement must set out any conditions, such as performance conditions, affecting the terms or extent of the employee’s entitlement.
(4) The agreement must contain details of any restrictions attaching to the shares.
(5) Where the shares that may be acquired by the employee are subject to risk of forfeiture, the agreement must contain details of the conditions.
For this purpose shares are “subject to risk of forfeiture” if the interest that may be acquired is only conditional within the meaning of Section 140C of the Taxes Act 1988.

Non-assignability of rights

41
An option is not a qualifying option unless the terms on which it is granted—
(a) prohibit the person to whom it is granted from transferring any of his rights under it, and
(b) if they permit its exercise after that person’s death, do not permit such exercise more than one year after the death.

Part VI Income tax

Introduction

42
(1) The provisions of this Part of this Schedule give relief from income tax in respect of the grant or exercise of a qualifying option.
(2) Relief in respect of the exercise of a qualifying option applies only to exercise within the period of ten years after—
(a) the grant of the option, or
(b) if it is a replacement option, the grant of the original option.
(3) In this Part the references to the “original option", where there has been one or more replacement options, are to the option that the replacement option (or, if there has been more than one, the first of them) replaced.

Exclusion of charge on grant

43
Tax is not chargeable under any provision of the Tax Acts in respect of the grant of the option.

Exercise of option to acquire shares at market value

44
(1) This paragraph applies if the option is to acquire shares at not less than their market value—
(a) at the time the option is granted, or
(b) if it is a replacement option, at the time the original option was granted.
(2) In that case no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.
(3) This paragraph has effect subject to paragraph 53 (effect of disqualifying event).

Exercise of option to acquire shares at less than market value

45
(1) This paragraph applies if the option is to acquire shares at less than their market value—
(a) at the time the option is granted, or
(b) if it is a replacement option, at the time the original option was granted.
(2) In that case for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised by the exercise of the option is taken to be the amount by which—
(a) the chargeable market value, exceeds
(b) the aggregate of—
(i) the amount or value of the consideration given for the grant of the option, and
(ii) the amount for which the shares are acquired.
Sch. 14 para. 45(2)-(4) substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(2) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 7, 13(2)
(3) For the purposes of this paragraph “the chargeable market value” means—
(a) the market value of the shares—
(i) at the time the option was granted, or
(ii) if it is a replacement value, at the time the original option was granted,
or
(b) if lower, the market value of the shares at the time the option is exercised.
(4) If the chargeable market value does not exceed the aggregate of the amounts mentioned in sub-paragraph (2)(b)(i) and (ii), no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.
(5) This paragraph has effect subject to paragraph 53 (effect of disqualifying event).

Exercise of option to acquire shares at nil cost

46
(1) This paragraph applies if the option is to acquire shares at a nil cost.
(2) In that case for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised by the exercise of the option is taken to be the amount by which—
(a) the chargeable market value (within the meaning of paragraph 45), exceeds
(b) the amount or value of the consideration given for the grant of the option.
Sch. 14 para. 46(2)(2A) substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(2) of the amending Act) for Sch. 14 para. 46(2) by 2001 c. 9, s. 62, Sch. 14 paras. 8, 13(2)
(2A) If the chargeable market value does not exceed the amount or value of the consideration given for the grant of the option, no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.
(3) This paragraph has effect subject to paragraph 53 (effect of disqualifying event).

Main disqualifying events

47
(1) The following are “disqualifying events" in relation to a qualifying option—
(a) the relevant company—
(i) becoming a 51% subsidiary of another company, or
(ii) coming under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company;
(b) the relevant company ceasing to meet the trading activities requirement;
(c) the employee ceasing to be an eligible employee in relation to the relevant company by reason of ceasing to meet—
(i) the requirement in paragraph 28 (the employment requirement), or
(ii) the requirement in paragraph 29 (the requirement as to commitment of working time);
(d) any variation of the terms of the option the effect of which is—
(i) to increase the market value of the shares that are the subject of the option, or
(ii) that the requirements of this Schedule would no longer be met in relation to the option;
(e) any alteration to the share capital of the relevant company that is within paragraph 49(1)—
(i) where the effect of the alteration is that the requirements of this Schedule would no longer be met in relation to the option, or
(ii) where the effect of the alteration is to increase the market value of the shares that are the subject of the qualifying option and paragraph 49(2) applies to the alteration;
Sch. 14 para. 47(1)(e) substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(3) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 9, 13(3)
(f) a conversion of any of the shares to which the option relates into shares of a different class, except in a case within paragraph 50; and
(g) the grant to the employee of a relevant CSOP option, if immediately after it is granted the employee holds unexercised employee options in respect of shares with a total value of more than £100,000.
(2) A disqualifying event is treated as occurring in relation to a qualifying option if—
(a) the relevant company was a qualifying company at the time the option was granted by reason only of preparations to carry on a qualifying trade, and
(b) either—
(i) the preparations cease to be carried on, or
(ii) the period of two years from the grant of the original option comes to an end,
without the relevant company or, if it is the parent company of a group, any group company beginning to carry on that qualifying trade.
(3) A disqualifying event is also treated as occurring in relation to a qualifying option if in any tax year the employee’s relevant working time amounts to less than 25 hours a week or, if less, 75% of his working time.
(4) This paragraph is supplemented by the following provisions—
paragraph 48 (company reorganisation);
paragraph 49 (alterations of share capital);
paragraph 50 (conversion of shares);
paragraph 51 (grant of CSOP option); and
paragraph 52 (actual relevant working time).

Disqualifying events: company reorganisation

48
Where a replacement option has been granted (see paragraph 61), if an event within paragraph 47(1)(a) (loss of independence) has occurred in relation to the old option at any time during the period—
(a) beginning at the same time as the period within which the replacement option had to be granted (see paragraph 62), and
(b) ending with the release of the rights under the old option,
that event shall not be regarded as a disqualifying event in relation to the old option.

Disqualifying events: alterations of share capital

49
(1) An alteration of the share capital of the relevant company is within[this sub-paragraph]if—
(a) it affects (or but for the occurrence of some other event would affect) the value of the shares which are the subject of the qualifying option, and
(b) it consists of or includes—
(i) the creation, variation or removal of a right relating to any shares in the relevant company,
(ii) the imposition of a restriction relating to any such shares, or
(iii) the variation or removal of a restriction to which any such shares are subject.
For this purpose references to restrictions relating to shares or to which shares are subject, or to rights relating to shares, include restrictions imposed or rights conferred by any contract or arrangement or in any other way.
Words in Sch. 14 para. 49(1) substituted (11.5.2001 with effect as mentioned in 13(3) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 10(1)(2), 13(3)
(2) This sub-paragraph applies to an alteration if—
(a) it is not made by the relevant company for commercial reasons, or
(b) the main purpose or one of the main purposes for making the alteration is to increase the market value of the shares which are the subject of the qualifying option.
Sch. 14 para. 49(2) substituted (11.5.2001 with effect as noted in 13(3)) for Sch. 14 para. 49(2)-(5) by 2001 c. 9, S.62, Sch. 14 paras. 10(1)(3), 13(3)

Disqualifying events: conversion of shares

50
(1) A conversion of shares is not a disqualifying event if—
(a) the conversion is a conversion of shares of one class only (“the original class”) into shares of one other class only (“the new class”);
(b) all shares of the original class are converted into shares of the new class; and
(c) one of the conditions in sub-paragraph (2) is fulfilled.
(2) The conditions are—
(a) that immediately before the conversion the majority of the relevant company’s shares of the original class are held otherwise than by or for the benefit of—
(i) directors or employees of the relevant company,
(ii) an associated company of the relevant company, or
(iii) directors or employees of such an associated company; and
(b) that immediately before the conversion the relevant company is employee-controlled by virtue of holdings of shares of the original class.
(3) For the purposes of this paragraph “director”, “employee”, “associated company” and “employee-controlled” have the same meaning as in section 140D of the Taxes Act 1988 (convertible shares).

Disqualifying events: grant of CSOP option

51
(1) This paragraph applies where it falls to be determined whether a disqualifying event within sub-paragraph (1)(g) of paragraph 47 has occurred in relation to a qualifying option (“the qualifying option”) granted to an employee.
(2) For the purposes of that sub-paragraph and this paragraph “CSOP option” has the meaning given in paragraph 10(6).
(3) A CSOP option is a “relevant" CSOP option if it is granted to the employee by reason of his employment with—
(a) the employer company, or
(b) if that company is a member of a group, any member of that group.
(4) An option is an “employee option" if it is—
(a) the qualifying option,
(b) another qualifying option granted to the employee by reason of his employment with the employer company or, if that company is a member of a group, any member of that group, or
(c) a relevant CSOP option.
(5) Paragraph 10(7) and (8) (determination of value of shares) apply for the purposes of paragraph 47(1)(g) as they apply for the purposes of paragraph 10.

Disqualifying events: actual relevant working time

52
(1) For the purposes of paragraph 47(3) an employee’s relevant working time means the time that he in fact spends as an employee in relevant employment—
(a) on the business of the relevant company, or
(b) if the relevant company is a parent company, on the business of the group.
(2) The time at which the disqualifying event is taken to have occurred is determined in accordance with the following provisions.
(3) Subject to sub-paragraphs (4) and (5), the time at which the disqualifying event occurred is determined as follows:
Method
(1) For each calendar month calculate whether over the tax year to date the employee’s relevant working time amounts to less than 25 hours a week or, if less, 75% of his working time.
(2) If it does, the disqualifying event is taken to have occurred—
(a) at the end of the previous calendar month, or
(b) if the calendar month for which the calculation is done is April, at the end of the previous tax year.
(4) In the case of an employee who begins or ceases to be in relevant employment during the tax year, the references in sub-paragraph (3) above and paragraph 47(3) to that tax year shall be construed as references to the part of the tax year in which he is in relevant employment.
(5) If the time determined under sub-paragraph (3) or (4) falls before the grant of the option, the option is treated for the purposes of this Schedule as if it had never been a qualifying option.
(6) Expressions used in paragraph 47(3) or this paragraph that are defined for the purposes of paragraph 29 (requirement as to commitment of working time) have the same meaning as in that paragraph.

Effect of disqualifying event

53
(1) This paragraph applies where—
(a) a disqualifying event occurs in relation to a qualifying option before the option is exercised, and
(b) the option is not exercised within 40 days of that event.
(2) Where paragraph 44 applies (option to acquire shares at market value), then for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised on the exercise of the option is taken to be—
(a) the post-event gain (if any), less
(b) the amount or value of the consideration given for the grant of the option.
Sch. 14 para. 53(2)-(2D) substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(2) of the amending Act) for Sch. 14 para. 53(2) by 2001 c. 9, s. 62, Sch. 14 paras. 11(1)(2), 13(2)
(2A) Where paragraph 45 applies (option to acquire shares at less than market value), then for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised on the exercise of the option is taken to be—
(a) the aggregate of—
(i) the chargeable market value (within the meaning of that paragraph), and
(ii) the post-event gain, less
(b) the aggregate of—
(i) the amount or value of the consideration given for the grant of the option, and
(ii) the amount for which the shares are acquired.
(2B) Where paragraph 46 applies (option to acquire shares at nil cost), then for the purposes of section 135 of the Taxes Act 1988 (taxation of share options) the amount of the gain realised on the exercise of the option is taken to be—
(a) the aggregate of—
(i) the chargeable market value (within the meaning of paragraph 45), and
(ii) the post-event gain, less
(b) the amount or value of the consideration given for the grant of the option.
(2C) For the purposes of this paragraph “the post-event gain” means the amount (if any) by which—
(a) the market value of the shares when the option is exercised, exceeds
(b) their market value immediately before the disqualifying event.
(2D) Where—
(a) the amount of the gain realised on the exercise of an option falls to be determined under sub-paragraph (2), (2A) or (2B) above, and
(b) the amount mentioned in paragraph (b) of the sub-paragraph concerned exceeds the amount mentioned in paragraph (a) of that sub-paragraph,
no amount is chargeable to income tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the exercise of the option.
(3) Paragraphs 44 to 46 and sub-paragraphs (2), (2A) and (2B) of this paragraph do not apply if the amount chargeable under section 135 of the Taxes Act 1988 on the exercise of the option would, in the absence of those provisions, be less than the amount so chargeable by virtue of those provisions.
Words in Sch. 14 para. 53(3) substituted (11.5.2001 with effect as mentioned in Sch. 14 para. 13(2) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 11(3), 13(2)

Exclusion of charge on acquisition at under-value

54
(1) Section 162(1) of the Taxes Act 1988 (deemed employment-related loan in case of acquisition of shares at an undervalue), as it applies in relation to an employee chargeable to tax under Case I of Schedule E, does not apply in relation to the acquisition of shares by the exercise of a qualifying option.
(2) This does not affect any charge to tax under section 162(6) of that Act (stop-loss provisions).

Saving for other income tax charges

55
(1) Nothing in this Part of this Schedule affects—
(a) any charge to tax under section 135 of the Taxes Act 1988 (taxation of share options) in respect of the release of rights conferred by a qualifying option;
(b) any charge to tax under section 78 or 80 of the Finance Act 1988 (charge on removal of restrictions etc. or on special benefits) in respect of shares acquired under a qualifying option; or
1988 c. 39.
(c) subject to sub-paragraph (2), any charge to tax under—
(i) section 140A of the Taxes Act 1988 (charge on interest in shares ceasing to be only conditional), or
(ii) section 140D of that Act (convertible shares),
in respect of shares acquired under a qualifying option.
(2) The amount of relief under this Schedule shall be treated as a deductible amount for the purposes of any charge to tax under section 140A or 140D of the Taxes Act 1988 in respect of shares acquired under a qualifying option.
The amount of relief means the difference between the amount on which tax would have been chargeable under section 135 of that Act in respect of the exercise of the option apart from this Schedule and the amount (if any) in fact so chargeable.

Part VII Capital gains tax

Qualifying shares

56
(1) In this Part of this Schedule “qualifying shares”—
(a) means shares acquired by the exercise of a qualifying option, subject to sub-paragraphs (2) and (3), and
(b) includes shares (“replacement shares”) which—
(i) are treated under section 127 of the Taxation of Chargeable Gains Act 1992 (company reorganisations etc.) as the same asset as a holding of qualifying shares, and
1992 c. 12.
(ii) meet the requirements of paragraph 38 (type of shares that may be acquired under qualifying option).
(2) If a disqualifying event occurs in relation to a qualifying option (whether the original option or a replacement option), shares acquired by the exercise of the option are qualifying shares only if the option is exercised within 40 days of that event.
(3) References in this Part to “the original option", where there has been one or more replacement options, are to the option that the replacement option (or, if there has been more than one, the first of them) replaced.

Taper relief on disposal of qualifying shares

57
For the purposes of computing taper relief on a disposal of qualifying shares, the shares are treated as if they had been acquired when the original option was granted.

Rights issues in respect of qualifying shares

58
Where—
(a) an individual holds qualifying shares, and
(b) there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a) of the Taxation of Chargeable Gains Act 1992, a reorganisation affecting that holding,
1992 c. 12.
sections 127 to 130 of that Act shall not apply in relation to that holding.

Part VIII Company reorganisations

Introduction

59
(1) The provisions of this Part of this Schedule apply in relation to company reorganisations.
(2) For the purposes of this Part a “company reorganisation” means where a company (“the acquiring company”)—
(a) obtains control of a company whose shares are subject to a qualifying option which has yet to be exercised—
(i) as a result of making a general offer to acquire the whole of the issued ordinary share capital of that company which is made on a condition such that if it is satisfied the person making the offer will have control of the company, or
(ii) as a result of making a general offer to acquire all the shares in the company which are of the same class as those to which the option relates; or
(b) obtains control of such a company in pursuance of a compromise or arrangement sanctioned by the court under section 425 of the Companies Act 1985 or Article 418 of the Companies (Northern Ireland) Order 1986; or
1985 c. 6.
S.I. 1986/1032 N.I. 6.
(c) becomes bound or entitled under sections 428 to 430 of that Act or Articles 421 to 423 of that Order to acquire shares of the same class as shares that are subject to a qualifying option that has yet to be exercised; or
(d) obtains all the shares of a company whose shares are subject to such a qualifying option as a result of a qualifying exchange of shares (see paragraph 60).
(3) In this Part of this Schedule “control” has the meaning given by section 840 of the Taxes Act 1988.

Meaning of “qualifying exchange of shares"

60
(1) For the purposes of this Part of this Schedule there is a “qualifying exchange of shares” where arrangements are made in accordance with which a company (“the new company”) acquires all the shares (“old shares”) in another company (“the old company”) and the following conditions are met.
(2) The conditions are—
(a) that the consideration for the old shares consists wholly of the issue of shares (“new shares”) in the new company;
(b) that new shares are issued in consideration of old shares only at times when there are no issued shares in the new company other than—
(i) subscriber shares, and
(ii) new shares previously issued in consideration of old shares;
(c) that the consideration for new shares of each description consists wholly of old shares of the corresponding description;
(d) that new shares of each description are issued to the holders of old shares of the corresponding description in respect of, and in proportion to, their holdings; and
(e) that by virtue of section 127 of the Taxation of Chargeable Gains Act 1992 as applied by section 135(3) of that Act, the exchange of shares is not treated as involving a disposal of the old shares or an acquisition of the new shares.
1992 c. 12.
(3) For the purposes of this paragraph old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
(4) In this paragraph references to “shares", except in the expression “subscriber shares", include securities.

Grant of replacement option

61
(1) This paragraph applies where in the case of a company reorganisation—
(a) the holder of a qualifying option, by agreement with the acquiring company, releases his rights under that option (“the old option”) in consideration of the grant to him of rights (“the new option”) which are equivalent but relate to shares in the acquiring company, and
(b) the requirements of the following paragraphs are met—
paragraph 62 (period within which replacement option must be granted), and
paragraph 63 (qualifying requirements for replacement option).
(2) Where this paragraph applies, the new option shall be treated for the purposes of this Schedule as a “replacement option”.
(3) Except as otherwise provided—
(a) references in this Schedule to a qualifying option include a replacement option, and
(b) a replacement option is treated for the purposes of this Schedule as if it had been granted on the date on which the old option was granted.
(4) In this Schedule references to “the old option” or “the new option” shall be construed in accordance with this paragraph.

Period within which replacement option must be granted

62
The new option does not qualify as a replacement option unless it is granted within—
(a) if the company reorganisation falls within paragraph 59(2)(a), the period of six months beginning with the time when the person making the offer has obtained control of the company and any condition subject to which the offer is made is satisfied;
(b) if the company reorganisation falls within paragraph 59(2)(b) or (d), the period of six months beginning with the time when the acquiring company obtains control of the company whose shares are subject to the old option;
(c) if the company reorganisation falls within paragraph 59(2)(c), the period during which the acquiring company remains bound or entitled as mentioned in that paragraph.

Qualifying requirements for replacement option

63
A new option qualifies as a replacement option only if—
(a) the option is granted to the holder of the old option by reason of his employment—
(i) with the acquiring company, or
(ii) if that company is a parent company, with that company or another group company;
(b) at the time of the release of rights under the old option, the requirements of—
(i) paragraph 9 (purpose of granting the option), and
(ii) (maximum value of options in respect of relevant company’s shares),
Words in Sch. 14 para. 63(b)(ii) substituted by (11.5.2001 with effect as mentioned in Sch. 14 para. 13(1) of the amending Act) by 2001 c. 9, s. 62, Sch. 14 paras. 12, 13(1)
are met in relation to the new option;
(c) at that time, the independence requirement and the trading activities requirement are met in relation to the acquiring company;
(d) at that time, the individual to whom the new option is granted is an eligible employee in relation to the acquiring company;
(e) at that time, the requirements of Part V are met in relation to the new option;
(f) the total market value, immediately before the release, of the shares which were subject to the old option is equal to the total market value, immediately after the grant, of the shares in respect of which the new option is granted; and
(g) the total amount payable by the employee for the acquisition of shares in pursuance of the new option is equal to the total amount that would have been payable for the acquisition of shares in pursuance of the old option.

Part IX Supplementary provisions

Power to require information

64
(1) The Inland Revenue may by notice require any person to furnish them, within such time as the Inland Revenue may direct (not being less than three months), with such information as—
(a) the Inland Revenue think necessary for the performance of their functions under this Schedule, and
(b) the person to whom the notice is addressed has or can reasonably obtain.
(2) The power conferred by this paragraph extends, in particular, to information to enable the Inland Revenue—
(a) to decide whether an option is a qualifying option, or
(b) to determine the liability to tax, including capital gains tax, of any person who has been granted a qualifying option.
(3) In section 98 of the Taxes Management Act 1970 (penalties in connection with returns, etc.), in the first column of the table, after the final entry insert—

“paragraph 64 of Schedule 14 to the Finance Act 2000;”

.
1970 c. 9.

Annual returns

65
(1) A company whose shares are the subject of a qualifying option at any time during a tax year must deliver a return to the Inland Revenue.
(2) The return must—
(a) contain such information as the Inland Revenue may require, and
(b) be made within three months after the end of the tax year to which it relates.
(3) In section 98 of the Taxes Management Act 1970 (penalties in connection with returns, etc.), in the second column of the table, after the final entry insert—

“paragraph 65 of Schedule 14 to the Finance Act 2000;”

.
1970 c. 9.

Meaning of “market value" of shares

66
(1) For the purposes of this Schedule the “market value” of shares has the same meaning as, for the purposes of the Taxation of Chargeable Gains Act 1992, it has by virtue of Part VIII of that Act.
This is subject to paragraph 10(8) (determination of value of shares subject to restriction or risk of forfeiture).
1992 c. 12.
(2) Where the market value of shares on any date falls to be determined for the purposes of this Schedule, the Inland Revenue and the employer company may agree that it shall be determined by reference to such date or dates, or to an average of the values on a number of dates, as may be provided in the agreement.

Determination of market value

67
(1) The market value of shares for the purposes of this Schedule, if not agreed between the employer company and the Inland Revenue or referred to the Commissioners under sub-paragraph (4), shall be determined by the Inland Revenue.
(2) The employer company may appeal against any such determination.
(3) Notice of appeal must be given to the Inland Revenue within 30 days after their notice of their determination was given to the employer company.
(4) The employer company may, at any time before notice of determination by the Inland Revenue has been given to it, by notice given to the Inland Revenue require the question of the market value of the shares to be referred to the Commissioners.
Any such reference shall be determined by the Commissioners in the same way as an appeal.
(5) An appeal or reference under this paragraph lies to the General Commissioners or, if the employer company so elects (in accordance with section 46(1) of the Taxes Management Act 1970), to the Special Commissioners.
1970 c. 9.

Exercise of functions conferred on “the Inland Revenue"

68
Functions conferred by this Schedule on “the Inland Revenue" may be exercised by any officer of the Board.

Power to amend by Treasury order

69
The Treasury may by order amend this Schedule—
(a) to make such amendments of paragraphs 17 to 26 (the trading activities requirement and related provisions) as they consider expedient;
(b) to substitute different sums of money for those for the time being specified in—
paragraph 10(1), (4) and (5) (maximum entitlement of employee), or
paragraph 16(1) and (2) (the gross assets requirement).

Compliance with time limits

70
(1) For the purposes of this Part and Part I of this Schedule a person is not taken to have failed to do anything required to be done within a limited time if—
(a) he had a reasonable excuse for not doing it within that time, and
(b) if the excuse ceased, he did it without unreasonable delay after the excuse ceased.
(2) Where sub-paragraph (1)(b) applies any further time limit expressed by reference to the time when the thing should have been done shall have effect as if it had been expressed by reference to the time when it was done.

Minor definitions

71
(1) In this Schedule—
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
“company” means any body corporate;
“group”, in relation to a parent company, means that company and its 51% subsidiaries;
“group company”, in relation to a parent company, means that company or any of its 51% subsidiaries;
“parent company” means a company that has one or more 51% subsidiaries and “single company” means a company that does not;
“option” means any right to acquire shares;
“ordinary share capital” has the meaning given in section 832(1) of the Taxes Act 1988;
“research and development” has the meaning given by section 837A of the Taxes Act 1988;
“shares” includes stock; and
“tax year” means a year of assessment.
(2) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule.

Index of defined expressions

72
In this Schedule the following expressions are defined or otherwise explained by the provisions indicated:
arrangements	paragraph 71(1)
closure notice (in Part I)	paragraph 5(4)
company	paragraph 71(1)
company reorganisation (in Part VIII)	paragraph 59(2)
connected person	paragraph 71(2)
disqualifying event	paragraphs 47 to 52
eligible employee	paragraph 27
employer company	paragraph 1(3)
excluded activities	paragraph 19
gross assets requirement	paragraph 16
group and group company	paragraph 71(1)
the independence requirement	paragraph 13
the Inland Revenue	paragraph 68
market value	paragraph 66 (and see paragraph 10(8))
new option	paragraph 61(4)
old option	paragraph 61(4)
option	paragraph 71(1)
ordinary share capital	paragraph 71(1)
original option (in Parts VI and VII)	paragraph 56(3)
parent company	paragraph 71(1)
qualifying company	paragraph 12
qualifying option	paragraph 1 (and see paragraph 61(3))
qualifying shares (in Part VII)	paragraph 56
qualifying subsidiary	paragraph 15
qualifying trade	paragraph 18
relevant company	paragraph 1(3)
replacement option	paragraph 61(2)
research and development	paragraph 71(1)
shares	paragraph 71(1) (and see paragraph 60(4))
single company	paragraph 71(1)
tax year	paragraph 71(1)
trading activities requirement	paragraph 17
Sch. 14 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 8 Pt. 1 (with Sch. 7)

SCHEDULE 15 The corporate venturing scheme
Section 63(1).

Part I Investment relief: introduction

Meaning of “investment relief"
1 This Schedule makes provision for—
(a) relief against corporation tax (“investment relief”) on amounts subscribed by companies for shares (see this Part and Parts II to VI of this Schedule);
(b) relief against income of companies for losses on disposals of shares to which investment relief is attributable (see Part VII of this Schedule); and
(c) the postponement of certain chargeable gains of companies where the gains are reinvested in shares to which investment relief is attributable (see Part VIII of this Schedule).

Eligibility for investment relief
2 A company (“the investing company”) is eligible for investment relief in respect of an amount subscribed by it for an issue of shares in another company (“the issuing company”) if—
(a) the shares (“the relevant shares”) are issued to the investing company;
(b) the investing company is a qualifying investing company in relation to the relevant shares (see Part II of this Schedule);
(c) the issuing company is a qualifying issuing company in relation to the relevant shares (see Part III of this Schedule); and
(d) the general requirements of Part IV of this Schedule are met in respect of the relevant shares.

Meaning of “the qualification period"
3 (1) In this Schedule “the qualification period”, in relation to the relevant shares, means the period beginning with the issue of the shares and ending—
(a) immediately before the third anniversary of the issue date; or
(b) where the money raised by the issuance of the shares is employed wholly or mainly for the purposes of one or more qualifying trades that, on the issue date, were not being carried on—
(i) by the issuing company, or
(ii) if it is a parent company, by that company or any of its qualifying 90% subsidiaries ,
Words in Sch. 15 para. 3(1)(b)(ii) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 2(a)
immediately before the third anniversary of the trading date.
(2) For this purpose “the trading date” means—
(a) the date on which the issuing company or one of its qualifying 90% subsidiaries begins to carry on the qualifying trade to which sub-paragraph (1)(b) refers, or
Words in Sch. 15 para. 3(2)(a) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 2(b)
(b) if there is more than one such trade, the latest date on which the issuing company or one of its qualifying 90% subsidiaries begins to carry on such a trade.
Words in Sch. 15 para. 3(2)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 2(b)

Part II The investing company

Introduction
4 The investing company is a qualifying investing company in relation to the relevant shares if the requirements of this Part are met as to—
(a) no material interest (see paragraph 5);
(b) no reciprocal arrangements (see paragraph 6);
(c) no control (see paragraph 8);
(d) non-financial activities (see paragraph 10);
(e) the shares being a chargeable asset (see paragraph 13); and
(f) no tax avoidance (see paragraph 14).

The “no material interest" requirement
5 The investing company must not, at any time during the qualification period relating to the shares, have a material interest in the issuing company.

The “no reciprocal arrangements" requirement
6 (1) The investing company must not subscribe for the relevant shares as part of any arrangements which provide for any other person to subscribe for shares in a related company.
(2) For this purpose—
(a) arrangements shall be disregarded to the extent that they provide for the issuing company to subscribe for shares in any of its qualifying subsidiaries, and
(b) “a related company” means a company in which the investing company, or any other person who is a party to the arrangements, has a material interest.
(3) In sub-paragraph (2)(a) the reference to qualifying subsidiaries of the issuing company is not restricted to companies that were such subsidiaries at the time the arrangements were made.

Meaning of “material interest"
7 (1) For the purposes of paragraphs 5 and 6 a person has a material interest in a company if he (whether alone or together with any person connected with him) directly or indirectly possesses or is entitled to acquire more than 30% of—
(a) the ordinary share capital of the company or any subsidiary, or
(b) the voting power in the company or any subsidiary.
(2) For the purposes of sub-paragraph (1) “ordinary share capital”, in relation to a company, means—
(a) all of the issued share capital (by whatever name called) of the company, other than capital comprising relevant preference shares, and
(b) all of the loan capital of the company that comprises debt which carries (directly or indirectly) any right to conversion into, or to the acquisition of, shares within paragraph (a) (or that would be within that paragraph if issued).
(3) For the purposes of sub-paragraph (2)(b) 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).
This is subject to sub-paragraph (4).
(4) For the purposes of sub-paragraph (3) a debt which—
(a) is incurred by a company or any subsidiary by overdrawing an account with a person carrying on the business of banking, and
(b) arises in the ordinary course of that business,
shall not be treated as loan capital of the company.
(5) For the purposes of sub-paragraph (1)—
(a) a person is 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
(b) there are attributed to a person any rights or powers of any other person who is an associate of his.
(6) For the purposes of this paragraph a company is a subsidiary of another company if it is a 51% subsidiary of that company.

The “no control" requirement
8 (1) The investing company must not, at any time during the qualification period relating to those shares, control the issuing company.
(2) For this purpose the question whether the investing company controls the issuing company shall be determined in accordance with sections 450 and 451 of CTA 2010 with the following modifications.
Words in Sch. 15 para. 8(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(2)(a) (with Sch. 2)
(3) The first modification is that, in determining whether the investing company controls the issuing company, there shall be disregarded—
(a) its or any other person’s possession of, or entitlement to acquire, relevant preference shares of the issuing company; and
(b) its or any other person’s possession of, or entitlement to acquire, rights as a loan creditor of the issuing company.
(4) For the purposes of sub-paragraph (3) a person is a “loan creditor” of a company if the person is a creditor in respect of the loan capital of that company (within the meaning of paragraph 7(3)).
(5) The second modification is that in determining whether the conditions of sections 450(2) to (4) of CTA 2010 are satisfied there shall be attributed to the investing company (to the extent that it would not otherwise be the case) any rights or powers in the issuing company, or any of its subsidiaries, that are held by—
(a) any person connected with the investing company; or
(b) any person who is—
(i) a director of the investing company, or of any company connected with that company, or
(ii) a relative of such a director.
For this purpose “relative” means spouse or civil partner, parent or remoter forebear or child or remoter issue.
Words in Sch. 15 para. 8(5)(b)(ii) substituted (5.12.2005) by Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 132
Words in Sch. 15 para. 8(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(2)(b) (with Sch. 2)

Relevant preference shares
9 (1) In paragraphs 7 (meaning of “material interest”) and 8 (the “no control” requirement) “relevant preference shares” means shares which—
(a) do not for the time being carry voting rights;
(b) are issued wholly for new consideration;
(c) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities; and
(d) do not carry any right to dividends other than dividends which—
(i) fall within sub-paragraph (2) or (3);
(ii) are not to any extent dependent on the results of the company’s business or any part of it or on the value of any of the company’s assets; and
(iii) together with any sum paid on a redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued.
In paragraph (b) “new consideration” has the meaning given by section 1115 of CTA 2010.
Words in Sch. 15 para. 9(1) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(3) (with Sch. 2)
(2) Dividends fall within this sub-paragraph if they are of a fixed amount or at a fixed rate per cent of the nominal value of the shares.
This includes dividends where the amount or rate may be changed to another fixed amount or fixed rate in a manner determined under the terms of issue of the shares.
(3) Dividends fall within this sub-paragraph if they are of a rate per cent of the nominal value of the shares and the rate fluctuates in accordance with—
(a) a standard published rate of interest,
(b) a rate of tax,
(c) the retail prices index, or any similar general index of prices which is published by the government, or by an agent of the government, of the country or territory in whose currency the shares are denominated, or
(d) a published index of prices of shares quoted in the official list of a recognised stock exchange.
(4) For the purposes of sub-paragraph (1)(d)(ii) dividends shall not be treated as being to any extent dependent on the results of the company’s business (or any part of it) or on the value of any of the company’s assets by reason only of the fact that the amount or rate of the dividends—
(a) reduces in the event of the results of the business (or part) improving or the value of any of the company’s assets increasing, or
(b) increases in the event of the results of the business (or part) deteriorating or the value of any of the company’s assets diminishing.
(5) Dividends are not prevented from falling within sub-paragraph (2) or (3) by the fact that the shares carry no rights at all to dividends for a period or periods determined under the terms of issue of the shares.

The non-financial activities requirement
10 (1) Throughout the qualification period relating to the relevant shares the investing company must fall within sub-paragraph (2) or (3).
(2) The company falls within this sub-paragraph at any time when it—
(a) is a single company, and
(b) disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more non-financial trades.
(3) The company falls within this sub-paragraph at any time when—
(a) it is a group company,
(b) the group is a non-financial trading group, and
(c) sub-paragraph (4) applies.
(4) This sub-paragraph applies where the company—
(a) disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more—
(i) non-financial trades, or
(ii) businesses other than trades; or
(b) is the parent company of the group.
(5) For the purposes of determining whether the company falls within sub-paragraph (2)(b) or (4)(a), the purposes for which the company exists shall be disregarded to the extent that they consist in the carrying on of the following activities—
(a) in the case of a single company, the holding and managing of property used by the company for one or more non-financial trades carried on by it,
(b) in the case of a group company, any activities within paragraph 12(3)(a) or (b), and
(c) in any case, the holding of shares to which investment relief is attributable, unless the holding of such shares amounts to a substantial part of the company’s business.
(6) In this paragraph “incidental purposes” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the company’s activities.

Meaning of “non-financial trade"
11 (1) A trade is a “non-financial trade" if—
(a) it is conducted on a commercial basis and with a view to the realisation of profits, and
(b) it does not consist wholly or as to a substantial part in the carrying on of financial activities.
(2) For this purpose “financial activities” includes—
(a) banking, or money-lending, carried on by a bank, building society or other person;
(b) debt-factoring, finance-leasing or hire-purchase financing;
(c) insurance;
(d) dealing in shares, securities, currency, debts or other assets of a financial nature; and
(e) dealing in commodity or financial futures or options.

Meaning of “non-financial trading group"
12 (1) A group is a “non-financial trading group" unless the business of the group consists wholly or as to a substantial part in the carrying on of one or more of the following—
(a) trades other than non-financial trades;
(b) businesses which are not trades.
(2) The business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
(3) For this purpose activities of a group company shall be disregarded to the extent that they consist in—
(a) the holding of shares in or securities of, or the making of loans to, another group company;
(b) the holding and managing of property used by a group company for the purposes of one or more non-financial trades carried on by a group company; or
(c) the holding of shares to which investment relief is attributable, unless the holding of such shares amounts to a substantial part of the company’s business.

Requirement as to shares being a chargeable asset
13 (1) The investing company is not a qualifying investing company in relation to the relevant shares unless the shares are a chargeable asset of the company immediately after they are issued to it.
(2) For this purpose an asset is a chargeable asset of that company at any time if, on a disposal at that time, a gain accruing to the company would be a chargeable gain.
(3) In this paragraph “asset” has the same meaning as in the 1992 Act.

Requirement as to no tax avoidance
14 The relevant shares must be subscribed for by the investing company for commercial reasons, 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.

Part III The issuing company

Introduction
15 The issuing company is a qualifying issuing company in relation to the relevant shares if the requirements of this Part are met as to—
(a) unquoted status (see paragraph 16);
(b) independence (see paragraph 17);
(c) individual-owners (see paragraph 18);
(d) partnerships and joint ventures (see paragraph 19);
(e) qualifying subsidiaries (see paragraph 20);
(ea) property managing subsidiaries (see paragraph 21A);
Sch. 15 para. 15(ea) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 3
(f) gross assets (see paragraph 22); ...
Word in Sch. 15 para. 15(f) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 27 Pt. 2(16)
(fa) number of employees (see paragraph 22A); and
Sch. 15 para. 15(fa) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 1(2) (with Sch. 16 para. 1(4))
(g) trading activities (see paragraph 23).

The “unquoted status" requirement
16 (1) The unquoted status requirement is that, at the time the relevant shares are issued, none of the issuing company’s shares, debentures or other securities is (and there are no arrangements in existence for any of them to be)—
(a) listed on a recognised stock exchange,
(b) listed on a designated exchange in a country outside the United Kingdom, or
(c) dealt in outside the United Kingdom by such means as may be designated.
This is subject to sub-paragraph (3).
(2) The unquoted status requirement applies whether or not the company is resident in the United Kingdom.
(3) The unquoted status requirement is treated as not met if at the time the relevant shares are issued—
(a) arrangements are in existence for the issuing company to become a subsidiary of another company (“the new company”) by virtue of an exchange of shares, or shares and securities, in relation to which paragraph 83 (certain exchanges resulting in acquisition of share capital by new company) applies, and
(b) arrangements have been made with a view to any of the new company’s shares, debentures or other securities being listed or dealt in as mentioned in paragraph (a), (b) or (c) of sub-paragraph (1).
(4) For the purposes of sub-paragraph (1) “designated” means designated by an order (“a designation order”) made for the purposes of subsection (1B) of section 312 of the Taxes Act 1988 or section 184(3) of ITA 2007 (definition of “unquoted company” for the purposes of EIS).
Words in Sch. 15 para. 16(4) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 394(2) (with Sch. 2)
(5) Where the issuing company meets the unquoted status requirement when the relevant shares are issued, it shall not cease to meet it by virtue of—
(a) any designation order, or
(b) any order under section 841 of the Taxes Act 1988 (designation of exchange as “recognised stock exchange”),
made after that time.

The independence requirement
17 (1) The independence requirement is that—
(a) the issuing company is not, at any time during the qualification period relating to the relevant shares—
(i) a 51% subsidiary of another company, or
(ii) under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company, and
(b) no arrangements are in existence at any time during that period by virtue of which the company could become such a subsidiary or fall under such control (whether during that period or otherwise).
(2) For the purposes of sub-paragraph (1)(b) arrangements with a view to such an exchange of shares, or shares and securities, as is mentioned in paragraph 83(1) (certain exchanges resulting in acquisition of share capital by new company) shall be disregarded.
(3) In this paragraph “control” has the meaning given by section 1124 of CTA 2010.
Words in Sch. 15 para. 17(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(4) (with Sch. 2)

The “individual-owners" requirement
18 (1) The “individual-owners" requirement is that, throughout the qualification period relating to the relevant shares, at least 20% of the ordinary share capital of the issuing company is beneficially owned by one or more independent individuals.
(2) For the purposes of sub-paragraph (1) “independent individual” means an individual who is not, at any time during that period when he holds ordinary shares in the issuing company—
(a) a director or employee of—
(i) the investing company, or
(ii) any company connected with that company, or
(b) a relative of such a director or employee.
For this purpose “relative” means spouse or civil partner, parent or remoter forebear or child or remoter issue.
Words in Sch. 15 para. 18(2)(b) substituted (5.12.2005) by Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 132
(3) Where part of the ordinary share capital of the issuing company forms part of the estate of a deceased person who immediately before his death—
(a) was the beneficial owner of the shares in question, and
(b) was an independent individual for the purposes of sub-paragraph (1),
the shares in question shall, by virtue of this sub-paragraph, continue to be treated as beneficially owned by an independent individual for the purposes of sub-paragraph (1) until such time as they cease to form part of the deceased’s estate.

The partnerships and joint ventures requirement
19 (1) The requirement as to partnerships and joint ventures is that neither the issuing company nor any of its qualifying subsidiaries is at any time during the qualification period relating to the relevant shares—
(a) a member of a partnership falling within sub-paragraph (2), or
(b) a party to a joint venture falling within sub-paragraph (3).
(2) A partnership of which the issuing company, or any of its qualifying subsidiaries, is a member falls within this paragraph at any time when—
(a) the relevant trade is being carried on, or to be carried on, by the partners in partnership,
(b) the other partners include at least one other company, and
(c) the same person (or persons) are the beneficial owner (or owners) of more than 75% of the issued share capital or the ordinary share capital of both—
(i) the issuing company, and
(ii) at least one of the other partners.
(3) A joint venture to which the issuing company, or any of its qualifying subsidiaries, is a party falls within this paragraph at any time when—
(a) the relevant trade is being carried on, or to be carried on, by that party in its capacity as a party to the joint venture,
(b) the other parties include at least one other company, and
(c) the same person (or persons) are the beneficial owner (or owners) of more than 75% of the issued share capital or the ordinary share capital of both—
(i) the issuing company, and
(ii) at least one of the other parties.
(4) For the purposes of sub-paragraphs (2) and (3)—
(a) “the relevant trade” means any trade by reference to which the trading activities requirement is met in respect of the issuing company in relation to the relevant shares; and
(b) there shall be attributed to any person any issued share capital or ordinary share capital held by any other person who is an associate of his.

The qualifying subsidiaries requirement
20 (1) The issuing company is not a qualifying issuing company in relation to the relevant shares if, at any time during the qualification period relating to those shares, it has a subsidiary which is not a qualifying subsidiary.
(2) In this paragraph “subsidiary” means any company which the company controls, either on its own or together with any person connected with it.
Sch. 15 para. 20(2)(3) substituted (22.7.2004) for Sch. 15 para. 20(2) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 4(2)
(3) For the purpose of sub-paragraph (2), the question whether a person controls a company shall be determined in accordance with sections 450 and 451 of CTA 2010.
Words in Sch. 15 para. 20(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(5) (with Sch. 2)

Meaning of “qualifying subsidiary"
21 (1) A company (“the subsidiary”) is a qualifying subsidiary of another company (“the relevant company”) if the following conditions are met.
(2) The conditions are that—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 15 para. 21(2)(a)-(c) repealed (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(2)(a), Sch. 42 Pt. 2(13)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ca) the subsidiary is a 51% subsidiary of the relevant company;
Sch. 15 para. 21(2)(ca) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(2)(b)
(d) no person other than the relevant company or another of its subsidiaries has control of the subsidiary within the meaning of section 840 of the Taxes Act 1988; and
(e) no arrangements are in existence by virtue of which either of the conditions in paragraphs (ca) and (d) would cease to be met.
Words in Sch. 15 para. 21(2)(e) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(2)(c)
(3) The subsidiary shall not be regarded as ceasing to be a company in relation to which the conditions in sub-paragraph (2) are met by reason only of—
(a) anything done as a consequence of the subsidiary, or any other company, being in administration or receivership, or
(b) the subsidiary, or any other company, being wound up or dissolved without winding up,
if sub-paragraph (4) applies.
(4) This paragraph applies where—
(a) in a case within sub-paragraph (3)(a)—
(i) the entry into administration or receivership, and
Sch. 15 para. 21(4)(a)(i) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 34(a) (with art. 6)
(ii) everything done as a consequence of the company concerned being in administration or receivership, or
Word in Sch. 15 para. 21(4)(a)(ii) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(3)
(b) in a case within sub-paragraph (3)(b), the winding up or dissolution,
is for commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(5) The subsidiary shall not be regarded, at any time when arrangements are in existence for the disposal by the relevant company or (as the case may be) by another subsidiary of that company of all its interest in the subsidiary in question, as having ceased on that account to be a qualifying subsidiary of the relevant company if the disposal is to be for commercial reasons and is not to be part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax.
Words in Sch. 15 para. 21(5) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(4)(a)
Words in Sch. 15 para. 21(5) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(4)(b)

The property managing subsidiaries requirement
21A (1) The issuing company is not a qualifying issuing company in relation to the relevant shares if, at any time during the qualification period relating to those shares, it has a property managing subsidiary which is not a qualifying 90% subsidiary of the issuing company (see paragraph 23(10) and (11)).
(2) “Property managing subsidiary” means a qualifying subsidiary of the issuing company whose business consists wholly or mainly in the holding or managing of land or any property deriving its value from land.
(3) In sub-paragraph (2) “property deriving its value from land” has the meaning given by section 833(2) of CTA 2010
Sch. 15 para. 21A(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(6) (with Sch. 2)
Sch. 15 para. 21A and cross-heading inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 6

The gross assets requirement
22 (1) The gross assets requirement in the case of a single company is that the value of the company’s gross assets—
(a) does not exceed £7 million immediately before the issue of the relevant shares, and
Words in Sch. 15 para. 22(1)(a) substituted (with effect in accordance with Sch. 14 para. 3(2)(3) to the amending Act) by Finance Act 2006 (c. 25), Sch. 14 para. 3(1)(a)
(b) does not exceed £8 million immediately afterwards.
Words in Sch. 15 para. 22(1)(b) substituted (with effect in accordance with Sch. 14 para. 3(2)(3) to the amending Act) by Finance Act 2006 (c. 25), Sch. 14 para. 3(1)(b)
(2) The gross assets requirement in the case of a parent company is that the consolidated value of the group assets—
(a) does not exceed £7 million immediately before the issue of the relevant shares, and
Words in Sch. 15 para. 22(2)(a) substituted (with effect in accordance with Sch. 14 para. 3(2)(3) to the amending Act) by Finance Act 2006 (c. 25), Sch. 14 para. 3(1)(a)
(b) does not exceed £8 million immediately afterwards.
Words in Sch. 15 para. 22(2)(b) substituted (with effect in accordance with Sch. 14 para. 3(2)(3) to the amending Act) by Finance Act 2006 (c. 25), Sch. 14 para. 3(1)(b)
(3) The consolidated value of the group assets means the aggregate value of the gross assets of the group, disregarding any that consist in rights against, or shares in or securities of, another group company.

The number of employees requirement
22A (1) If the issuing company is a single company, the full-time equivalent employee number for it must be less than 50 when the relevant shares are issued.
(2) If the issuing company is a parent company, the sum of—
(a) the full-time equivalent employee number for it, and
(b) the full-time equivalent employee numbers for each of its qualifying subsidiaries,
must be less than 50 when the relevant shares are issued.
(3) The full-time equivalent employee number for a company is calculated as follows—
Step 1
Find the number of full-time employees of the company.
Step 2
Add, for each employee of the company who is not a full-time employee, such fraction as is just and reasonable.
The result is the full-time equivalent employee number.
(4) In this paragraph references to an employee—
(a) include a director, but
(b) do not include—
(i) an employee on maternity , paternity or shared parental leave, or
Words in Sch. 15 para. 22A(4)(b)(i) substituted (1.12.2014) by Children and Families Act 2014 (c. 6), s. 139(6), Sch. 7 para. 49; S.I. 2014/1640, art. 5(2)(r)
(ii) a student on vocational training.
Sch. 15 para. 22A and cross-heading inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 1(3) (with Sch. 16 para. 1(4))

The trading activities requirement
23 (1) The issuing company is not a qualifying issuing company in relation to the relevant shares unless it meets the trading activities requirement throughout the qualification period relating to those shares.
(2) The trading activities requirement in the case of a single company is that the company—
(a) disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and
(b) is carrying on a qualifying trade or preparing to do so.
(3) The trading activities requirement in the case of a parent company is that—
(a) the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities, and
(b) the issuing company or a qualifying 90% subsidiary of the issuing company —
(i) disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and
(ii) is carrying on a qualifying trade or preparing to do so.
Words in Sch. 15 para. 23(3)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 7(a)
(4) For this purpose the business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
(5) The requirement of sub-paragraph (2) or (3) is not met at any time by reason of the issuing company or a qualifying 90% subsidiary of the issuing company preparing to carry on a qualifying trade if the company or a qualifying 90% subsidiary of the issuing company does not begin to carry on the trade within two years after the issue of the relevant shares.
Words in Sch. 15 para. 23(5) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 7(b)(i)
Words in Sch. 15 para. 23(5) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 7(b)(ii)
(6) For the purposes of determining whether a company falls within sub-paragraph (2)(a) or (3)(b)(i), the purposes for which it exists shall be disregarded to the extent that they consist in the carrying on of the following activities—
(a) in the case of a single company, the holding and managing of property used by the company for one or more qualifying trades carried on by it,
(b) in the case of a group company, any activities within sub-paragraph (7)(a), (b) or (d), and
(c) in any case, the holding of shares to which investment relief is attributable, unless the holding of such shares amounts to a substantial part of the company’s business.
Words in Sch. 15 para. 23(6) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 7(c)
(7) For the purposes of determining the business of a group, activities of a group company shall be disregarded to the extent that they consist in—
(a) the holding of shares in or securities of, or the making of loans to, another group company;
(b) the holding and managing of property used by a group company for the purposes of one or more qualifying trades carried on by a group company;
(c) the holding of shares to which investment relief is attributable, unless the holding of such shares amounts to a substantial part of the company’s business, or
(d) incidental activities of a company which meets the trading activities requirement for a single company.
(8) In sub-paragraph (3)(a) “non-qualifying activities” means—
(a) excluded activities other than—
(i) the letting of ships to which paragraph 28 applies (ships other than offshore installations or pleasure craft) in circumstances where the requirement of sub-paragraph (2) of that paragraph is met; or
Words in Sch. 15 para. 23(8)(a)(i) substituted (22.7.2004) (with effect in accordance with Sch. 27 para. 6(5)(6) of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 6(2)
(ii) the receiving of royalties or licence fees within paragraph 29 in circumstances where the requirements mentioned in sub-paragraph (2) of that paragraph are met; and
(b) activities carried on otherwise than in the course of a trade.
(9) In this paragraph—
(a) “incidental purposes” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities of the company in question;
(b) “incidental activities” means activities carried on in pursuance of incidental purposes.
(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 15 para. 23(10) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 15(2), 18, Sch. 27 Pt. 2(16)
(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 15 para. 23(11) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 15(2), 18, Sch. 27 Pt. 2(16)

Meaning of “qualifying 90% subsidiary”
23A (1) For the purposes of this Schedule, a company (“the subsidiary”) is a qualifying 90% subsidiary of the issuing company if the following conditions are met—
(a) the issuing company possesses not less than 90% of the issued share capital of, and not less than 90% of the voting power in, the subsidiary;
(b) the issuing company would—
(i) in the event of a winding up of the subsidiary, or
(ii) in any other circumstances,
be beneficially entitled to receive not less than 90% of the assets of the subsidiary which would then be available for distribution to the shareholders of the subsidiary;
(c) the issuing company is beneficially entitled to not less than 90% of any profits of the subsidiary which are available for distribution to the shareholders of the subsidiary;
(d) no person other than the issuing company has control of the subsidiary within the meaning of section 1124 of CTA 2010;
Words in Sch. 15 para. 23A(1)(d) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(7) (with Sch. 2)
(e) no arrangements are in existence by virtue of which any of the conditions in paragraphs (a) to (d) would cease to be met.
(2) Paragraph 21(3) and (4) (effect of receivership etc) apply in relation to the conditions in sub-paragraph (1) as they apply in relation to the conditions in paragraph 21(2).
(3) If—
(a) arrangements are in existence for the disposal by the issuing company of all its interest in the subsidiary, and
(b) the disposal is to be for commercial reasons and is not to be part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax,
the subsidiary is not to be regarded as having ceased on that account to be a qualifying 90% subsidiary of the issuing company.
(4) For the purposes of this Schedule, a company (“company A”) which is a subsidiary of a company that is not the issuing company (“company B”) is a qualifying 90% subsidiary of the issuing company if—
(a) company A would be a qualifying 90% subsidiary of company B (if company B were the issuing company), and company B is a qualifying 100% subsidiary of the issuing company; or
(b) company A is a qualifying 100% subsidiary of company B, and company B is a qualifying 90% subsidiary of the issuing company.
(5) For the purposes of sub-paragraph (4), no account is to be taken of any control the issuing company may have of company A.
(6) For those purposes, a company (“company X”) is a qualifying 100% subsidiary of another company (“company Y”) at any time when the conditions in sub-paragraph (1) would be met if—
(a) company X were the subsidiary;
(b) company Y were the issuing company; and
(c) in sub-paragraph (1) for “not less than 90%” in each place there were substituted “100%”.
Sch. 15 para. 23A and cross-heading inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 15(3), 18

Ceasing to meet trading activities requirement by reason of administration, receivership, etc.
24 (1) A company ... shall not be regarded as ceasing to meet the trading activities requirement by reason only of anything done as a consequence of the company, or any of its qualifying subsidiaries, being in administration or receivership.
This sub-paragraph has effect subject to sub-paragraphs (2) and (3).
Words in Sch. 15 para. 24(1) repealed (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 8(a)(i), Sch. 42 Pt. 2(13)
Word in Sch. 15 para. 24(1) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 8(a)(ii)
(2) Sub-paragraph (1) applies only if—
(a) the entry into administration or receivership, and
Sch. 15 para. 24(2)(a) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 34(b) (with art. 6)
(b) everything done as a consequence of the company concerned being in administration or receivership,
Word in Sch. 15 para. 24(2)(b) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 8(b)
is for commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(3) A company ceases to meet the trading activities requirement if—
(a) a resolution is passed, or an order is made, for the winding up of the company or any of its qualifying subsidiaries (or, in the case of a winding up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989, any other act is done for the like purpose), or
1986 c. 45.
S.I. 1989/2405 (N.I.19).
(b) the company, or any of its qualifying subsidiaries, is dissolved without winding up.
This is subject to sub-paragraph (4).
(4) A company shall not be regarded as ceasing to meet the trading activities requirement if—
(a) it does so by reason only of the company or any of its qualifying subsidiaries being wound up or dissolved without winding up, and
Words in Sch. 15 para. 24(4)(a) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 8(c)(i)
(b) the winding up or dissolution is for commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
Words in Sch. 15 para. 24(4)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 8(c)(ii)

Meaning of “qualifying trade"
25 (1) A trade is a qualifying trade if—
(a) it is carried on wholly or mainly in the United Kingdom,
(b) it is conducted on a commercial basis and with a view to the realisation of profits, and
(c) it does not consist wholly or as to a substantial part in the carrying on of excluded activities.
(2) The carrying on of activities of research and development from which it is intended that a connected qualifying trade will be derived or benefit is treated as the carrying on of a qualifying trade.
But preparing to carry on such activities does not count as preparing to carry on a qualifying trade.
(3) For the purposes of sub-paragraph (2) a “connected qualifying trade” means a qualifying trade carried on—
(a) by the company carrying on the activities of research and development, or
(b) if that company is a member of a group, by the issuing company or any of its qualifying 90% subsidiaries.
Words in Sch. 15 para. 25(3)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 9

Excluded activities
26 (1) The following are excluded activities—
(a) dealing in land, in commodities or futures or in shares, securities or other financial instruments;
(b) dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution;
(c) banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities;
(d) leasing (including letting ships on charter or other assets on hire) or receiving royalties or other licence fees;
(e) providing legal or accountancy services;
(f) property development;
(g) farming or market gardening;
(h) holding, managing or occupying woodlands, any other forestry activities or timber production;
(ha) shipbuilding;
Sch. 15 para. 26(1)(ha)-(hc) inserted (retrospective to 6.4.2008) by Finance Act 2008 (c. 9), Sch. 11 paras. 2(a), 10 (with Sch. 11 para. 11)
(hb) producing coal;
(hc) producing steel;
(i) operating or managing hotels or comparable establishments or managing property used as a hotel or comparable establishment; and
(j) operating or managing nursing homes or residential care homes, or managing property used as a nursing home or residential care home.
(2) Sub-paragraph (1) is supplemented by the following provisions—
paragraph 27 (wholesale and retail distribution);
paragraph 28 (leasing of ships);
paragraph 29 (receipt of royalties and licence fees);
paragraph 30 (property development);
paragraph 30A (shipbuilding);
paragraph 30B (producing coal);
paragraph 30C (producing steel);
paragraph 31 (hotels and comparable establishments);
paragraph 32 (nursing homes and residential care homes); and
paragraph 33 (provision of facilities for another business).
Words in Sch. 15 para. 26(2) inserted (retrospective to 6.4.2008) by Finance Act 2008 (c. 9), Sch. 11 paras. 2(b), 10 (with Sch. 11 para. 11)

Excluded activities: wholesale and retail distribution
27 (1) This paragraph supplements paragraph 26(1)(b).
(2) A trade of wholesale distribution is one in which the goods are offered for sale and sold to persons for resale by them, or for processing and resale by them, to members of the general public for their use or consumption.
(3) A trade of retail distribution is one in which the goods are offered for sale and sold to members of the general public for their use or consumption.
(4) A trade is not an ordinary trade of wholesale or retail distribution if—
(a) it consists, to a substantial extent, in dealing in goods of a kind which are collected or held as an investment, or in that activity and any other excluded activity taken together, and
(b) a substantial proportion of those goods are held by the company for a period which is significantly longer than the period for which a vendor would reasonably be expected to hold them while endeavouring to dispose of them at their market value.
(5) In determining whether a trade carried on by any person is an ordinary trade of wholesale or retail distribution, regard shall be had to the extent to which it has the following features—
(a) the goods are bought by that person in quantities larger than those in which he sells them;
(b) the goods are bought and sold by that person in different markets;
(c) that person employs staff and incurs expenses in the trade in addition to the cost of the goods and, in the case of a trade carried on by a company, to any remuneration paid to any person connected with it;
(d) there are purchases or sales from or to persons who are connected with that person;
(e) purchases are matched with forward sales or vice versa;
(f) the goods are held by that person for longer than is normal for goods of the kind in question;
(g) the trade is carried on otherwise than at a place or places commonly used for wholesale or retail trade;
(h) that person does not take physical possession of the goods.
(6) The features specified in sub-paragraph (5)(a) to (c) are indications that the trade is such an ordinary trade.
Those in sub-paragraph (5)(d) to (h) are indications of the contrary.

Excluded activities: leasing of ships
28 (1) This paragraph supplements paragraph 26(1)(d) so far as it relates to the leasing of ships other than offshore installations or pleasure craft.
Words in Sch. 15 para. 28(1) substituted (22.7.2004) (with effect in accordance with Sch. 27 para. 6(5)(6) of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 6(3)
(2) A trade shall not be treated as not being a qualifying trade by reason only of its consisting in letting such ships on charter if the following requirements are met—
(a) every ship let on charter by the company carrying on the trade is beneficially owned by the company;
(b) every ship beneficially owned by the company is registered in the United Kingdom;
(c) the company is solely responsible for arranging the marketing of the services of its ships; and
(d) the conditions mentioned in sub-paragraph (3) are satisfied in relation to every letting of a ship on charter by the company.
(3) The conditions are that—
(a) the letting is for a period not exceeding 12 months and no provision is made at any time (whether in the charterparty or otherwise) for extending it beyond that period otherwise than at the option of the charterer;
(b) during the period of the letting there is no provision in force (whether by virtue of being contained in the charterparty or otherwise) for the grant of a new letting to end, otherwise than at the option of the charterer, more than 12 months after that provision is made;
(c) the letting is by way of a bargain made at arm’s length between the company and a person who is not connected with it;
(d) under the terms of the charter the company is responsible as principal—
(i) for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry; and
(ii) for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period;
and
(e) no arrangements exist by virtue of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) on behalf of the company.
(4) In relation to any letting between one company and another where—
(a) one of those companies is the company carrying on the trade and the other is a qualifying subsidiary of that company, or
(b) both companies are qualifying subsidiaries of the company carrying on the trade,
sub-paragraph (3) has effect with the omission of paragraph (c).
(5) Where any of the requirements in sub-paragraph (2) are not met in relation to any lettings, the trade shall not thereby be treated as not a qualifying trade if those lettings and any other excluded activities do not, taken together, amount to a substantial part of the trade.
(6) In this paragraph—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“pleasure craft” means any ship of a kind primarily used for sport or recreation.
Words in Sch. 15 para. 28(6) repealed (22.7.2004) (with effect in accordance with Sch. 27 para. 6(5)(6) of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 6(4), Sch. 42 Pt. 2(19)

Excluded activities: receipt of royalties and licence fees
29 (1) This paragraph supplements paragraph 26(1)(d) so far as it relates to the receipt of royalties and licence fees.
(2) A trade shall not be regarded as not being a qualifying trade by reason only that at some time in the qualification period relating to the relevant shares it consists to a substantial extent in the receiving of royalties or licence fees if the royalties and licence fees (or all but for a part that is not a substantial part in terms of value) are attributable to the exploitation of relevant intangible assets.
(3) For this purpose an intangible asset is a “relevant intangible asset" if the whole or greater part (in terms of value) of it has been created—
(a) by the issuing company, or
Sch. 15 para. 29(3)(a)(b) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 9(2), 13
(b) by a company which was a qualifying subsidiary of the issuing company throughout a period during which it created the whole or greater part (in terms of value) of the intangible asset.
(4) In this paragraph “intangible asset” means any asset which falls to be treated as an intangible asset in accordance with generally accepted accounting practice.
. . . .
Words in Sch. 15 para. 29(4) substituted (24.7.2002) by 2002 c. 23, s. 103(4)(f)
The second sentence in Sch. 15 para. 29(4) repealed (24.7.2002) by 2002 c. 23, s. 141, Sch. 40, Pt. 3(16)
(5) In the case of a relevant asset that is intellectual property, references in this paragraph to the creation of the asset by a company are to its creation in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others).
(6) In sub-paragraph (5) “intellectual property” means—
(a) any patent, trade mark, registered design, copyright, design right, performer’s right or plant breeder’s right; and
(b) any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a).
(7) If—
(a) the issuing company acquired all the shares (“old shares”) in another company (“the old company”) at a time when the only shares issued in the issuing company were subscriber shares, and
(b) the consideration for the old shares consisted wholly of the issue of shares in the issuing company,
references in sub-paragraph (3) to the issuing company include the old company.
Sch. 15 para. 29(7) inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 9(3), 13

Excluded activities: property development
30 (1) This paragraph supplements paragraph 26(1)(f).
(2) “Property development” means the development of land—
(a) by a company which has, or at any time has had, an interest in the land, and
(b) with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed.
(3) For this purpose “interest in land” means, subject to sub-paragraph (4)—
(a) any estate, interest or right in or over land, including any right affecting the use or disposition of land, or
(b) any right to obtain such an estate, interest or right from another which is conditional on the other’s ability to grant it.
(4) References in this paragraph to an interest in land do not include—
(a) the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an agreement for a mortgage or a charge of any kind over land, or
(b) in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.

Excluded activities: shipbuilding
30A In paragraph 26(1)(ha) “shipbuilding” has the same meaning as in the Framework on state aid to shipbuilding (2003/C 317/06), published in the Official Journal on 30 December 2003.
Sch. 15 paras. 30A-30C and cross-heading inserted (retrospective to 6.4.2008) by Finance Act 2008 (c. 9), Sch. 11 paras. 3, 10 (with Sch. 11 para. 11)

Excluded activities: producing coal
30B (1) This paragraph supplements paragraph 26(1)(hb).
(2) “Coal” has the meaning given by Article 2 of Council Regulation (EC) No. 1407/2002 (state aid to coal industry).
(3) The production of coal includes the extraction of it.

Excluded activities: producing steel
30C In paragraph 26(1)(hc) “steel” means any of the steel products listed in Annex 1 to the Guidelines on national regional aid (2006/C 54/08), published in the Official Journal on 4 March 2006.

Excluded activities: hotels and comparable establishments
31 (1) This paragraph supplements paragraph 26(1)(i).
(2) The reference to a comparable establishment is to a guest house, hostel or other establishment the main purpose of maintaining which is the provision of facilities for overnight accommodation (with or without catering services).
(3) The activities of a person shall not be taken to fall within paragraph 26(1)(i) unless that person has an estate or interest in, or is in occupation of, the hotel or comparable establishment in question.

Excluded activities: nursing homes and residential care homes
32 (1) This paragraph supplements paragraph 26(1)(j).
(2) “Nursing home” means an establishment that exists wholly or mainly for the provision of nursing care—
(a) for persons suffering from sickness, injury or infirmity, or
(b) for women who are pregnant or have given birth to children.
(3) “Residential care home” means an establishment that exists wholly or mainly for the provision of residential accommodation, together with board and personal care, for persons in need of personal care by reason of—
(a) old age,
(b) mental or physical disability,
(c) past or present dependence on alcohol or drugs,
(d) any past illness, or
(e) past or present mental disorder.
(4) The activities of a person shall not be taken to fall within paragraph 26(1)(j) unless that person has an estate or interest in, or is in occupation of, the nursing home or residential care home in question.

Excluded activities: provision of facilities for another business
33 (1) Providing services or facilities for a business carried on by another person is an excluded activity if—
(a) the business consists to a substantial extent of excluded activities within sub-paragraph 26(1), and
(b) a controlling interest in the business is held by a person who also has a controlling interest in the business carried on by the company providing the services or facilities.
(2) Sub-paragraphs (3) to (5) define what is meant by a controlling interest in a business for the purposes of sub-paragraph (1)(b).
(3) In the case of a business carried on by a company, a person has a controlling interest if—
(a) he controls the company,
(b) the company is a close company and he or an associate of his, being a director of the company, either—
(i) is the beneficial owner of more than 30% of the ordinary share capital of the company, or
(ii) is able, directly or through the medium of other companies or by any other indirect means, to control more than 30% of that share capital,
or
(c) not less than half of the business could, in accordance with section 942 of CTA 2010, be regarded as belonging to him for the purposes of section 941 of that Act.
Words in Sch. 15 para. 33(3)(c) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(8)(a) (with Sch. 2)
Words in Sch. 15 para. 33(3)(c) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(8)(b) (with Sch. 2)
(4) In any other case, a person has a controlling interest in a business if he is entitled to not less than half of the assets used for, or of the income arising from, the business.
(5) For the purposes of sub-paragraph (3)(a) the question whether a person controls a company shall be determined in accordance with sections 450 and 451 of CTA 2010.
Words in Sch. 15 para. 33(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(9) (with Sch. 2)
(6) For the purposes of this paragraph—
(a) there shall be attributed to any person any rights or powers of any other person who is an associate of his, and
(b) “business” includes any trade, profession or vocation.

Part IV General requirements

Introduction
34 The investing company is not eligible for investment relief in respect of the amount subscribed by it for the relevant shares unless the requirements of this Part are met as to—
(a) the shares (see paragraph 35);
(aa) the maximum amount raised annually through risk capital schemes (see paragraph 35A);
Sch. 15 para. 34(aa) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 4(2)
(b) the money raised (see paragraph 36);
(c) no pre-arranged exits (see paragraph 37); and
(d) no tax avoidance (see paragraph 38).

Requirement as to the shares
35 (1) The relevant shares must satisfy sub-paragraphs (2) and (3).
(2) Shares satisfy this sub-paragraph if they are—
(a) ordinary shares,
(b) subscribed for wholly in cash, and
(c) fully paid up at the time they are issued.
Shares are not fully paid up for the purposes of paragraph (c) if there is any undertaking to pay cash to any person at a future date in respect of the acquisition of the shares.
Words in Sch. 15 para. 35(2)(c) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 10
(3) Shares satisfy this sub-paragraph if they do not, at any time during the qualification period relating to the relevant shares, carry—
(a) any present or future preferential right to dividends or to a company’s assets on its winding up, or
(b) any present or future right to be redeemed.

Requirement as to maximum amount raised annually through risk capital schemes
35A (1) The total amount of relevant investments made in the issuing company in the year ending with the date the relevant shares are issued must not exceed £2 million.
(2) In sub-paragraph (1), the reference to relevant investments made in the issuing company includes relevant investments made in any company that is, or has at any time in the year mentioned there been, a subsidiary of the issuing company (whether or not it was such a subsidiary when the investment was made).
(3) A “relevant investment” is made in a company if—
(a) an investment (of any kind) in the company is made by a VCT, or
(b) the company issues shares (money having been subscribed for them), and (at any time) the company provides—
(i) a compliance statement under paragraph 42, or
(ii) a compliance statement under section 205 of ITA 2007 (enterprise investment scheme),
in respect of the shares.
(4) An investment within sub-paragraph (3)(b) is regarded as made when the shares are issued.
Sch. 15 para. 35A and cross-heading inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 4(3) (with Sch. 16 para. 8)

Requirement as to the money raised
36 (1) All of the money raised by the issuance of the relevant issue of shares must have been employed wholly for the purposes of a relevant trade not later than the time determined in accordance with sub-paragraph (1B).
Sch. 15 para. 36(1)-(1C) substituted (11.5.2001 with effect as mentioned in Sch. 16 para. 5(3) of the amending Act) for Sch. 15 para. 36(1) by 2001 c. 9, s. 64, Sch. 16 para. 5(1)(3).
Word in Sch. 15 para. 36(1) substituted (with effect in accordance with Sch. 8 para. 11 of the amending Act) by Finance Act 2009 (c. 10), Sch. 8 para. 8(2)
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 15 para. 36(1A) omitted (with effect in accordance with Sch. 8 para. 11 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 8 para. 8(3)
(1B) The time referred to in sub-paragraph (1) is—
(a) the end of the period of two years beginning with the issue of the shares, or
Words in Sch. 15 para. 36(1B) substituted (with effect in accordance with Sch. 8 para. 11 of the amending Act) by Finance Act 2009 (c. 10), Sch. 8 para. 8(4)
(b) where the issuing company or a qualifying 90% subsidiary of that company had not begun to carry on the relevant trade at the time the shares were issued, the end of the period of two years beginning when the issuing company or a qualifying 90% subsidiary of that company begins to carry on the relevant trade.
Words in Sch. 15 para. 36(1B)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 11(a)(i)
Words in Sch. 15 para. 36(1B)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 11(a)(ii)
(1C) Sub-paragraph (1) is subject to sub-paragraph (5).
Words in Sch. 15 para. 36(1C) substituted (with effect in accordance with Sch. 8 para. 11 of the amending Act) by Finance Act 2009 (c. 10), Sch. 8 para. 8(5)
(2) For the purposes of this paragraph—
“the relevant issue of shares” means the issue of shares in the issuing company which includes the relevant shares;
“relevant trade” means a trade by reference to which the issuing company meets the trading activities requirement.
(3) In this paragraph references to employing money for the purposes of a trade (except where the carrying on of the trade is within paragraph 25(2)) include references to employing it for the purpose of preparing to carry on the trade.
(4) In sub-paragraph (2) the reference to a trade by reference to which the trading activities requirement is met includes, where the carrying on of that trade is within paragraph 25(2), a reference to any qualifying trade—
(a) which is derived or benefits from that trade, and
(b) which is carried on—
(i) by the issuing company, or
(ii) if that company is a parent company, by that company or a qualifying 90% subsidiary of that company.
Words in Sch. 15 para. 36(4)(b)(ii) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 11(b)
(5) Where—
(a) any of the money raised by the issuance of the relevant issue of shares is employed for the purposes of a trade that is a relevant trade by virtue of sub-paragraph (4), and
Words in Sch. 15 para 36(5)(a) substituted (11.5.2001 with effect as mentioned in Sch. 16 para. 5(3) of the amending Act) by 2001 c. 9, s. 64, Sch. 16 paras. 5(2)(a)(3)
(b) that trade was not being carried on by the issuing company, or a qualifying 90% subsidiary of that company, at the time the shares were issued,
Words in Sch. 15 para. 36(5)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 11(b)
the requirement of sub-paragraph (1) ... is not met unless that money is so employed before the third anniversary of the issue date.
Words in Sch. 15 para. 36(5) omitted (with effect in accordance with Sch. 8 para. 11 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 8 para. 8(6)
(6) For the purposes of this paragraph money is not treated as employed otherwise than wholly for the purposes of a trade if the only amount employed for other purposes is an amount which is not a significant amount.

Requirement as to no pre-arranged exits
37 (1) The issuing arrangements for the relevant shares must not include—
(a) arrangements with a view to the subsequent repurchase, exchange or other disposal of those shares or of other shares in or securities of the issuing company;
(b) arrangements for or with a view to the cessation of any trade which is being or is to be or may be carried on by the issuing company or a person connected with that company;
(c) arrangements for the disposal of, or of a substantial amount (in terms of value) of, the assets of the issuing company or of a person connected with that company; or
(d) arrangements the main purpose of which, or one of the main purposes of which, is (by means of any insurance, indemnity or guarantee or otherwise) to provide partial or complete protection for persons investing in shares in the issuing company against what would otherwise be the risks attached to making the investment.
(2) For the purposes of this paragraph “the issuing arrangements” means—
(a) the arrangements under which the relevant shares are issued to the investing company,
(b) any arrangements made, before the issue of the relevant shares to that company, in relation to or in connection with that issue, and
(c) if before the relevant shares were issued information on pre-arranged exits was made available to any prospective subscribers for shares in the relevant issue, any arrangements made—
(i) on or after the issue of the shares, but
(ii) before the end of the qualification period relating to them.
(3) For the purposes of sub-paragraph (2)—
(a) “information on pre-arranged exits” means any information indicating the possibility of making, on or after the issue of the relevant shares but before the end of the qualification period relating to them, arrangements of the kind described in paragraph (a), (b), (c) or (d) of sub-paragraph (1), and
(b) “the relevant issue” means the issue of shares in the issuing company which includes the relevant shares.
(4) The arrangements referred to in sub-paragraph (1)(a) do not include any arrangements with a view to such an exchange of shares, or shares and securities, as is mentioned in paragraph 83(1) (certain exchanges resulting in acquisition of share capital by new company).
(5) The arrangements referred to in sub-paragraph (1)(b) and (c) do not include any arrangements applicable only on the winding up of the issuing company except in a case where—
(a) the issuing arrangements include arrangements for the issuing company to be wound up, or
(b) the issuing company is wound up otherwise than for commercial reasons.
(6) The arrangements referred to in sub-paragraph (1)(d) do not include any arrangements which are confined to the provision—
(a) for the issuing company itself, or
(b) where the issuing company is the parent company of a group, for any group company,
of any such protection against the risks arising in the course of carrying on its business as might reasonably be expected to be provided for normal commercial reasons.

Requirement as to no tax avoidance
38 The relevant shares must be issued for commercial reasons, 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.

Part V Investment relief

Form of investment relief
39 (1) Where—
(a) the investing company is eligible for investment relief in respect of an amount subscribed by it for an issue of shares, and
(b) it makes a claim under this Part,
the company’s liability for corporation tax for the accounting period in which the shares were issued shall be reduced by the appropriate amount.
(2) In sub-paragraph (1) “the appropriate amount” means whichever is the smaller of—
(a) 20% of the amount or aggregate amount—
(i) which was subscribed by the company for shares issued in that period, and
(ii) in respect of which the company is eligible for and claims investment relief, and
(b) the amount which reduces the liability to nil.

Entitlement to claim
40 (1) The investing company is entitled to make a claim to investment relief in respect of the amount subscribed by it for the relevant shares if it appears to it that the requirements for the relief are for the time being met.
This is subject to sub-paragraph (2).
(2) The investing company is not entitled to make a claim to investment relief in relation to the amount subscribed by it for the relevant shares unless—
(a) the funded trade has been carried on for four months by no person other than the issuing company or a qualifying 90% subsidiary of that company, disregarding—
(i) any time spent preparing to carry on that trade, and
(ii) any person required to be disregarded in accordance with sub-paragraph (2A) or (2B), and
Sch. 15 para. 40(2)(a) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 12(a)
(b) the investing company has received from the issuing company a compliance certificate in respect of those shares.
(2A) At any time when the funded trade is carried on by the partners in a partnership of which the issuing company, or a qualifying 90% subsidiary of that company, is a member, there shall be disregarded for the purposes of sub-paragraph (2)(a) any other members of the partnership at that time.
Sch. 15 para. 40(2A), (2B) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 12(b)
(2B) At any time when the funded trade is carried on by the parties to a joint venture to which the issuing company, or a qualifying 90% subsidiary of that company, is a party, there shall be disregarded for the purposes of sub-paragraph (2)(a) any other parties to the joint venture at that time.
(3) For the purposes of this paragraph, “the funded trade” means the trade or trades by reference to which the requirement of paragraph 36 (use of money raised) is met in respect of the relevant issue of shares (as defined by sub-paragraph (2) of that paragraph).
This is subject to sub-paragraph (4).
(4) To the extent that the funded trade would, by virtue of sub-paragraph (3), be a trade derived or benefiting from a trade within paragraph 25(2), the funded trade shall be deemed, for the purposes of this paragraph, to be the trade within that paragraph.
(5) Where—
(a) by reason only of the issuing company or any other company being wound up or dissolved without winding up, the funded trade is carried on as mentioned in sub-paragraph (2)(a) for a period shorter than four months, and
Sch. 15 para. 40(5)(a) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 12(c)
(b) the winding up or dissolution is for commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax,
Word in Sch. 15 para. 40(5)(b) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 12(d)
sub-paragraph (2)(a) shall have effect as if it referred to that shorter period.
(6) Where—
(a) by reason only of anything done as a consequence of the issuing company or any other company being in administration or receivership, the funded trade is carried on as mentioned in sub-paragraph (2)(a) for a period shorter than four months, and
Sch. 15 para. 40(6)(a) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 12(e)
(b) the entry into administration or receivership, and everything done as a consequence of the company concerned being in administration or receivership, is for commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax,
Words in Sch. 15 para. 40(6)(b) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 34(c) (with art. 6)
Word in Sch. 15 para. 40(6)(b) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 12(f)
sub-paragraph (2)(a) shall have effect as if it referred to that shorter period.
(7) No application shall be made under section 55(3) or (4) of the Taxes Management Act 1970 (application for postponement of payment of tax pending appeal) on the ground that the investing company is eligible for investment relief unless a claim for the relief has been duly made by that company.

Compliance certificates
41 (1) A “compliance certificate" is a certificate which—
(a) is issued by the issuing company in respect of the relevant shares,
(b) states that, except so far as they fall to be met by or in relation to the investing company, the requirements for investment relief are for the time being met in relation to those shares, and
(c) is in such form as the Inland Revenue may direct.
(2) Before issuing a compliance certificate in respect of the relevant shares, the issuing company must provide the Inland Revenue with a compliance statement in respect of the issue of shares which includes the relevant shares.
(3) The issuing company must not issue a compliance certificate without the authority of the Inland Revenue.
(4) Where the company or a person connected with the company has given notice to the Inland Revenue under paragraph 65 (information to be provided by issuing company etc.) the authority of the Inland Revenue must be given or renewed after the receipt of the notice.

Compliance statements
42 (1) A “compliance statement" is a statement, in respect of an issue of shares, to the effect that, except so far as they fall to be satisfied by or in relation to companies to which the shares included in that issue have been issued, the requirements for investment relief—
(a) are for the time being met in relation to the shares to which the statement relates, and
(b) have been so met at all times since the shares were issued.
In determining for the purposes of this sub-paragraph whether those requirements are met at any time in relation to the issue of shares, references in this Schedule to “the relevant shares” shall be read as references to the shares included in the issue.
(2) A compliance statement must be in such form as the Inland Revenue direct and must contain—
(a) such additional information as the Inland Revenue reasonably require,
(b) a declaration that the statement is correct to the best of the issuing company’s knowledge and belief, and
(c) such other declarations as the Inland Revenue reasonably require.
(3) Without prejudice to the generality of sub-paragraph (2)(a) the information required by the Inland Revenue may include—
(a) information relating to the companies to which compliance certificates may be issued under paragraph 41 in respect of any shares included in the issue of shares to which the statement relates, and
(b) information to enable the Inland Revenue to determine whether the requirements of paragraph 35(2)(b) and (c) (shares to be subscribed for wholly in cash and fully paid up) are met in relation to shares included in that issue subscribed for by such companies.
(4) The issuing company may not provide the Inland Revenue with a compliance statement in respect of any shares issued by it in any accounting period—
(a) before the condition in paragraph 40(2)(a) (no claim until trade carried on for four months) is satisfied; or
(b) later than two years after the end of that accounting period or, if that condition is first satisfied after the end of that accounting period, later than two years after the condition is first satisfied.

Appeal against refusal to authorise compliance certificate
43 For the purposes of the provisions of the Taxes Management Act 1970 relating to appeals, the refusal of the Inland Revenue to authorise the issue of a compliance certificate shall be taken to be a decision disallowing a claim by the issuing company which is not a claim for discharge or repayment of tax.
1970 c. 9.

Penalties for fraudulent certificate or statement etc.
44 The issuing company is liable to a penalty not exceeding £3,000 if—
(a) it issues a compliance certificate, or provides a compliance statement, which is made fraudulently or negligently, or
(b) it issues a compliance certificate in contravention of paragraph 41(3) or (4) (no certificate to be issued without Inland Revenue approval).

Attribution of relief to shares
45 (1) References in this Schedule, in relation to a company, to the investment relief attributable to any shares or issue of shares shall be read as references to any reduction made in the company’s liability to corporation tax that is attributed to those shares or that issue in accordance with this paragraph.
This is subject to the provisions of Part VI of this Schedule providing for the reduction or withdrawal of investment relief.
(2) Where a company’s liability to corporation tax is reduced for an accounting period under paragraph 39 (form of investment relief), then—
(a) where the reduction is obtained by reason of one issue of shares, the amount of the reduction shall be attributed to that issue, and
(b) where the reduction is obtained by reason of two or more issues of shares, the reduction—
(i) shall be apportioned between those issues in the same proportions as the amounts subscribed by the company for each issue, and
(ii) shall be attributed to those issues accordingly.
(3) Where under this paragraph an amount of any reduction of corporation tax is attributed to an issue of shares (“the original issue”) to a company a proportionate part of that amount shall be attributed to each share comprised in the original issue.
(4) If corresponding bonus shares are issued to the company in respect of any shares (“the original shares”) comprised in the original issue that have been continuously held by the company from the time they were issued until the issue of the bonus shares—
(a) a proportionate part of the total amount attributed to the original shares immediately before the bonus shares are issued shall be attributed to each of the shares in the holding comprising the original shares and the bonus shares, and
(b) after the issue of the bonus shares, this Schedule shall apply as if—
(i) the original issue had included the bonus shares, and
(ii) the bonus shares had been held by the company continuously from the time the original shares were issued until the bonus shares were issued.
(5) In sub-paragraph (4) “corresponding bonus shares” means bonus shares which are in the same company, of the same class, and carry the same rights as the original shares.
(6) If investment relief attributable to any shares falls to be withdrawn under Part VI of this Schedule the relief attributable to each of the shares shall be reduced to nil.
(7) If investment relief attributable to any shares falls to be reduced under Part VI of this Schedule by any amount the relief attributable to each of the shares shall be reduced by a proportionate part of that amount.

Part VI Withdrawal of investment relief

Disposal of shares
46 (1) This paragraph applies where—
(a) the investing company disposes of any of the relevant shares which have been held by it continuously from the time they were issued until the disposal,
(b) the disposal takes place during the qualification period relating to the relevant shares, and
(c) investment relief is attributable to the shares.
(2) If the disposal is not—
(a) by way of a bargain made at arm’s length ...,
Words in Sch. 15 para. 46(2)(a) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(10), Sch. 3 Pt. 1 (with Sch. 2)
(b) by way of a distribution in the course of dissolving or winding up the issuing company,
(c) a disposal within section 24(1) of the 1992 Act (entire loss, destruction, dissipation or extinction of asset), or
(d) a deemed disposal under section 24(2) of that Act (claim that value of asset has become negligible),
the investment relief attributable to those shares must be withdrawn.
(3) If the disposal is within paragraph (a), (b), (c) or (d) of sub-paragraph (2) the investment relief attributable to those shares must—
(a) if it is greater than an amount equal to 20% of the amount or value of the consideration (if any) which the company receives for the shares, be reduced by that amount, and
(b) in any other case, be withdrawn.
(4) Where—
(a) the amount of the reduction (“A”) in the investing company’s liability to corporation tax obtained under paragraph 39 (form of investment relief) in respect of the relevant shares, is less than
(b) the amount (“B”) which is equal to 20% of the amount subscribed by the investing company for those shares,
sub-paragraph (3)(a) shall have effect in relation to a disposal of any of those shares as if the amount or value referred to in that sub-paragraph were reduced by multiplying it by the fraction—
AB
(5) Where the amount of investment relief attributable to any of the relevant shares has been reduced before the investment relief was obtained, the amount of the corporation tax reduction obtained in respect of those shares shall be deemed for the purposes of sub-paragraph (4) to be the amount of the corporation tax reduction that would have been obtained had no such reduction of relief been made before the relief was obtained.
(6) Sub-paragraph (5) does not apply to a reduction by virtue of paragraph 45(4) (attribution of investment relief where there is a corresponding issue of bonus shares).

Value received by investing company
47 (1) Sub-paragraph (2) applies where the investing company receives any value (other than insignificant value) from the issuing company during the period of restriction relating to the relevant shares.
(2) Any investment relief attributable to the shares shall—
(a) if it exceeds the amount mentioned in sub-paragraph (3), be reduced by that amount, and
(b) in any other case, be withdrawn.
(3) The amount referred to in sub-paragraph (2)(a) is an amount equal to 20% of the amount of the value received.
(4) This paragraph is subject to the following paragraphs—
paragraph 51 (value received where there is more than one issue of shares);
paragraph 52 (cases where maximum investment relief not obtained); and
paragraph 54 (receipt of replacement value).
(5) Where—
(a) value is received (“the relevant receipt”) by the investing company from the issuing company at any time during the period of restriction relating to the relevant shares,
(b) the investing company has received from the issuing company one or more receipts of insignificant value at a time or times—
(i) during that period, but
(ii) not later than the time of the relevant receipt, and
(c) the aggregate amount of the value of the receipts within paragraph (a) and (b) is not an amount of insignificant value,
the investing company shall be treated for the purposes of this Part as if the relevant receipt had been a receipt of an amount of value equal to that aggregate amount.
For this purpose a receipt does not fall within paragraph (b) if it has been previously aggregated under this sub-paragraph.
(6) If, at any time in the period—
(a) beginning one year before the relevant shares are issued, and
(b) expiring at the end of the issue date,
arrangements are in existence which provide for the investing company to receive, or to be entitled to receive, any value from the issuing company at any time in the period of restriction relating to those shares, no amount of value received by the investing company shall be treated as a receipt of insignificant value for the purposes of this paragraph.
(7) For the purposes of this paragraph—
(a) references to a receipt of insignificant value (however expressed) are references to a receipt of an amount of insignificant value;
(b) “an amount of insignificant value” means an amount of value which—
(i) does not exceed £1,000, or
(ii) if it exceeds that amount, is insignificant in relation to the amount subscribed by the investing company for the shares.
This is subject to sub-paragraph (6).
(8) Where by reason of the investing company’s disposal of any shares any investment relief attributable to those shares is withdrawn or reduced, the investing company shall not be treated for the purposes of this paragraph as receiving value from the issuing company in respect of the disposal.
(9) Value received shall be disregarded, for the purposes of this paragraph, to the extent to which investment relief attributable to any shares has already been reduced or withdrawn on its account.

Meaning of “the period of restriction"
48 For the purposes of this Schedule “the period of restriction” relating to the relevant shares means the period—
(a) beginning one year before the shares are issued, and
(b) ending at the end of the qualification period relating to the shares.

When value is received
49 (1) For the purposes of paragraphs 47 (value received by investing company) and 51 (value received where there is more than one issue of shares) the investing company receives value from the issuing company at any time when the issuing company—
(a) repays, redeems or repurchases any of its share capital or securities which belong to the investing company or makes any payment to that company for giving up its right to any of the issuing company’s share capital or any security on its cancellation or extinguishment;
(b) repays, in pursuance of any arrangements for or in connection with the acquisition of the relevant shares, any debt owed to the investing company other than a debt which was incurred by the issuing company—
(i) on or after the date of issue of those shares; and
(ii) otherwise than in consideration of the extinguishment of a debt incurred before that date;
(c) makes to the investing company any payment for giving up the company’s right to any debt on its extinguishment;
(d) releases or waives any liability of the investing company to the issuing company or discharges, or undertakes to discharge, any liability of the investing company to a third person;
(e) makes a loan or advance to the investing company which has not been repaid in full before the issue of the relevant shares;
(f) provides a benefit or facility for the directors or employees of the investing company or any of their associates;
(g) disposes of an asset to the investing company for no consideration or for a consideration which is or the value of which is less than the market value of the asset;
(h) acquires an asset from the investing company for a consideration which is or the value of which is more than the market value of the asset; or
(i) makes a payment to the investing company other than a qualifying payment.
(2) For the purposes of sub-paragraph (1)(e) there shall be treated as if it were a loan made by the issuing company to the investing company—
(a) the amount of any debt (other than an ordinary trade debt) incurred by the investing company to the issuing company, and
(b) the amount of any debt due from the investing company to a third person which has been assigned to the issuing company.
(3) For the purposes of sub-paragraph (1)(d) the issuing company shall be treated as having released or waived a liability if the liability is not discharged within 12 months of the time when it ought to have been discharged.
(4) For the purposes of this paragraph—
(a) references to a debt or liability do not, in relation to a person, include references to any debt or liability which would be discharged by the making by that person of a qualifying payment;
(b) references to a benefit or facility do not include references to any benefit or facility provided in circumstances such that, if a payment had been made of an amount equal to its value, that payment would be a qualifying payment; and
(c) any reference to a payment or disposal to a person includes a reference to a payment or disposal made to that person indirectly or to his order or for his benefit.
In paragraphs (a) to (c) references to “a person" include references to any person who, at any time in the period of restriction in question, is connected with that person, whether or not he is so connected at the material time.
(5) In this paragraph—
“ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business where any credit given—
(a) does not exceed six months, and
(b) is not longer than that normally given to customers of the person carrying on the trade or business; and
“qualifying payment” means—
(a) any payment by any person for any goods, services or facilities provided by the investing company (in the course of its trade or otherwise) which is reasonable in relation to the market value of those goods, services or facilities;
(b) the payment by any person of any interest which represents no more than a reasonable commercial return on money lent to that person;
(c) the payment by any company of any dividend or other distribution which does not exceed a normal return on any investment in shares in or other securities of that company;
(d) any payment for the acquisition of an asset which does not exceed its market value;
(e) the payment by any person, as rent for any property occupied by the person, of an amount not exceeding a reasonable and commercial rent for the property; and
(f) a payment in discharge of an ordinary trade debt.

The amount of value received
50 For the purposes of paragraph 47 the amount of the value received is—
(a) in a case within paragraph 49(1)(a), (b) or (c)—
(i) the amount received by the investing company, or
(ii) the market value of the shares, securities or debt in question,
whichever is greater;
(b) in a case within paragraph 49(1)(d), the amount of the liability;
(c) in a case within paragraph 49(1)(e)—
(i) the amount of the loan or advance, less
(ii) the amount of any repayment made before the issue of the relevant shares;
(d) in a case within paragraph 49(1)(f)—
(i) the cost to the issuing company of providing the benefit or facility, less
(ii) any consideration given for it by the recipient or any associate of his;
(e) in a case within paragraph 49(1)(g) or (h), the difference between the market value of the asset and the consideration (if any) received for it; and
(f) in a case within paragraph 49(1)(i), the amount of the payment.

Value received where there is more than one issue of shares
51 (1) This paragraph applies where—
(a) two or more issues of shares in the issuing company have been made to the investing company (being issues in relation to which the investing company is eligible for and claims investment relief), and
(b) the value received falls within the periods of restriction relating to two or more of those issues.
(2) Where this paragraph applies paragraph 47 has effect in relation to the shares comprised in each of the issues referred to in sub-paragraph (1)(b) as if the amount of the value received were reduced by multiplying it by the fraction—
AB
Where—
A is the amount subscribed by the investing company for the shares comprised in the issue in question to which investment relief is (or, but for paragraph 47 would be) attributable; and
B is the aggregate of that amount and the corresponding amount or amounts for the other issue or issues.

Cases where maximum investment relief not obtained
52 (1) Where—
(a) the amount of the reduction (“C”) in the investing company’s liability to corporation tax obtained in respect of the relevant shares, is less than
(b) the amount (“D”) which is equal to 20% of the amount subscribed by the investing company for those shares,
paragraph 47 has effect as if the amount of the value received were reduced by multiplying it by the fraction—
CD
(2) Where the amount of investment relief attributable to any of the relevant shares has been reduced before the investment relief was obtained, the amount of the corporation tax reduction obtained in respect of those shares shall be deemed for the purposes of sub-paragraph (1) to be the amount of the corporation tax reduction that would have been obtained had no such reduction of relief been made before the relief was obtained.
(3) Sub-paragraph (2) does not apply to a reduction of investment relief by virtue of paragraph 45(4) (attribution of investment relief where there is a corresponding issue of bonus shares).

Receipts of value by and from connected persons
53 In paragraphs 47, 49 and 50 references to the investing company or the issuing company include references to any person who at any time in the period of restriction relating to the relevant shares is connected with the company concerned, whether or not he is connected at the material time.

Receipt of replacement value
54 (1) Where—
(a) any investment relief attributable to the relevant shares would, in the absence of this paragraph, be reduced or withdrawn under paragraph 47 by reason of a receipt of value within paragraph 49(1) (“the original value”),
(b) the original supplier receives value (“the replacement value”) from the original recipient by reason of a qualifying receipt, and
(c) the amount of the replacement value is not less than the amount of the original value,
Words in Sch. 15 para. 54(1)(a) inserted (retrospectively) by 2001 c. 9, s.64, Sch. 16 para. 6(1)(6)
paragraph 47 shall not, by reason of the receipt of the original value, have effect to reduce or withdraw the investment relief.
(2) For the purposes of this paragraph and paragraph 55—
“the original recipient” means the person who receives the original value; and
“the original supplier” means the person from whom that value was received.
(2A) Where the amount of the original value is, by virtue of paragraph 51, treated as reduced for the purposes of paragraph 47, the reference in sub-paragraph (1)(c) to the amount of the original value shall be read as a reference to the amount of that value disregarding the reduction.
Sch. 15 para. 54(2A) inserted (11.5.2001 with effect as mentioned in Sch. 16 para. 6(7) of the amending Act) by 2001 c. 9, s. 64, Sch. 16 para. 6(2)(7)
(3) A receipt of the replacement value is a qualifying receipt for the purposes of sub-paragraph (1) if it arises—
(a) by reason of the original recipient doing one or more of the following—
(i) making a payment to the original supplier other than an excepted payment;
(ii) acquiring any asset from the original supplier for a consideration the amount or value of which is more than the market value of the asset;
(iii) disposing of any asset to the original supplier for no consideration or for a consideration the amount or value of which is less than the market value of the asset; or
Sch. 15 para. 54(3)(a)(b) substituted (11.5.2001 with effect as mentioned in Sch. 16 para. 6(7) of the amending Act) for Sch. 15 para. 54(3)(a)-(c) by 2001 c. 9, s. 64, Sch. 16 paras. 6(3)(7)
(b) where the receipt of the original value was within paragraph 49(1)(d), by reason of an event the effect of which is to reverse the event which constituted the receipt of the original value.
(3A) For the purposes of sub-paragraph (3)(a)(i), the following are excepted payments—
(a) any payment for any goods, services or facilities, provided (whether in the course of a trade or otherwise) by—
(i) the original supplier, or
(ii) any other person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that supplier (whether or not he is such an associate, or so connected, at the material time),
which is reasonable in relation to the market value of those goods, services or facilities;
(b) any payment of any interest which represents no more than a reasonable commercial return on money lent to—
(i) the original recipient, or
(ii) any other person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that recipient (whether or not he is such an associate, or so connected, at the material time);
(c) any payment, as rent for any property occupied by—
(i) that recipient, or
(ii) any person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that recipient (whether or not he is such an associate, or so connected, at the material time),
of an amount not exceeding a reasonable and commercial rent for the property;
(d) any payment within paragraph (c), (d) or (f) of the definition of “qualifying payment" in paragraph 49(5); and
(e) any payment for shares in or securities of any company in circumstances that do not fall within sub-paragraph (3)(a)(ii).
Sch. 15 para. 54(3A) inserted (11.5.2001 with effect as mentioned in Sch. 16 para. 6(7) of the amending Act) by 2001 c. 9, s. 64, Sch. 16 para. 6(4)(7)
(4) For the purposes of this paragraph, the amount of the replacement value is—
(a) in a case within paragraph (a) of sub-paragraph (3), the aggregate of—
(i) the amount of any payment within sub-paragraph (i) of that paragraph, and
(ii) the difference between the market value of any asset to which sub-paragraph (ii) or (iii) of that paragraph applies and the amount or value of the consideration (if any) received for it, and
(b) in a case within sub-paragraph (3)(b), the amount of the original value,
and paragraph 50 shall apply for the purposes of determining the amount of the original value.
Sch. 15 para. 54(4) substituted (11.5.2001 with effect as mentioned in Sch. 16 para. 6(7) of the amending Act) by 2001 c. 9, s. 64, Sch. 16 para. 6(5)(7)

Provision supplementary to paragraph 54
55 (1) The receipt of the replacement value shall be disregarded for the purposes of sub-paragraph (1) of paragraph 54 to the extent to which it has previously been set (under that paragraph) against a receipt of value to prevent any reduction or withdrawal of investment relief under paragraph 47.
(2) The receipt of the replacement value by the original supplier (“the event”) shall be disregarded for the purposes of paragraph 54(1) if—
(a) the event occurs before the start of the period of restriction relating to the relevant shares,
(b) there was an unreasonable delay in the event occurring, or
(c) where an appeal has been brought by the investing company against an assessment to withdraw or reduce any investment relief attributable to the relevant shares by reason of the receipt of the original value, the event occurs more than 60 days after the amount of relief which falls to be withdrawn has been finally determined.
But nothing in paragraph 54 or this paragraph requires the replacement value to be received after the original value.
(3) Sub-paragraph (4) applies where—
(a) the receipt of the replacement value is a qualifying receipt for the purposes of paragraph 54(1) (receipt of replacement value which prevents loss of investment relief), and
(b) the event which gives rise to the receipt is (or includes) a subscription for shares by—
(i) the investing company, or
(ii) any person who at any time in the period of restriction relating to the relevant shares is connected with the investing company, whether or not he is connected at the material time.
(4) Where this sub-paragraph applies the person who subscribes for the shares shall not—
(a) be eligible for—
(i) any investment relief, or
(ii) any relief under Chapter III of Part VII of the Taxes Act 1988 or Part 5 of ITA 2007 (EIS income tax relief),
Words in Sch. 15 para. 55(4) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 394(3) (with Sch. 2)
in relation to those shares or any other shares in the same issue; or
(b) by virtue of his subscription for those shares or any other shares in the same issue, be treated as making a qualifying investment for the purposes of Schedule 5B to the 1992 Act (EIS: deferral relief).
(5) In this paragraph “the original value” and “the replacement value” shall be construed in accordance with paragraph 54.
Sch. 15 para. 55(5) inserted (retrospectively) by 2001 c. 9, s. 64, Sch. 16 para. 7

Value received by other persons
56 (1) Where any investment relief is attributable to such of the relevant shares as are held by the investing company, sub-paragraph (2) shall apply if at any time in the period of restriction relating to the relevant shares the issuing company or any subsidiary—
(a) repays, redeems or repurchases any of its share capital which belongs to any member other than—
(i) the investing company, or
(ii) a person who falls within sub-paragraph (3), or
(b) 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.
(2) The investment relief—
(a) if it is greater than the amount mentioned in sub-paragraph (4), shall be reduced by that amount, and
(b) in any other case, must be withdrawn.
(3) A person falls within this sub-paragraph if the repayment, redemption, repurchase or payment in question—
(a) causes any investment relief attributable to that person’s shares in the issuing company to be withdrawn or reduced by virtue of—
(i) paragraph 46 (disposal of shares), or
(ii) paragraph 49(1)(a) (receipt of value by virtue of repayment of share capital etc.);
(b) causes any relief under Chapter III of Part VII of the Taxes Act 1988 or Part 5 of ITA 2007 (EIS income tax relief) attributable to that person’s shares in the issuing company to be withdrawn or reduced by virtue of—
(i) section 299 of the Taxes Act 1988 or section 209 of ITA 2007 (disposal of shares), or
Words in Sch. 15 para. 56(3) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 394(4)(b) (with Sch. 2)
(ii) section 300(2)(a) of the Taxes Act 1988 or section 216(2)(a) of ITA 2007 (receipt of value by virtue of repayment of share capital etc.);
Words in Sch. 15 para. 56(3) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 394(4)(c) (with Sch. 2)
or
Words in Sch. 15 para. 56(3) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 394(4)(a) (with Sch. 2)
(c) gives rise to a qualifying chargeable event (within the meaning of paragraph 14(4) of Schedule 5B to the 1992 Act (EIS: deferral relief)) in respect of that person. or it would have the effect mentioned in paragraph (a), (b) or (c) were it not a receipt of insignificant value for the purposes of paragraph 47 (value received by the investing company), section 300 of the Taxes Act 1988, section 214 of ITA 2007 or paragraph 13 of Schedule 5B to the 1992 Act, as the case may be.
Words in Sch. 15 para. 56(3)(c) inserted (11.5.2001 with effect as mentioned in Sch. 16 para. 9(2) of the amending Act) by 2001 c. 9, s. 64, Sch. 16 para. 8
Words in Sch. 15 para. 56(3) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 394(4)(d) (with Sch. 2)
(4) The amount referred to in sub-paragraph (2) is an amount equal to 20%—
(a) where sub-paragraph (1) does not apply in the case of any other company holding shares in the issuing company, of the amount received by the member, and
(b) where sub-paragraph (1) also applies in the case of one or more such other companies, of the appropriate fraction of that amount.
(5) For the purposes of sub-paragraph (4) “the appropriate fraction” is—
AB
Where—
A is the amount subscribed by the investing company for such of the relevant shares as are shares to which investment relief is or, but for sub-paragraph (2)(b), would be attributable, and
B is the aggregate of that amount and the amount or amounts subscribed by the other company or companies for such shares which are comprised in the same issue of shares.
(6) Where—
(a) the amount of the reduction (“C”) in the investing company’s liability to corporation tax obtained under paragraph 39 (form of investment relief) in respect of the relevant shares, is less than
(b) the amount (“D”) which is equal to 20% of the amount subscribed by the investing company for those shares,
sub-paragraph (4) has effect as if the amount received by the member, or (as the case may be) the appropriate fraction of that amount, were reduced by multiplying it by the fraction—
CD
(7) Where the amount of investment relief attributable to the relevant shares has been reduced before the relief was obtained, the amount of the corporation tax reduction obtained in respect of those shares shall be deemed for the purposes of sub-paragraph (6) to be the amount of the corporation tax reduction that would have been obtained had no such reduction of investment relief been made before the relief was obtained.
(8) Sub-paragraph (7) does not apply to a reduction by virtue of paragraph 45(4) (attribution of investment relief where there is a corresponding issue of bonus shares).

Insignificant repayments disregarded
57 (1) Any repayment shall be disregarded for the purposes of paragraph 56(1) (repayments etc. which cause withdrawal of investment relief) if whichever is the greater of—
(a) the market value of the shares to which it relates (“the target shares”) immediately before the event occurs, and
(b) the amount received by the member in question,
is insignificant in relation to the market value of the remaining issued share capital of the issuing company (or, as the case may be, subsidiary) immediately after the event occurs.
This is subject to sub-paragraph (4).
Word in Sch. 15 para. 57(1) inserted (11.5.2001 with effect as mentioned in Sch. 15 para. 9(3) of the amending Act) by 2001 c. 9, s. 64, Sch. 16 Pt. 2 para. 9(1)(3)
(2) For the purposes of this paragraph “repayment” means a repayment, redemption, repurchase or payment mentioned in paragraph 56(1) (repayments etc. which cause withdrawal of investment relief).
(3) For the purposes of sub-paragraph (1) it shall be assumed that the target shares are cancelled at the time the repayment is made.
Word in Sch. 15 para. 57(3) substituted (retrospectively) by 2001 c. 9, s. 64, Sch. 16 Pt. 2 para. 9(2)(4)
(4) Sub-paragraph (1) does not apply if, at a relevant time, arrangements are in existence that provide—
(a) for a repayment by the issuing company or any subsidiary of that company (whether or not it is such a subsidiary at the time the arrangements are made), or
(b) for anyone to be entitled to such a repayment,
at any time in the period of restriction relating to the shares.
(5) For the purposes of sub-paragraph (4) “a relevant time” means any time in the period—
(a) beginning one year before the relevant shares are issued, and
(b) expiring at the end of the issue date.

Provision supplementary to paragraph 56 and 57
58 (1) Any repayment shall be disregarded for the purposes of paragraph 56(1) (repayments etc. which cause withdrawal of investment relief) to the extent to which investment relief attributable to any shares has already been reduced or withdrawn on its account.
(2) In any case where—
(a) investment relief is attributable to such of the relevant shares as are held by the investing company;
(b) the issuing company has made one or more other issues of shares each of which includes shares (“designated shares”) to which investment relief is attributable, and
(c) the repayment falls—
(i) within the period of restriction relating to the relevant shares, and
(ii) within one or more of the equivalent periods relating to any of the designated shares,
paragraph 56(4) shall have effect in relation to each of the issues of shares as if the amount received by the member, or (as the case may be) the appropriate fraction of that amount, were reduced by multiplying it by the relevant fraction.
(3) For the purposes of sub-paragraph (2) “the equivalent period”, in relation to any designated shares, means the period—
(a) beginning one year before the shares are issued, and
(b) ending at the end of the qualification period relating to the shares.
For the purposes of determining the qualification period relating to any designated shares, the references in paragraph 3 to the relevant shares shall be read as references to those designated shares.
(4) In sub-paragraph (2)—
(a) “the appropriate fraction” has the meaning given by paragraph 56(5), and
(b) “the relevant fraction” means—
EF
Where—
E is the amount subscribed by companies for shares which are included in the issue in question and to which investment relief is or, but for paragraph 56(2)(b), would be attributable; and
F is the aggregate of that amount and the corresponding amount or amounts for the other issue or issues.
(5) Where—
(a) a company issues share capital of nominal value equal to the authorised minimum (within the meaning of the Companies Act 2006) for the purposes of complying with the requirements of section 761 of that Act (public company not to do business unless requirements as to share capital complied with), and
Words in Sch. 15 para. 58(5) substituted (6.4.2008) by The Companies Act 2006 (Consequential Amendments) (Taxes and National Insurance) Order 2008 (S.I. 2008/954), arts. 1(1), 26(a)(i) (with art. 4)
Words in Sch. 15 para. 58(5) substituted (6.4.2008) by The Companies Act 2006 (Consequential Amendments) (Taxes and National Insurance) Order 2008 (S.I. 2008/954), arts. 1(1), 26(a)(ii) (with art. 4)
(b) the registrar of companies issues the company with a certificate under section 761,
paragraph 56(1) shall not apply in relation to any redemption of those shares within 12 months of the date on which they were issued.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 15 para. 58(6) repealed (6.4.2008) by The Companies Act 2006 (Consequential Amendments) (Taxes and National Insurance) Order 2008 (S.I. 2008/954), arts. 1(1), 26(b), Sch. (with art. 4)
(7) References in paragraphs 56 and 57 and this paragraph to a subsidiary of the issuing company are references to any company which at any time in the period of restriction relating to the relevant shares is a 51% subsidiary of the issuing company whether or not it is such a subsidiary at the time of the repayment in question.
(8) For the purposes of this paragraph “repayment” has the meaning given in paragraph 57(2).

Put options and call options
59 (1) Sub-paragraph (2) applies where—
(a) an option, the exercise of which would bind the grantor to purchase any of the relevant shares, is granted to the investing company during the qualification period relating to those shares; or
(b) an option, the exercise of which would bind the investing company to sell such shares, is granted by the investing company during that period.
(2) Any investment relief attributable to the shares to which the option relates must be withdrawn.
(3) The shares to which the option relates are those which, if—
(a) the option were exercised immediately after the grant, and
(b) any shares in the issuing company acquired by the investing company after the grant were disposed of immediately after being acquired,
would be treated for the purposes of this Schedule as disposed of in pursuance of the option.
(4) Nothing in this paragraph prejudices the operation of paragraph 37 (pre-arranged exits).

Withdrawal of relief
60 (1) Where any investment relief has been obtained which—
(a) is subsequently found not to have been due, or
(b) falls to be withdrawn under this Part,
it shall be withdrawn by making an assessment to corporation tax ... for the accounting period for which the relief was obtained.
Words in Sch. 15 para. 60(1) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 468, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)
(2) Investment relief obtained by the investing company in respect of the relevant shares may not be withdrawn on the ground—
(a) that the issuing company is not a qualifying issuing company in relation to those shares,
(b) that the requirements of Part IV of this Schedule are not met in respect of the shares,
(c) by virtue of paragraph 47 (value received by investing company), or
(d) by virtue of paragraph 56 (value received by other persons),
unless sub-paragraph (3) is satisfied.
(3) This sub-paragraph is satisfied if—
(a) either—
(i) the issuing company has given notice under paragraph 65 (information to be provided by issuing company etc.) in relation to those shares, or
(ii) the Inland Revenue have given notice to that company stating that, by reason of the ground in question, the whole or any part of the investment relief obtained by any company or companies in respect of shares included in the relevant issue of shares was not in their opinion due,
and
(b) in the case of a withdrawal within sub-paragraph (2)(c) or (d), the Inland Revenue have given notice to the investing company stating the matters mentioned in paragraph (a)(ii) above.
(4) In this paragraph—
(a) references to the withdrawal of investment relief include its reduction; and
(b) “the relevant issue of shares” means the issue of shares in the issuing company which includes the relevant shares.

Appeals against withdrawal of relief
61 For the purposes of the provisions of the Taxes Management Act 1970 relating to appeals, the giving of notice by the Inland Revenue under paragraph 60(3)(a)(ii) shall be taken to be a decision disallowing a claim by the issuing company which is not a claim for discharge or repayment of tax.
1970 c. 9.

Time limits
62 (1) The Inland Revenue may not—
(a) make an assessment for withdrawing or reducing the investment relief attributable to any of the relevant shares, or
(b) give a notice under paragraph 60(3)(a)(ii) or (b),
more than six years after the end of the relevant accounting period.
(2) In sub-paragraph (1) “the relevant accounting period” means—
(a) the accounting period in which the time mentioned in paragraph 36(1) (time limit for employing money raised) falls, or
(b) the accounting period in which the event which causes the investment relief to be withdrawn or reduced occurs,
whichever is later.
(3) This paragraph is subject to sub-paragraphs (2) and (3) of paragraph 46 of Schedule 18 to the Finance Act 1998 (fraud or negligence).
Those sub-paragraphs shall apply in relation to any notice under paragraph 60(3)(a)(ii) or (b) as if it were an assessment relating to the accounting period to which any assessment made by virtue of the notice would relate.
1998 c. 36.

Interest
63 (1) This paragraph applies where—
(a) investment relief is withdrawn or reduced by virtue of—
(i) a failure to meet any of the requirements of paragraphs 5 to 10 or of Part III of this Schedule (requirements to be met in relation to investing company or issuing company);
(ia) paragraph 35A (maximum amount raised annually through risk capital schemes);
Sch. 15 para. 63(1)(a)(ia) inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 4(4)
(ii) paragraph 46 (disposal of shares);
(iii) paragraph 47 (value received by investing company);
(iv) paragraph 56 (value received by other persons); or
(v) paragraph 59 (put options and call options);
(b) as a result, an assessment to corporation tax is made by virtue of paragraph 60; and
(c) the relevant event occurs after the date when the tax assessed became due and payable or, if there is more than one such date, the latest of them.
(2) Section 87A of the Taxes Management Act 1970 (interest on overdue corporation tax etc.) has effect in relation to the tax assessed as if it became due and payable on the date the relevant event occurred.
1970 c. 9.
(3) In this paragraph references to “the relevant event" are to the event by virtue of which the relief is withdrawn or reduced as mentioned in sub-paragraph (1)(a).

Information to be provided by the investing company
64 (1) This paragraph applies where—
(a) the investing company has obtained investment relief in respect of the relevant shares, and
(b) an event occurs by reason of which—
(i) the company is not a qualifying investing company in relation to those shares,
(ii) the investment relief falls to be withdrawn or reduced by virtue of paragraph 47 (receipt of value by investing company), or
(iii) the investment relief falls to be withdrawn or reduced by virtue of paragraph 59 (put options and call options).
(2) Where this paragraph applies the investing company must give the Inland Revenue a notice containing particulars of the event.
(3) Where the investing company—
(a) is required under this paragraph to give notice of a receipt of value (within paragraph 49(1)), and
(b) has knowledge of any replacement value received (or expected to be received) from the original recipient by the original supplier by reason of a qualifying receipt,
the notice shall include particulars of that receipt of replacement value (or expected receipt).
In this paragraph “replacement value”, “original recipient”, “original supplier” and “qualifying receipt” shall be construed in accordance with paragraph 54.
(4) Subject to sub-paragraph (5), any notice required to be given by the company under sub-paragraph (2) must be given—
(a) within 60 days after the event, or
(b) where the event is the receipt of value by a person connected with the company (see paragraph 53), within 60 days after the company’s coming to know of the event.
(5) In a case within sub-paragraph (1)(b)(ii), where the event occurred before the issue of the relevant shares, any notice required to be given by the investing company under sub-paragraph (2) must be given—
(a) within 60 days after the issue of the shares, or
(b) where—
(i) the event is the receipt of value by a person connected with the company (see paragraph 53), and
(ii) the company comes to know of the event on or after the issue of the shares,
within 60 days after the company’s coming to know of the event.

Information to be provided by the issuing company etc.
65 (1) This paragraph applies where—
(a) the issuing company has provided the Inland Revenue with a compliance statement in respect of an issue of shares, and
(b) an event occurs by reason of which—
(i) the issuing company is not a qualifying issuing company in relation to any of the shares included in that issue, or would not be such a company if investment relief had been obtained in respect of the shares in question,
(ii) the requirements of Part IV of this Schedule are not met in respect of any of the shares included in that issue, or would not be met if investment relief had been obtained in respect of the shares in question, or
(iii) paragraph 47 (value received by investing company) or 56 (value received by other persons) has effect to cause any investment relief attributable to any of the shares included in that issue to be withdrawn or reduced, or would have such an effect if investment relief had been obtained in respect of the shares in question.
(2) Where this paragraph applies—
(a) the company, and
(b) any person connected with the company who has knowledge of the matters mentioned in sub-paragraph (1),
must give the Inland Revenue a notice containing particulars of the event.
(3) Sub-paragraph (3) of paragraph 64 shall apply in relation to a person required to give notice under this paragraph of a receipt of value within paragraph 49(1) as it applies to a company required to give such a notice under paragraph 64.
(4) Subject to sub-paragraph (6) any notice required to be given by a company under sub-paragraph (2)(a) must be given—
(a) within 60 days after the event, or
(b) where the event is—
(i) a failure by the company to meet the requirement of paragraph 18 (the “individual-owners requirement”) in respect of any of those shares; or
(ii) a receipt of value within paragraph 49(1) from a person connected with the company (see paragraph 53),
within 60 days after the company’s coming to know of the event.
(5) Subject to sub-paragraph (6) any notice required to be given by a person within sub-paragraph (2)(b) must be given within 60 days after the person’s coming to know of the event.
(6) In a case within sub-paragraph (1)(b)(iii), any notice required to be given by a person under sub-paragraph (2) must be given within 60 days after the issue of the shares if—
(a) the event occurred, and
(b) the person came to know of it,
before those shares were issued.

Power of Inland Revenue to obtain information
66 (1) This paragraph applies where the Inland Revenue have reason to believe that a company or other person—
(a) has not given a notice which it is required to give under paragraph 64 or 65 in respect of any event, or
(b) has given or received value (within the meaning of paragraph 49(1)) which, but for the fact that the amount given or received was an amount of insignificant value, would have triggered a requirement to give such a notice.
(2) The Inland Revenue may by notice require the person concerned to furnish them, within such time as the Inland Revenue may direct (not being less than 60 days), with such information relating to the event as the Inland Revenue may reasonably require for the purposes of this Schedule.
(3) In sub-paragraph (1)(b) the reference to an amount of insignificant value shall be construed in accordance with paragraph 47(7)(b).

Part VII Relief for losses on disposals of shares

Eligibility for relief against income
67 (1) The investing company is eligible for relief under this Part (“loss relief”) if—
(a) it incurs an allowable loss on the disposal of shares to which investment relief is attributable (and not withdrawn in full as a result of the disposal), and
(b) the requirements of sub-paragraphs (2) and (3) are met.
(2) The first requirement is that the shares must have been held continuously by the investing company from the time they were issued until the disposal.
(3) The second requirement is that the disposal on which the loss is incurred must be a disposal of the kind described in paragraph (a), (b), (c) or (d) of paragraph 46(2).

Entitlement to claim
68 (1) Where the investing company is eligible for loss relief it may make a claim requiring that the loss be set off for the purposes of corporation tax against income—
(a) of the accounting period in which the loss is incurred, and
(b) if the claim so requires, of accounting periods ending within the preceding 12 month period.
(2) A claim under sub-paragraph (1) must be made within two years after the end of the accounting period in which the loss is incurred.
(3) In this paragraph “the preceding 12 month period” means the 12 months ending immediately before the accounting period in which the loss is incurred.

Form of loss relief
69 (1) Where a claim is made under sub-paragraph (1) of paragraph 68, the income of any of the accounting periods mentioned in that sub-paragraph shall then be treated as reduced by the amount of the loss or by so much of it as cannot be relieved under this sub-paragraph against income of a later accounting period.
This is subject to loss relief first being obtained for any earlier loss.
(2) The amount of the reduction which may be made under this paragraph in the income of an accounting period beginning before the preceding 12 month period (within the meaning of paragraph 68(3)) shall not exceed a part of that income proportionate to the part of the accounting period falling within that period.

Priority of loss relief
70 (1) Where loss relief is claimed by the investing company it must be claimed—
(a) in priority to any relief claimed by that company under Chapter 5 of Part 4 of CTA 2010 (relief for loss on disposal of shares in certain trading companies by investment companies), ...
Words in Sch. 15 para. 70(1)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(11)(a) (with Sch. 2)
Sch. 15 para. 70(1)(b) and word repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(11)(b), Sch. 3 Pt. 1 (with Sch. 2)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Where loss relief is obtained for an amount of a loss no deduction shall be made in respect of that amount—
(a) by virtue of section 70 of CTA 2010 (relief for loss on disposal of shares in certain trading companies by investment companies), or
Words in Sch. 15 para. 70(2)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(11)(c) (with Sch. 2)
(b) for the purposes of corporation tax on chargeable gains.

Tax avoidance
71 (1) Sub-paragraph (2) applies where shares would, in the absence of paragraph 82 (which disapplies sections 135 and 136 of the 1992 Act in respect of shares to which investment relief is attributable), be the subject of an exchange or arrangement which—
(a) is of the kind mentioned in section 135 or 136 of the 1992 Act (company reconstructions etc.), and
(b) would involve a disposal of shares, by reason of—
(i) section 137(1) of that Act (schemes with tax avoidance purpose), or
(ii) paragraph 96(2)(b) (company treated as disposing of shares in the case of certain schemes of reconstruction involving tax avoidance).
Words in Sch. 15 para. 71(1)(b)(ii) substituted (24.7.2002 with effect as mentioned in Sch. 9 para. 7(1) of the amending Act) by 2002 c. 23, s. 45, Sch. 9 Pt. 2 para. 6(2)
(2) Where this sub-paragraph applies no loss relief may be obtained in respect of any allowable loss incurred on the disposal.
(3) Where a claim is made under this Part in respect of a loss accruing on the disposal of shares, section 30 of the 1992 Act (value-shifting) shall have effect in relation to the disposal as if for the references in subsections (1)(b) and (5) of that section to a tax-free benefit there were substituted references to any benefit whether tax-free or not.

Adjustment of corporation tax
72 The Inland Revenue shall make any adjustment of corporation tax required as a result of—
(a) loss relief being obtained in respect of an allowable loss, or
(b) loss relief not being obtained for the whole or part of a loss in respect of which a claim is made under this Part,
whether by way of assessment, discharge or repayment of tax.

Part VIII Deferral relief

Introduction
73 (1) This Part applies where—
(a) a chargeable gain (“the original gain”) accrues to the investing company at any time (“the accrual time”),
(b) the gain is one accruing either—
(i) on a disposal of shares to which investment relief was attributable immediately before the disposal, or
(ii) by virtue of paragraph 79 on the occurrence of a chargeable event in relation to shares to which deferral relief is attributable immediately before the event,
and
(c) the investing company makes a qualifying investment.
(2) In determining for the purposes of sub-paragraph (1)(a) whether or not a chargeable gain accrues at any time paragraph 76 (postponement of original gain) shall be disregarded.
(3) Sub-paragraph (1)(b)(i) does not apply to a disposal of shares unless the shares were held by the investing company continuously from the time they were issued until the disposal.

Meaning of “qualifying investment"
74 (1) For the purposes of this Part the investing company makes a qualifying investment if—
(a) it subscribes for any shares to which investment relief is attributable,
(b) the shares are not issued by a prohibited company,
(c) the shares are issued to the investing company at a qualifying time, and
(d) where the shares were issued before the accrual time—
(i) they have been held continuously by the investment company from the time they were issued until that time, and
(ii) investment relief is attributable to the shares at that time.
(2) For the purposes of sub-paragraph (1)—
“a prohibited company” means—
(a) the company whose shares comprised the original holding, or
(b) a company that was, at the accrual time or the time of the issue of the qualifying shares (or both), a member of the same group as that company; and
“a qualifying time” means any time in the period of four years beginning one year before the accrual time.
(3) For the purposes of the definition of “a prohibited company” in sub-paragraph (2), “the original holding” means—
(a) where the original gain accrued as mentioned in sub-paragraph (i) of paragraph 73(1)(b), the shares disposed of, and
(b) where the original gain accrued as mentioned in sub-paragraph (ii) of paragraph 73(1)(b), the shares in relation to which the chargeable event occurred.

Meaning of “the qualifying shares"
75 (1) For the purposes of this Part “the qualifying shares”, in relation to a case where this Part applies, means the shares which are acquired by the investing company in making the qualifying investment.
This is subject to sub-paragraphs (2) and (4).
(2) If any corresponding bonus shares are issued to the investing company, this Part shall apply as if references to the qualifying shares were to all the shares comprising the qualifying shares and the bonus shares so issued.
(3) In sub-paragraph (2) “corresponding bonus shares” means bonus shares which—
(a) are issued in respect of the qualifying shares, and
(b) are in the same company, of the same class and carry the same rights as those shares.
(4) If in circumstances where paragraph 83 (certain exchanges resulting in acquisition of share capital by new company) applies new shares are issued in exchange for old shares, references in this Part to the qualifying shares, so far as they relate to the old shares, shall be construed as references to the new shares.
For this purpose “old shares” and “new shares” have the same meaning as in that paragraph.

Postponement of original gain
76 (1) On the making of a claim by the investing company for the purposes of this Part, so much of the investing company’s unused qualifying expenditure on the qualifying shares as—
(a) is specified in the claim, and
(b) does not exceed so much of the original gain as is unmatched,
shall be set against a corresponding amount of the original gain.
(2) Where an amount of qualifying expenditure on the qualifying shares is set under this paragraph against the whole or part of the original gain, then for the purposes of corporation tax on chargeable gains—
(a) so much of that gain as is equal to that amount shall be treated as not having accrued at the accrual time, but
(b) paragraph 79 applies for determining the gain that is to be treated as accruing on the occurrence of any chargeable event in relation to any of the qualifying shares.
(3) For the purposes of this Part—
(a) the investing company’s qualifying expenditure on the qualifying shares is the amount subscribed by it for the shares, and
(b) that expenditure is unused to the extent that it has not already been set under this paragraph against the whole or any part of a chargeable gain.
(4) For the purposes of this paragraph the original gain is unmatched in relation to any qualifying expenditure on the qualifying shares to the extent that it has not had any other expenditure set against it under this paragraph.

Meaning of “deferral relief"
77 For the purposes of this Schedule “deferral relief” is attributable to any shares if—
(a) expenditure on the shares has been set under paragraph 76 against the whole or part of any gain, and
(b) there has been no chargeable event for the purposes of this Part in relation to the shares.

Chargeable events
78 (1) There is, for the purposes of this Part, a chargeable event in relation to any of the qualifying shares if—
(a) the investing company disposes of those shares, or
(b) any other event occurs by reason of which the investment relief attributable to those shares is reduced or withdrawn otherwise than by virtue of paragraph 46(2) or (3) (withdrawal of investment relief on disposal of shares).
(2) For the purposes of sub-paragraph (1)(b), where the qualifying investment is made before the time at which the original gain accrues, any reduction of the investment relief attributable to the qualifying shares that is made by reason of an event that occurs before the accrual time shall be disregarded.

Gain accruing on chargeable event
79 (1) This paragraph applies where a chargeable event occurs in relation to any of the qualifying shares in relation to which there has not been a previous chargeable event.
(2) Where this paragraph applies, then for the purposes of corporation tax on chargeable gains—
(a) a chargeable gain shall be treated as accruing to the investing company at the time of the event, and
(b) the amount of the gain shall be equal to so much of the deferred gain as is attributable to the shares in relation to which the chargeable event occurs.
(3) In order to determine, for this purpose, the amount of the deferred gain attributable to any shares, a proportionate part of the amount of the gain shall be attributed to each of the qualifying shares held immediately before the occurrence of the chargeable event in question by the investing company.
(4) In this paragraph “the deferred gain” means—
(a) the amount of the original gain against which expenditure has been set under paragraph 76, less
(b) the amount of any gain treated as accruing under this paragraph previously in consequence of a chargeable event in relation to any of the qualifying shares.
(5) For the purposes of section 10B of the 1992 Act (taxation of chargeable gains accruing to non-resident with UK branch or agency) a chargeable gain treated as accruing by virtue of this paragraph shall be treated as a chargeable gain accruing on the disposal of an asset to which subsection (3) of that section applies.
Words in Sch. 15 para. 79(5) substituted (10.7.2003) (with effect in accordance with s. 155(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 27 para. 9

Part IX Company restructuring

Share reorganisations
80 (1) Where a company (“the company”) holds shares which—
(a) form part of the ordinary share capital of another company,
(b) are of the same class and held in the same capacity, and
(c) include shares falling within two or more of the categories in sub-paragraph (2),
then, where there is a reorganisation affecting those shares to which section 116 or section 127 of the 1992 Act applies, section 116 or (as the case may be) section 127 shall apply separately to shares falling within each of those categories.
(2) The categories referred to in sub-paragraph (1)(c) are—
(a) shares to which deferral relief is attributable;
(b) shares—
(i) to which investment relief but not deferral relief is attributable, and
(ii) which have been held continuously by the company since the time they were issued until the reorganisation; and
(c) shares not within paragraph (a) or (b) above.
(3) In this paragraph “reorganisation” has the meaning given in section 126 of the 1992 Act.

Rights issues etc.
81 (1) Where—
(a) a company (“the company”) holds shares (“the existing holding”) which—
(i) form part of the ordinary share capital of another company, and
(ii) are of the same class and held in the same capacity,
(b) there is by virtue of such an allotment as is mentioned in section 126(2)(a) of the 1992 Act (an allotment of shares or debentures in respect of and in proportion to an original holding), other than an allotment of corresponding bonus shares, a reorganisation affecting the existing holding,
(c) immediately following the reorganisation, investment relief is attributable to the shares comprised in the existing holding or the shares allotted in respect of those shares, and
(d) if investment relief is attributable to the shares comprised in the existing holding at that time, those shares have been held by the company continuously from the time they were issued until the reorganisation,
sections 127 to 130 of that Act (treatment of share capital following a reorganisation) shall not apply in relation to the existing holding.
(2) Subsection (10) of section 116 of that Act (reorganisations, conversions and reconstructions) shall not apply in any case where the old asset consists of shares held (in the same capacity) by a company—
(a) that have been held by it continuously from the time they were issued until the relevant transaction, and
(b) to which investment relief is attributable immediately before that transaction.
In this sub-paragraph “old asset” and “the relevant transaction” have the meanings given in section 116 of that Act.
(3) For the purposes of sub-paragraph (1)—
“corresponding bonus shares” means bonus shares that—
(a) are issued in respect of shares comprised in the existing holding, and
(b) are of the same class, and carry the same rights, as those shares;
“reorganisation” has the meaning given in section 126 of that Act.

Company reconstructions and amalgamations
82 (1) Where—
(a) a company (“the company”) holds shares (“the existing holding”) in a company (“company A”),
(b) there is a reconstruction or amalgamation affecting the existing holding,
(c) immediately before the reconstruction or amalgamation, investment relief is attributable to the shares comprised in the existing holding, and
(d) the shares comprised in the existing holding have been held by the company continuously from the time they were issued until the reconstruction or amalgamation,
sections 135 and 136 of the 1992 Act (share exchanges and company reconstructions) shall not apply in respect of the existing holding.
This is subject to paragraph 84 (no disposal on certain exchanges of shares).
Words in Sch. 15 para. 82(1) substituted (24.7.2002 with effect as mentioned in Sch.9 para.7(1) of the amending Act) by 2002 c. 23, s. 45, Sch. 9 para. 6(3)
(2) Sub-paragraph (1)(a) applies only where the shares are held by the company in the same capacity.
(3) For the purposes of sub-paragraph (1) a “reconstruction or amalgamation” means an issue by a company (“company B”) of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A.

Certain exchanges resulting in acquisition of share capital by new company
83 (1) Paragraphs 84 and 85 apply where—
(a) arrangements are made in accordance with which a company (“the new company”) acquires all the shares (“old shares”) in another company (“the old company”);
(b) the acquisition provided for by the arrangements falls within sub-paragraph (2); and
(c) the Inland Revenue have, before any exchange of shares takes place under the arrangements, given an approval notification.
(2) An acquisition of shares falls within this sub-paragraph if—
(a) the consideration for the old shares consists wholly of the issue of shares (“new shares”) in the new company;
(b) new shares are issued in consideration of old shares only at times when there are no issued shares in the new company other than—
(i) subscriber shares, and
(ii) new shares previously issued in consideration of old shares;
(c) the consideration for new shares of each description consists wholly of old shares of the corresponding description; and
(d) new shares of each description are issued to the holders of old shares of the corresponding description in respect of, and in proportion to, their holdings.
(3) For the purposes of sub-paragraph (1)(c) an approval notification is one which, on an application by either the old company or the new company, is given to the applicant company and states that the Inland Revenue are satisfied that the exchange of shares under the arrangements—
(a) will be effected for commercial reasons, and
(b) will not form part of any such scheme or arrangements as are mentioned in section 137(1) of the 1992 Act (schemes with tax avoidance purpose).
(4) For the purposes of this paragraph old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
(5) In this paragraph references to “shares", except in the expression “subscriber shares", include securities.
(6) References in paragraphs 84 to 87 to “shares”, “old shares”, “new shares”, “the old company” and “the new company” shall be construed in accordance with this paragraph.

No disposal on certain exchanges of shares
84 (1) Where this paragraph applies (see paragraph 83 and paragraph 4 of Schedule 7AC to the Taxation of Chargeable Gains Act 1992), nothing in paragraph 82 has effect to disapply section 135 of the 1992 Act (exchange of shares etc. for those in another company).
Accordingly, by virtue of section 127 of that Act (as applied by section 135(3)), the exchange of shares is not treated as involving a disposal of the old shares or an acquisition of the new shares.
Words in Sch. 15 para. 84(1) inserted (24.7.2002 with effect as mentioned in s. 44(3) of the amending Act) by 2002 c.23, s. 44(2), Sch. 8 Pt. 2 para. 5
(2) In its application by virtue of sub-paragraph (1), section 127 of the 1992 Act shall have effect subject to paragraph 80 (shares to which investment relief or investment and deferral relief is attributable treated as separate holdings).

Attribution of relief to new shares
85 (1) Where this paragraph applies (see paragraph 83 and paragraph 4 of Schedule 7AC to the Taxation of Chargeable Gains Act 1992), any investment relief or deferral relief which is attributable to any old shares shall be attributable instead to the new shares for which they are exchanged.
Words in Sch. 15 para. 85(1) inserted (24.7.2002 with effect as mentioned in s. 44(3) of the amending Act) by 2002 c. 23, s. 44(2), Sch. 8 Pt. 2 para.5
(2) Where investment relief becomes so attributable to any new shares—
(a) this Schedule shall have effect as if anything which under paragraph 41, 42, 60 or 65 has been done, or is required to be done, by or in relation to the old company had been done, or were required to be done, by or in relation to the new company; and
(b) any appeal brought by the old company against—
(i) the refusal of the Inland Revenue to authorise the issue of a compliance certificate, or
(ii) a notice under paragraph 60(3)(b),
may be prosecuted by the new company as if it had been brought by that company.
Sch. 15 para. 85 excluded (24.7.2002 with effect as mentioned in s. 44(3) of the amending Act) by 1992 c. 12, Sch. 7AC Pt. 1 para. 4(4) (as inserted by 2002 c. 23, s. 44(2), Sch. 8 para. 1)

Substitution of new shares for old shares
86 (1) This paragraph applies where—
(a) relief becomes attributable, by virtue of paragraph 85, to any new shares held by a company (“the company”), and
(b) the old shares for which those shares were exchanged (“the relevant old shares”) were—
(i) subscribed for by and issued to the company, and
(ii) held by it continuously from the time they were issued until the exchange.
(2) Where this paragraph applies this Schedule (except paragraph 29(7)) shall have effect as if—
(a) the matching new shares had been subscribed for by the company at the time when, and for the amount for which, the relevant old shares were subscribed for,
(b) the matching new shares had—
(i) been issued at the time when the relevant old shares were issued, and
(ii) been held continuously by the company from that time until the exchange,
(c) any claim for relief under Part V (investment relief), or Part VIII (deferral relief), of this Schedule made in respect of the relevant old shares had been made in respect of the matching new shares, and
(d) the company’s liability to corporation tax had been reduced under Part V of this Schedule in respect of the matching new shares for the same accounting period as that for which its liability was so reduced in respect of the relevant old shares.
Words in Sch. 15 para. 86(2) inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 10, 13
(3) For the purposes of this paragraph old shares and new shares are matching shares in relation to each other if the old shares are the shares for which those new shares are exchanged under the arrangements.

Operation of requirements of Parts II and III in relation to new shares
87 (1) This paragraph applies where paragraph 86 (substitution of new shares for old shares) applies in relation to any new shares held by a company.
(2) If, immediately before the exchange, any of the requirements of paragraphs 5, 8 and 13 (requirements to be met by a qualifying investing company in relation to the relevant shares) was (or was deemed to be) met to any extent by the company in relation to the matching old shares, the requirement shall be deemed to be met by the company to the same extent in relation to the new shares.
(3) If, immediately before the exchange, any of the requirements of paragraphs 16 to 22 (requirements to be met by a qualifying issuing company) was (or was deemed to be) met to any extent by the old company in relation to the matching old shares, it shall be deemed to be met to the same extent by the new company in relation to the new shares.
(4) In determining whether the requirements of paragraphs 17 (the independence requirement) and 20 (the qualifying subsidiaries requirement) are met in relation to the old company or the new company at a time in the period for giving effect to the arrangements, both—
(a) the arrangements themselves, and
(b) any exchange of new shares for old shares that has already taken place under the arrangements,
shall be disregarded.
(5) If, immediately before the period for giving effect to the arrangements, the requirement of paragraph 23(1) (the trading activities requirement) was (or was deemed to be) met to any extent by the old company in relation to the matching old shares—
(a) it shall be deemed to be met to the same extent by the new company in relation to the new shares, and
(b) to the extent that it would not otherwise be the case, it shall also be deemed to be met by that company in relation to those shares at all times which—
(i) fall in the period for giving effect to the arrangements, and
(ii) do not fall after a time when (apart from the arrangements) the requirement would have ceased to have been met by the old company in relation to the matching old shares.
(6) For the purposes of this paragraph—
(a) “the period for giving effect to the arrangements” means the period which—
(i) begins when those arrangements first come into existence; and
(ii) ends when the new company completes its acquisition under the arrangements of all the old shares;
and
(b) references to matching shares shall be construed in accordance with paragraph 86(3).

Relationship between this Part and the 1992 Act
88 The following provisions of the 1992 Act have effect subject to paragraphs 80, 81, 82 and 84 (which make special provision in respect of company reorganisations etc. involving shares to which investment relief is attributable)—
section 116 (reorganisations, conversions and reconstructions); and
Chapter II of Part IV (reorganisation of share capital, conversion of securities etc.).

Part X Advance clearance

Application for advance clearance notice
89 (1) A company (“the applicant”) may, before issuing any shares, make an application to the Board for an advance clearance notice in respect of that issue.
(2) An advance clearance notice is a notice issued by the Board in respect of an issue of shares which states that, on the basis of the particulars, declarations and undertakings provided by the applicant, the Board are satisfied that, at the time the shares are issued, the requirements of Parts III and IV of this Schedule will be met (or, in the case of any requirement that cannot be met until a future date, will be met for the time being) in relation to the shares.
(3) For the purposes of determining whether they are satisfied as mentioned in sub-paragraph (2) the Inland Revenue shall assume that the shares included in the issue of shares are “the relevant shares”.
(4) An application under this paragraph must—
(a) contain the particulars, declarations and undertakings required by the Board, and
(b) disclose all facts and circumstances material for the decision of the Board.
(5) In this Part references to an “application" are to an application under this paragraph.

Provision of further information
90 (1) On receiving an application for an advance clearance notice, the Board may by notice (“an information notice”) require the applicant to provide them, within such time as the Board may direct (not being less than 30 days), with such further particulars as the Board deem necessary to enable them to decide whether or not to issue an advance clearance notice.
(2) An information notice must be given—
(a) within 30 days after the receipt of the application, or
(b) if further particulars have already been provided in response to an earlier information notice, within 30 days after the receipt of those particulars.
(3) If the applicant does not comply with an information notice within the period specified in the notice, the Board need not proceed further on the application.

Decision on application and review procedure
91 (1) The Board must within 30 days after receiving an application or, where an information notice is given in relation to the application, within 30 days after that notice being complied with—
(a) issue an advance clearance notice in respect of the shares to which the application relates, or
(b) notify the applicant that the Board are not satisfied as mentioned in paragraph 89(2) in respect of those shares.
This is subject to sub-paragraph (3) and to paragraph 90(3) (circumstances in which Board need not proceed on application).
(2) In a case where two or more information notices are given in relation to the application, the time limit in sub-paragraph (1) is calculated by reference to the time when the later (or last) of the notices is complied with.
(3) If before the Board issue an advance clearance notice in respect of the issue of shares to which the application relates, or notify the applicant under sub-paragraph (1), the applicant issues the shares in question, the Board need not proceed further on the application.
(4) If the Board—
(a) notify the applicant that they are not satisfied as mentioned in paragraph 89(2), or
(b) in a case to which sub-paragraph (3) does not apply, fail to notify their decision to the applicant in accordance with sub-paragraph (1),
the applicant may, within 30 days after the notification or failure, require the Board to transmit the application, together with any information notices given and further particulars provided under paragraph 90, to the tribunal.
Word in Sch. 15 para. 91(4) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 293(2)(a)
(5) Where sub-paragraph (4) applies any notification by the tribunal that it is satisfied as mentioned in paragraph 89(2) shall have effect as if it were an advance clearance notice issued by the Board in respect of the issue of shares in question.
Words in Sch. 15 para. 91(5) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 293(2)(b)

Effect of advance clearance notice
92 (1) For the purposes of this Schedule, where an advance clearance notice is issued in respect of an issue of shares before the shares are issued, the requirements of Parts III and IV of this Schedule shall be treated as met (or, in the case of any requirement that cannot be met until a future date, as met for the time being) in relation to those shares at the time they are issued.
(2) If—
(a) any particulars provided in the application for the notice, or in response to any information notice relating to the application, do not fully and accurately disclose all facts and circumstances material for the decision of the Board or the tribunal, or
Word in Sch. 15 para. 92(2)(a) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 293(3)
(b) the applicant or any of its subsidiaries fails to act in accordance with any declaration or undertaking which was given in, or in connection with, the application,
any resulting advance clearance notice shall be void.
(3) Sub-paragraph (2)(b) applies in relation to a subsidiary of the applicant whether or not it was such a subsidiary at the time the declaration or undertaking in question was given.

Part XI Supplementary and general

Identification of shares on a disposal
93 (1) In any case where—
(a) a company (“the company”) disposes of part of a holding of shares (“the holding”), and
(b) the holding includes shares to which investment relief is attributable that have been held continuously by the company from the time they were issued until the disposal,
this paragraph applies for the purpose of identifying the shares disposed of.
(2) For the purposes of this paragraph “holding” means any number of shares of the same class in another company held by the company in the same capacity, growing or diminishing as shares of that class are acquired or disposed of.
(3) Where shares included in the holding have been acquired by the company on different days, then, for the purposes of corporation tax on chargeable gains and of this Schedule, any disposal by the company of any of those shares shall be treated as relating to those acquired on an earlier day rather than to those acquired on a later day.
(4) Where shares included in the holding have been acquired by the company on the same day, then, for the purposes of corporation tax on chargeable gains and of this Schedule, if there is a disposal by the company of any of those shares, any shares—
(a) to which investment relief is attributable, and
(b) which have been held by the company continuously from the time they were issued until the time of disposal,
shall be treated as disposed of after any other shares included in the holding which were acquired by the company on that day.
(5) Chapter I of Part IV of the 1992 Act (share pooling, etc.) shall have effect subject to this paragraph.
(6) Sections 104, 105 and 107 of that Act (which make provision for the purposes of corporation tax on chargeable gains for the identification of shares on a disposal) shall not apply to shares to which investment relief is attributable.
Words in Sch. 15 para. 93(6) substituted (with effect in accordance with s. 72(3) of the amending Act) by Finance Act 2006 (c. 25), s. 72(2)(e)
(7) In a case to which section 127 of that Act (equation of original shares and new holding) applies (including a case where that section applies by virtue of any enactment relating to chargeable gains), shares comprised in the new holding shall be treated for the purposes of sub-paragraphs (3) and (4) as acquired when the original shares were acquired.
In this sub-paragraph “new holding” and “original shares” have the same meaning as in section 127 of the 1992 Act (or, as the case may be, that section as applied by virtue of the enactment concerned).
Words in Sch. 15 para. 93(7) substituted (24.7.2002 with effect as mentioned in Sch. 9 para. 7(1) of the amending Act) by 2002 c. 23, s. 45, Sch. 9 Pt. 2 para. 6(4)(a)
Words in Sch. 15 para. 93(7) substituted (24.7.2002 with effect as mentioned in Sch. 9 para. 7(1) of the amending Act) by 2002 c. 23, s 45, Sch. 9 Pt. 2 para. 6(4)(b)
Sch. 15 para. 93 applied (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 76(6)(a), 1184(1) (with Sch. 2)

Determination of loss where investment relief is attributable to shares
94 (1) This paragraph applies for the purposes of corporation tax on chargeable gains where—
(a) a company disposes of shares which were held by it continuously from the time they were issued until the disposal,
(b) investment relief is attributable to the shares (and not withdrawn in full as a result of the disposal), and
(c) apart from sub-paragraph (2), there would be a loss on the disposal.
(2) For the purpose of determining the gain or loss on the disposal the consideration given by the company for the shares is treated as reduced by the amount of the investment relief attributable to the shares immediately after the disposal.
(3) Any gain which accrues by virtue of sub-paragraph (2) is not a chargeable gain.
(4) Notwithstanding the definition of “allowable loss" in section 1119 of CTA 2010 (interpretation of the Corporation Tax Acts), nothing in sub-paragraph (3) has effect in relation to any loss determined in accordance with sub-paragraph (2) to prevent it being an allowable loss.
Words in Sch. 15 para. 94(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(12) (with Sch. 2)

Nominees
95 Shares subscribed for by, issued to, acquired or held by or disposed of by a nominee for any person shall be treated for the purposes of this Schedule as subscribed for by, issued to, acquired or held by or disposed of by that person.

Meaning of “disposal"
96 (1) Subject to sub-paragraph (2), in this Schedule “disposal” shall be construed in accordance with the 1992 Act, and cognate expressions shall be construed accordingly.
(2) A company shall be treated for the purposes of this Schedule, and for the purposes of corporation tax on chargeable gains, as disposing of any shares which but for paragraph 82 (company reconstructions and amalgamations) it—
(a) would be treated as exchanging for other shares by virtue of section 136 of the 1992 Act, or
Words in Sch. 15 para. 96(2)(a) substituted (24.7.2002 with effect as mentioned in Sch. 9 para. 7(1) of the amending Act) by 2002 c. 23, s. 45, Sch. 9 Pt. 2 para. 6(5)(a)
(b) would be so treated but for section 137(1) of the 1992 Act (which restricts section 136 of that Act to bona fide schemes of reconstruction).
Words in Sch. 15 para. 96(2)(b) substituted (24.7.2002 with effect as mentioned in Sch. 9 para. 7(1) of the amending Act) by 2002 c. 23, s. 45, Sch. 9 Pt. 2 para. 6(5)(b)

Construction of references to shares being “held continuously"
97 (1) This paragraph applies where for the purposes of this Schedule it falls to be determined whether a company has held shares continuously throughout any period.
(2) The company shall not be treated as having held shares continuously throughout a period if—
(a) it is deemed, under any provision of the 1992 Act, to have disposed of and immediately reacquired the shares at any time during the period, or
(b) it is treated as having disposed of the shares at any such time, by virtue of paragraph 96(2) (on reconstruction or amalgamation company treated as disposing of shares continuously held by it to which investment relief is attributable).

Meaning of “issue of shares"
98 In this Schedule—
(a) references (however expressed) to an issue of shares in any company are to such of the shares in the company as are of the same class and issued on the same day; and
(b) references (however expressed) to an issue of shares in a company to a person are references to such of the shares in an issue of shares in that company as are issued to that person in one capacity.

Meaning of “associate"
99 (1) In this Schedule “associate”, in relation to a person, means—
(a) any relative or partner of that person,
(b) the trustee or trustees of any settlement in relation to which that person, or any relative of his (living or dead), is or was a settlor, and
(c) where that person is interested in any shares or obligations of a company which are subject to any trust, or are part of the estate of a deceased person—
(i) the trustee or trustees of the settlement concerned or, as the case may be, the personal representatives of the deceased, and
(ii) if that person is a company, any other company interested in those shares or obligations.
(2) In sub-paragraph (1)(a) and (b) “relative” means spouse or civil partner, parent or remoter forebear or child or remoter issue.
Words in Sch. 15 para. 99(2) substituted (5.12.2005) by Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 132
(3) In sub-paragraph (1)(b) “settlor” and “settlement” have the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).
Words in Sch. 15 para. 99(3) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 521 (with Sch. 2)

“The Board" and “the Inland Revenue"
100 In this Schedule—
(a) “the Board” means the Commissioners of Inland Revenue; and
(b) references to “the Inland Revenue" are to any officer of the Board.

Power to amend by Treasury order
101 The Treasury may by order amend this Schedule—
(a) to make such amendments of—
(i) paragraphs 10 to 12 (the non-financial activities requirement), or
(ii) paragraphs 23 to 33 (the trading activities requirement),
as they consider expedient;
(b) to substitute different sums of money for those for the time being specified in paragraph 22 (gross assets requirement).

Minor definitions etc.
102 (1) In this Schedule—
“allowable loss” means an allowable loss for the purposes of corporation tax on chargeable gains;
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
“chargeable gain” means a chargeable gain for the purposes of corporation tax on chargeable gains;
“class”, in relation to shares or securities, means a class of shares in or securities of any one company (see sub-paragraph (2));
“CTA 2010” means the Corporation Tax Act 2010;
“director” shall be construed in accordance with section 452 of CTA 2010;
“group” means a parent company and its 51% subsidiaries;
“group company”, in relation to a group, means the parent company and any of its 51% subsidiaries;
“ordinary share capital”, except in paragraph 7 (meaning of “material interest”), has the meaning given in section 1119 of CTA 2010;
“ordinary shares” means shares forming part of a company’s ordinary share capital;
“parent company” means a company that—
(a) has one or more 51% subsidiaries, but
(b) is not itself a 51% subsidiary of another company;
“research and development” has the meaning given by section 1138 of CTA 2010;
“single company” means a company that is not a parent company or a 51% subsidiary of a parent company;
“the 1992 Act” means the Taxation of Chargeable Gains Act 1992.
Words in Sch. 15 para. 102(1) inserted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(13)(d) (with Sch. 2)
Words in Sch. 15 para. 102(1) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(13)(a) (with Sch. 2)
Words in Sch. 15 para. 102(1) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(13)(b) (with Sch. 2)
Words in Sch. 15 para. 102(1) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(13)(c) (with Sch. 2)
1992 c. 12.
(2) For the purposes of this Schedule shares in or securities of 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.
(3) Section 1122 of CTA 2010 (connected persons) applies for the purposes of this Schedule.
Words in Sch. 15 para. 102(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(14) (with Sch. 2)
(4) References in this Schedule to a company being in administration or receivership shall be construed as follows—
(a) references to a company being “in administration” are to the company being in administration within the meaning of Schedule B1 to the Insolvency Act 1986, or to there being in force in relation to it—
(i) an administration order under Part III of the Insolvency (Northern Ireland) Order 1989, or
(ii) any corresponding order under the law of a country or territory outside the United Kingdom;
Sch. 15 para. 102(4)(a) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 34(d) (with art. 6)
(b) references to a company being “in receivership" are to there being in force in relation to it—
(i) an order for the appointment of an administrative receiver, a receiver and manager or a receiver under Chapter I or II of Part III of the Insolvency Act 1986 or Part IV of the Insolvency (Northern Ireland) Order 1989, or
1986 c. 45.
S.I. 1989/2405 (N.I.19).
(ii) any corresponding order under the law of a country or territory outside the United Kingdom.
(5) For the purposes of this Schedule the market value at any time of any asset is 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.
(6) In this Schedule—
(a) references to investment relief obtained by a company in respect of any shares include references to investment relief obtained by it in respect of those shares at any time after it has disposed of them, and
(b) references to the withdrawal or reduction of investment relief obtained by a company in respect of any shares include references to the withdrawal or reduction of investment relief obtained in respect of those shares at any such time.
(7) In the case of a requirement that cannot be met until a future date—
(a) references in this Schedule to a requirement being met for the time being are to nothing having occurred to prevent its being met, and
(b) references to its continuing to be met are to nothing occurring to prevent its being met.
(8) In determining for the purposes of paragraph 3(2), 23(5) or 36(1B) when a trade is begun to be carried on by a qualifying 90% subsidiary of the issuing company there shall be disregarded any carrying on of the trade by it before it became such a subsidiary.
Sch. 15 para. 102(8) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 13
(9) References in this Schedule to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.
Sch. 15 para. 102(9) inserted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 394(5) (with Sch. 2)

Index of defined expressions
103 In this Schedule the following expressions are defined or otherwise explained by the provisions indicated:
allowable loss	paragraph 102(1)
application (in Part X)	paragraph 89(5)
arrangements	paragraph 102(1)
associate	paragraph 99
the Board	paragraph 100
chargeable gain	paragraph 102(1)
class (of shares)	paragraph 102(1) and (2)
compliance certificate	paragraph 41
compliance statement	paragraph 42
connected person	paragraph 102(3)
CTA 2010	paragraph 102(1)
deferral relief	paragraph 77
director	paragraph 102(1)
disposal	paragraph 96
excluded activities	paragraph 26
group	paragraph 102(1)
group company	paragraph 102(1)
held continuously (in relation to shares)	paragraph 97
the Inland Revenue	paragraph 100
the investing company	paragraph 2
investment relief	paragraph 1
issue of shares	paragraph 98
the issuing company	paragraph 2
loss relief	paragraph 67(1)
market value	paragraph 102(5)
material interest	paragraph 7
new company (in paragraphs 83 to 87)	paragraph 83
new shares (in paragraphs 83 to 87)	paragraph 83
non-financial trade	paragraph 11
non-financial trading group	paragraph 12
old company (in paragraphs 83 to 87)	paragraph 83
old shares (in paragraphs 83 to 87)	paragraph 83
ordinary share capital	paragraphs 7 and 102(1)
ordinary shares	paragraph 102(1)
parent company	paragraph 102(1)
the period of restriction	paragraph 48
the qualification period	paragraph 3
the qualifying shares (in Part VIII)	paragraph 75
qualifying subsidiary	paragraph 21
qualifying 90% subsidiary	paragraph 23A
qualifying trade	paragraph 25
in receivership	paragraph 102(4)(b)
relevant preference shares	paragraph 9
the relevant shares	paragraph 2
relief attributable to shares	
investment relief	paragraph 45
deferral relief	paragraph 77
research and development	paragraph 102(1)
single company	paragraph 102(1)
the 1992 Act	paragraph 102(1)
trading activities requirement	paragraph 23(2) and (3)
Words in Sch. 15 para. 103 inserted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 315(15) (with Sch. 2)
Words in Sch. 15 para. 103 inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 14
Words in Sch. 15 para. 103 substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 16 paras. 15(4), 18

SCHEDULE 16 Corporate venturing scheme: consequential amendments
Section 63(2).

Penalties in connection with returns etc.
1 (1) In section 98 of the Taxes Management Act 1970, the Table is amended as follows.
1970 c. 9.
(2) In the second column after the final entry insert—

“paragraph 64 or 65 of Schedule 15 to the Finance Act 2000”

.
(3) In the first column after the final entry insert—

“paragraph 66 of Schedule 15 to the Finance Act 2000”

.

Enterprise investment scheme
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 16 para. 2 repealed (with effect in relation to shares issued after 6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 2 (with Sch. 2)

Loss relief
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 16 para. 3 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

EIS: deferral relief
4 (1) The Taxation of Chargeable Gains Act 1992 is amended as follows.
(2) In paragraph 14 of Schedule 5B (value received by persons other than claimants)—
(a) in sub-paragraph (1) (repayments etc. which cause revival of a deferred gain under EIS), in paragraph (a) for “an individual" substitute “ a person ”;
(b) at the end of that sub-paragraph insert—

“This is subject to paragraph 14A below.”

;
(c) in sub-paragraph (3) (exception where repayment etc. causes withdrawal of income tax relief or revival of a deferred gain under the EIS), for “An individual" substitute “ A person ”; and
(d) in that sub-paragraph, after paragraph (b) insert

“; or
(c) causes any investment relief (within the meaning of Schedule 15 to the Finance Act 2000) to be withdrawn or reduced by virtue of paragraph 46 (disposal of shares) or 49(1)(a) (repayment etc. of share capital or securities) of that Schedule.”

(3) After that paragraph insert—

“Certain receipts to be disregarded for purposes of paragraph 14
14A (1) Sub-paragraph (4) below applies where, by reason of a repayment, any investment relief which is attributable under Schedule 15 to the Finance Act 2000 to any shares is withdrawn under paragraph 56(2) of that Schedule.
(2) For the purposes of this paragraph “repayment” means a repayment, redemption, repurchase or payment mentioned in paragraph 56(1) of that Schedule (repayments etc. which cause withdrawal of investment relief).
(3) For the purposes of sub-paragraph (4) below “the relevant amount” is the amount determined by the formula—
X-5Y
Where—
X is the amount of the repayment, and
Y is the aggregate amount of the investment relief withdrawn by reason of the repayment.
(4) Where the relevant amount does not exceed £1,000, the repayment shall be disregarded for the purposes of paragraph 14 above, unless repayment arrangements are in existence at any time in the period—
(a) beginning one year before the shares mentioned in sub-paragraph (1) above are issued, and
(b) expiring at the end of the issue date of those shares.
(5) For this purpose “repayment arrangements” means arrangements which provide—
(a) for a repayment by the company that issued the shares (“the issuing company”) or any subsidiary of that company, or
(b) for anyone to be entitled to such a repayment,
at any time.
(6) Sub-paragraph (5)(a) above applies in relation to a subsidiary of the issuing company whether or not it was such a subsidiary—
(a) at the time of the repayment mentioned in sub-paragraph (1) above, or
(b) when the arrangements were made.
(7) Where, but for the existence of paragraph 57(1) of Schedule 15 to the Finance Act 2000 (receipts causing insignificant changes to share capital to be disregarded), any investment relief would be withdrawn by reason of a repayment, the repayment shall be disregarded for the purposes of paragraph 14 above.
(8) In this paragraph—
(a) “investment relief” has the same meaning as in that Schedule; and
(b) references to the withdrawal of investment relief include its reduction.”

Company tax returns, assessments etc.
5 (1) Schedule 18 to the Finance Act 1998 is amended as follows.
1998 c. 36.
(2) In paragraph 8 (calculation of tax payable), in sub-paragraph (1) after paragraph number 1 of the second step insert—

“1A Any relief under Part V of Schedule 15 to the Finance Act 2000 (corporate venturing scheme: investment relief).”

(3) In paragraph 9 (claims that cannot be made without a return), after sub-paragraph (3) insert—

“(4) This paragraph applies to a claim by a company for relief under Part V of Schedule 15 to the Finance Act 2000 (corporate venturing scheme: investment relief).”

SCHEDULE 17 Enterprise investment scheme: amendments
Section 64.

Part I Reduction of applicable periods

Meaning of “eligible shares"
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 17 (except paras. 7, 8, 15(3)(b)) repealed (with effect in relation to shares issued after 6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 2 (with Sch. 2)

Conditions relating to individuals
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions relating to further investment by connected person
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value received from company
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value received by persons other than claimants
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “termination date" and “relevant period"
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Postponement of chargeable gains on reinvestment
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 17 para. 7 repealed (11.5.2001 with effect in accordance with Sch. 15 para. 40(2)(3) of the amending Act) by 2001 c. 9, s. 110, Sch. 33 Pt. 2(3) Notes 2, 6

Commencement
8 The amendments in this Part of this Schedule have effect in relation to shares issued on or after 6th April 2000.

Part II Qualifying companies

Company in administration or receivership
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company in liquidation
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independence of qualifying company
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commencement
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part III Other amendments

Qualifying trades
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “arrangements"
14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “research and development"
15 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Nothing in this paragraph affects the operation of any of the following provisions in relation to shares issued before 6th April 2000—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 17 para. 15(3)(b) repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 18 Venture capital trusts: amendments
Section 65.

Part I Reduction of applicable periods

Relief from income tax
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 18 para. 1 repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

Deferred CGT charge on reinvestment
2 In Schedule 5C to the Taxation of Chargeable Gains Act 1992 (venture capital trusts: deferred charge on re-investment), in paragraph 3(2), in the definition of “the relevant period" for “five" substitute “ three ”.
1992 c. 12.

Commencement
3 The amendments made by this Part of this Schedule have effect in relation to shares issued on or after 6th April 2000.

Part II Qualifying holdings

Introductory
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying trade: receipt of royalties or licence fees
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “research and development"
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company in administration or receivership
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company reorganisations et ceteralaetc. involving exchange of shares
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 18 Pt. II repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

SCHEDULE 19 Meaning of “research and development"
Section 68.

Part I The new definition

Research and development
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 19 paras. 1, 2 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

Oil and gas exploration and appraisal
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II Consequential amendments

Income and Corporation Taxes Act 1988 (c.1)
3 The Income and Corporation Taxes Act 1988 is amended as follows.
1988 c. 1.
4 In section 495 (regional development grants), in subsection (1)(b) for “scientific research" substitute “ research and development ”.
5 (1) In Part IV (provisions relating to the Schedule D charge), after section 82 insert—

“82A Expenditure on research and development.
(1) Notwithstanding anything in section 74, where a person carrying on a trade incurs expenditure not of a capital nature on research and development—
(a) related to that trade, and
(b) directly undertaken by him or on his behalf,
the expenditure incurred may be deducted as an expense in computing the profits of the trade for the purposes of tax.
(2) For this purpose expenditure on research and development does not include expenditure incurred in the acquisition of rights in, or arising out of, research and development.
Subject to that, it includes all expenditure incurred in carrying out, or providing facilities for carrying out, research and development.
(3) The reference in subsection (1) above to research and development related to a trade includes—
(a) research and development which may lead to or facilitate an extension of that trade;
(b) research and development of a medical nature which has a special relation to the welfare of workers employed in that trade.
(4) The same expenditure may not be taken into account under this section in relation to more than one trade.
(5) In this section “research and development” has the meaning given by section 837A and includes oil and gas exploration and appraisal.

82B Payments to research associations, universities etc.
(1) Notwithstanding anything in section 74, where a person carrying on a trade—
(a) pays any sum to a scientific research association that—
(i) has as its object the undertaking of scientific research related to the class of trade to which the trade he is carrying on belongs, and
(ii) is for the time being approved for the purposes of this section by the Secretary of State, or
(b) pays any sum to be used for such scientific research as is mentioned in paragraph (a) above to any such university, college research institute or other similar institution as is for the time being approved for the purposes of this section by the Secretary of State,
the sum paid may be deducted as an expense in computing the profits of the trade for the purposes of tax.
(2) In this section “scientific research” means any activities in the fields of natural or applied science for the extension of knowledge.
(3) The reference in this section to scientific research related to a class of trade includes—
(a) scientific research which may lead to or facilitate an extension of trades of that class;
(b) scientific research of a medical nature which has a special relation to the welfare of workers employed in trades of that class.
(4) If a question arises under this section whether, or to what extent, any activities constitute or constituted scientific research, the Board shall refer the question for decision to the Secretary of State.
The decision of the Secretary of State is final.
(5) The same expenditure may not be taken into account under this section in relation to more than one trade.”

.
(2) Any approval given by the Secretary of State for the purposes of section 136(b) or (c) of the Capital Allowances Act 1990 and in force immediately before the commencement of this paragraph has effect as if given under section 82B(1)(a) or (b) of the Taxes Act 1988 as inserted by sub-paragraph (1) above.
1990 c. 1.
(3) So far as is necessary for continuing its effect, any decision made by the Secretary of State under section 139(3) of the Capital Allowances Act 1990 before the commencement of this paragraph has effect as if given under section 82B(4) of the Taxes Act 1988 as inserted by sub-paragraph (1) above.
1990 c. 1.
6 In Schedule 18 (group relief: equity holders and profits or assets available for distribution), in paragraph 1(6)(b)(iii) for “scientific research" substitute “ research and development (within the meaning of Part VII of that Act) ”.

Capital Allowances Act 1990 (c.1)
7 The Capital Allowances Act 1990 is amended as follows.
8 For “scientific research", wherever occurring, substitute “ research and development ”.
The provisions affected by this amendment are: section 4(5), (9) (twice) and (10), section 8(5), section 56D(1)(a), section 118(2), section 137(1) (twice), (1A) (twice), (3) (three times), section 138(1), (3A)(a) and (5)(b), section 138A(3), section 139(1)(b) (twice), (1)(c) (three times), (1)(d) (three times), section 158(2)(d) and section 161(2).
9 In section 137(1)(b) after “that research" insert “ and development ”.
10 In section 139 (supplementary provisions), in subsection (1) for paragraph (a) substitute—

“(a) “research and development” has the meaning given by section 837A of the principal Act and includes oil and gas exploration and appraisal;”

.
11 In section 161 after “other than an allowance under section 136" insert “ (as that section had effect before it was repealed by the Finance Act 2000) ”.

Taxation of Chargeable Gains Act 1992 (c.12)
12 (1) Section 195 of the Taxation of Chargeable Gains Act 1992 (allowance of certain drilling expenditure) is amended as follows.
1992 c. 12.
(2) In subsections (2) and (3) for “scientific research" in each place substitute “ research and development ”.
(3) In subsection (3) after “that research" insert “ and development ”.
(4) After subsection (7) insert—

“(8) In this section “research and development” has the same meaning as in Part VII of the Capital Allowances Act 1990 (allowances for research and development expenditure).
1990 c. 1.”

SCHEDULE 20 Tax relief for expenditure on research and development
Section 69(1).

Part I Entitlement to relief

Entitlement to R&D tax relief
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “small or medium-sized enterprise".
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying R&D expenditure
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relevant research and development
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Staffing costs
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenditure on software or consumable items
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relevant payments to subjects of clinical trials
6A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “intellectual property"
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Subsidised expenditure
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying expenditure on externally provided workers
8A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “externally provided worker”
8B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of expenditure where company and staff provider are connected persons
8C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Election for connected persons treatment
8D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of staff provision payment in other cases
8E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying expenditure on sub-contracted research and development
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of expenditure where company and sub-contractor are connected persons
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Election for connected persons treatment
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of sub-contractor payment in other cases
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II Manner of giving effect to relief

Deduction in computing profits of trade
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Alternative treatment of pre-trading expenditure
14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Entitlement to R&D tax credit
15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amount of credit
16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total amount of company’s Pay As You EarnPAYE and NICs liabilities
17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment in respect of R&D tax credit
18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

R&D tax relief or tax credit only available where company is a going concern
18A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on losses carried forward
19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment in respect of R&D tax credit not income
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part III Supplementary provisions

Artificially inflated claims for deduction or R&D tax credit
21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on consortium relief
22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of deemed trading loss
23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funding of R&D tax credits
24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation
25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transitional provisions
26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 20 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 469, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

SCHEDULE 21 R&D tax credits: consequential amendments
Section 69(2).

Interest
1 (1) Section 826 of the Taxes Act 1988 (interest on tax overpaid) is amended as follows.
(2) In subsection (1) (payments which carry interest) after paragraph (c) insert

“; or
(d) a payment of R&D tax credit falls to be made to a company under Schedule 20 to the Finance Act 2000 in respect of an accounting period,”

.
(3) After subsection (3) (material date for repayments of income tax etc.) insert—

“(3A) In relation to a payment of R&D tax credit falling within subsection (1)(d) above the material date is whichever is the later of—
(a) the filing date for the company’s company tax return for the accounting period for which the R&D tax credit is claimed, and
(b) the date on which the company tax return or amended company tax return containing the claim for payment of the R&D tax credit is delivered to the Inland Revenue.
For this purpose “the filing date”, in relation to a company tax return, has the same meaning as in Schedule 18 to the Finance Act 1998.
1998 c. 36.”

.
(4) In subsection (8A) (recovery of overpaid interest)—
(a) in paragraph (a), after “subsection (1)(a)" insert “ or (d) ”,
(b) for paragraph (b) substitute—

“(b) there is—
(i) a change in the company’s assessed liability to corporation tax, or
(ii) a change in the amount of the R&D tax credit payable to the company (which does not result in a change falling within sub-paragraph (i)),
other than a change which in whole or in part corrects an error made by the Board or an officer of the Board, and”

.
(5) After subsection (8B) insert—

“(8BA) For the purposes of subsection (8A)(b) above, the cases where there is a change in the amount of the R&D tax credit payable to the company are those cases where an assessment, or an amendment to an assessment, is made to recover an amount of R&D tax credit paid to the company for the accounting period in question.”

.

Claim must be made in tax return
2 In Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters), in paragraph 10 (other claims and elections to be included in return), for sub-paragraph (2) substitute—

“(2) A claim to which Part VIII, IX or IXA of this Schedule applies (claims for group relief, capital allowances or R&D tax credit) can only be made by being included in a company tax return (see paragraphs 67, 79 and 83B).”

.
1998 c. 36.

Recovery of excessive R&D tax credit
3 In paragraph 52 of that Schedule (recovery of excessive repayments, etc.)—
(a) in sub-paragraph (2) (excessive repayments to which paragraphs 41 to 48 apply), before “or" at the end of paragraph (b) insert—

“(ba) R&D tax credit under Schedule 20 to the Finance Act 2000,”

;
and
(b) in sub-paragraph (5) (connection of assessment for excessive payment to an accounting period), before “or" at the end of paragraph (a) insert—

“(ab) an amount of R&D tax credit paid to a company for an accounting period,”

;
and
(c) at the end of that sub-paragraph after “(a)" insert “ , (ab) ”.

Claims for R&D tax credits
4 After Part IX of that Schedule (claims for capital allowances) insert—

“Part IXA Claims for R&D tax credit

Introduction
83A This Part of this Schedule applies to claims for R&D tax credits under Schedule 20 to the Finance Act 2000.

Claim to be included in company tax return
83B (1) A claim for an R&D tax credit must be made by being included in the claimant company’s company tax return for the accounting period for which the claim is made.
(2) It may be included in the return originally made or by amendment.

Content of claim
83C A claim for an R&D tax credit must specify the amount of the relief claimed, which must be an amount quantified at the time the claim is made.

Amendment or withdrawal of claim
83D A claim for an R&D tax credit may be amended or withdrawn by the claimant company only by amending its company tax return.

Time limit for claims
83E (1) A claim for an R&D tax credit may be made, amended or withdrawn at any time up to the first anniversary of the filing date for the company tax return of the claimant company for the accounting period for which the claim is made.
(2) The claim may be made, amended or withdrawn at a later date if the Inland Revenue allow it.

Penalty
83F (1) The company is liable to a penalty where it—
(a) fraudulently or negligently makes a claim for an R&D tax credit which is incorrect, or
(b) discovers that a claim for an R&D tax credit made by it (neither fraudulently or negligently) is incorrect and does not remedy the error without unreasonable delay.
(2) The penalty is an amount not exceeding the excess R&D tax credit claimed, that is, the difference between—
(a) the amount of the R&D tax credit to which the company is entitled for the accounting period to which the claim relates, and
(b) the amount of the R&D tax credit claimed by the company for that period.”

.

SCHEDULE 22 Tonnage tax
Section 82.

Part I Introductory

Tonnage tax
1 (1) This Schedule provides an alternative regime (“tonnage tax”) for calculating the profits of a shipping company for the purposes of corporation tax.
(2) The regime applies only if an election to that effect (a “tonnage tax election”) is made (see Part II of this Schedule).
Companies that are members of a group must join in a group election.
(3) A tonnage tax election may only be made if—
(a) the company or group is a qualifying company or group (see Part III of this Schedule), and
(b) certain requirements are met as to training (see Part IV of this Schedule) and other matters (see Part V of this Schedule).

Tonnage tax companies and groups
2 (1) In this Schedule a “tonnage tax company” or “tonnage tax group” means a company or group in relation to which a tonnage tax election has effect.
(2) References in this Schedule to a company entering or leaving tonnage tax are to its becoming or ceasing to be a tonnage tax company.
References to a company being subject to tonnage tax have a corresponding meaning.

Profits of tonnage tax company
3 (1) In the case of a tonnage tax company, its tonnage tax profits are brought into charge to corporation tax in place of its relevant shipping profits (see Part VI of this Schedule).
(2) Where profits would be relevant shipping income, any loss accruing to the company is similarly left out of account for the purposes of corporation tax.

Tonnage tax profits: method of calculation
4 (1) A company’s tonnage tax profits for an accounting period are calculated in accordance with this paragraph by reference to the net tonnage of the qualifying ships operated by the company.
For the purposes of the calculation the net tonnage of a ship is rounded down (if necessary) to the nearest multiple of 100 tons.
(2) The calculation is as follows:
Step One
Determine the daily profit for each qualifying ship operated by the company by reference to the following table and the net tonnage of the ship:
For each 100 tons up to 1,000 tons	£0.60
For each 100 tons between 1,000 and 10,000 tons	£0.45
For each 100 tons between 10,000 and 25,000 tons	£0.30
For each 100 tons above 25,000 tons	£0.15
Step Two
Work out the ship’s profit for the accounting period by multiplying the daily profit by—
(a) the number of days in the accounting period, or
(b) if the ship was operated by the company as a qualifying ship for only part of the period, by the number of days in that part.
Step Three
Follow Steps One and Two for each of the qualifying ships operated by the company in the accounting period.
Step Four
Add together the resulting amounts and the total is the amount of the company’s tonnage tax profits for that accounting period.

Tonnage tax profits: calculation in case of joint operation etc.
5 (1) If two or more companies fall to be regarded as operators of a ship by virtue of a joint interest in the ship, or in an agreement for the use of the ship, the tonnage tax profits of each are calculated as if each were entitled to a share of the profits proportionate to its share of that interest.
(2) If two or more companies fall to be treated as the operator of a ship otherwise than as mentioned in sub-paragraph (1), the tonnage tax profits of each are computed as if each were the only operator.

Measurement of tonnage of ship
6 (1) References in this Schedule to the gross or net tonnage of a ship are to that tonnage as determined—
(a) in the case of a vessel of 24 metres in length or over, in accordance with the IMO International Convention on Tonnage Measurement of Ships (ITC69);
(b) in the case of a vessel under 24 metres in length, in accordance with tonnage regulations.
(2) A ship shall not be treated as a qualifying ship for the purposes of this Schedule unless there is in force—
(a) a valid International Tonnage Certificate (1969), or
(b) a valid certificate recording its tonnage as measured in accordance with tonnage regulations.
(3) In this paragraph “tonnage regulations” means regulations under section 19 of the Merchant Shipping Act 1995 or provisions of the law of a country or territory outside the United Kingdom corresponding to those regulations.
1995 c. 21.

Part II Tonnage tax elections

Company or group election
7 (1) A tonnage tax election may be made in respect of—
(a) a qualifying single company (a “company election”), or
(b) a qualifying group (a “group election”).
(2) A group election has effect in relation to all qualifying companies in the group.

Method of making election
8 (1) A tonnage tax election is made by notice to the Inland Revenue.
(2) The notice must contain such particulars and be supported by such evidence as the Inland Revenue may require.

Person by whom election to be made
9 (1) A company election must be made by the company concerned.
(2) A group election must be made jointly by all the qualifying companies in the group.

When election may be made
10 (1) A tonnage tax election may be made at any time before the end of the period of twelve months beginning with the day on which this Act is passed (“the initial period”).
After the end of the initial period a tonnage tax election may only be made—
(a) in the circumstances specified in the following provisions of this paragraph, or
(b) as provided by an order under paragraph 11 (power to provide further opportunities for election).
(2) An election may be made after the end of the initial period in respect of a single company that—
(a) becomes a qualifying company, and
(b) has not previously been a qualifying company at any time after the passing of this Act.
Any such election must be made before the end of the period of twelve months beginning with the day on which the company became a qualifying company.
(3) An election may be made after the end of the initial period in respect of a group that becomes a qualifying group by virtue of a member of the group becoming a qualifying company, not previously having been a qualifying company at any time after the passing of this Act.
This does not apply if the group—
(a) was previously a qualifying group at any time after the passing of this Act, or
(b) is substantially the same as a group that was previously a qualifying group at any such time.
An election under this sub-paragraph must be made before the end of the period of twelve months beginning with the day on which the group became a qualifying group.
(4) This paragraph does not prevent an election being made under the provisions of Part XII of this Schedule relating to mergers and demergers.

Power to provide further opportunities for election
11 (1) The Treasury may by order provide for further periods during which tonnage tax elections may be made.
(2) Any such order may provide for this Part of this Schedule to apply, with such consequential adaptations as appear to the Treasury to be appropriate, in relation to any such further period as it applies in relation to the initial period.
The consequential adaptations that may be made include adaptations of the references to the passing of this Act or to 1st January 2000.

When election takes effect
12 (1) The general rule is that a tonnage tax election has effect from the beginning of the accounting period in which it is made.
This is subject to the following exceptions.
(2) A tonnage tax election cannot have effect in relation to an accounting period beginning before 1st January 2000.
If the general rule would produce that effect, the election has effect instead from the beginning of the accounting period following that in which it is made.
(3) The Inland Revenue may agree that a tonnage tax election made before the end of the initial period shall have effect from the beginning of an accounting period earlier than that in which it is made (but not one beginning before 1st January 2000).
(4) The Inland Revenue may agree that a tonnage tax election made before the end of the initial period shall have effect from the beginning of the accounting period following that in which it is made.
In exceptional circumstances they may agree that it shall have effect from the beginning of the accounting period following that one.
(5) In the case of a group election in respect of a group where the members have different accounting periods—
(a) sub-paragraph (1), or
(b) any agreement under sub-paragraph (3) or (4),
has effect in relation to each qualifying company by reference to that company’s accounting periods.
(6) A tonnage tax election under paragraph 10(2) or (3) (election in consequence of company becoming a qualifying company) has effect from the time at which the company in question became a qualifying company.
This is subject to paragraph 38(2)(a) and (b) (effect in certain cases of exceeding the 75% limit on chartered in tonnage).
Sch. 22 para. 12 modified (1.7.2005) by Tonnage Tax (Further Opportunity for Election) Order 2005 (S.I. 2005/1449), arts. 1, 3

Period for which election is in force
13 (1) The general rule is that a tonnage tax election remains in force until it expires at the end of the period of ten years beginning—
(a) in the case of a company election, with the first day on which the election has effect in relation to the company;
(b) in the case of a group election, with the first day on which the election has effect in relation to any member of the group.
This is subject to the following exceptions.
(2) A tonnage tax election ceases to be in force—
(a) in the case of a company election, if the company ceases to be a qualifying company;
(b) in the case of a group election, if the group ceases to be a qualifying group.
(2A) A tonnage tax election ceases to be in force—
(a) in the case of a company election, if a withdrawal notice in respect of the company takes effect under paragraph 15A;
(b) in the case of a group election, if a withdrawal notice in respect of the group takes effect under that paragraph.
Sch. 22 para. 13(2A) inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 2(2), 18(2)
(3) A tonnage tax election may also cease to be in force under—
(a) the provisions of Part V of this Schedule, or
(b) the provisions of Part XII of this Schedule relating to mergers and demergers.
(4) This paragraph has effect subject to paragraph 15(4) (election superseded by renewal election).

Effect of election ceasing to be in force
14 A tonnage tax election that ceases to be in force ceases to have effect in relation to any company.

Renewal election
15 (1) At any time when a tonnage tax election is in force in respect of a single company or group a further tonnage tax election (a “renewal election”) may be made in respect of that company or group.
(2) This is subject to paragraph 32(5) (training requirement: no renewal election if non-compliance notice in force).
(3) The provisions of—
paragraphs 7 to 9 (type of election, method of election and person by whom election to be made), and
paragraphs 13 and 14 (period for which election is in force and when election ceases to have effect),
apply in relation to a renewal election as they apply in relation to an original tonnage tax election.
(4) A renewal election supersedes the existing tonnage tax election.

Withdrawal notices
15A (1) A withdrawal notice (see paragraph 13(2A)) may be given—
(a) in respect of a single company, or
(b) in respect of a group,
but only if the following conditions are met.
(2) Condition 1 is that the notice is given during the period—
(a) beginning with the day on which the Finance Act 2005 is passed, and
(b) ending with 31st March 2006.
(3) Condition 2 is that, for the whole of the period of three years ending with the day on which the Finance Act 2005 is passed, a tonnage tax election or a renewal election has been in force in respect of the company or group in respect of which the withdrawal notice is to be given.
(4) A withdrawal notice must be given to the Inland Revenue—
(a) in the case of a withdrawal notice in respect of a single company, by that company;
(b) in the case of a withdrawal notice in respect of a group, jointly by all the qualifying companies in the group.
(5) A withdrawal notice given in accordance with this paragraph takes effect at the end of the accounting period that precedes the first accounting period of the company to begin after 1st July 2005.
(6) In the case of a withdrawal notice given in respect of a group, sub-paragraph (5) has effect in relation to each qualifying company in the group by reference to that company's accounting periods.
Paras. 15A, 15B and cross-headings inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 3, 18(2)

Power to provide further opportunities for withdrawal
15B (1) The Treasury may by order provide for further periods during which withdrawal notices under paragraph 15A may be given.
(2) Any such order may provide for that paragraph to apply, with such consequential adaptations as appear to the Treasury to be appropriate, in relation to any such further period as it applies in relation to the period specified in sub-paragraph (2) of that paragraph.
(3) The consequential adaptations that may be made include adaptations of the reference in sub-paragraph (3) of that paragraph to the period of three years ending with the day on which the Finance Act 2005 is passed.

Part III Qualifying companies and groups

Qualifying companies and groups
16 (1) For the purposes of this Schedule a company is a “qualifying company” if—
(a) it is within the charge to corporation tax,
(b) it operates qualifying ships, and
(c) those ships are strategically and commercially managed in the United Kingdom.
(2) A “qualifying group” means a group of which one or more members are qualifying companies.

Effect of temporarily ceasing to operate qualifying ships
17 (1) This paragraph applies where a company temporarily ceases to operate any qualifying ships.
It does not apply where a company continues to operate a ship that temporarily ceases to be a qualifying ship.
(2) If the company gives notice to the Inland Revenue stating—
(a) its intention to resume operating qualifying ships, and
(b) its wish to remain within tonnage tax,
the company shall be treated for the purposes of this Schedule as if it had continued to operate the qualifying ship or ships it operated immediately before the temporary cessation.
(3) The notice must be given not later than the date which is the filing date for the company’s company tax return for the accounting period in which the temporary cessation begins.
“Filing date” and “company tax return” here have the same meaning as in Schedule 18 to the Finance Act 1998.
1998 c. 36.
(4) This paragraph ceases to apply if and when the company—
(a) abandons its intention to resume operating qualifying ships, or
(b) again in fact operates a qualifying ship.

Meaning of operating a ship
18 (1) A company is regarded for the purposes of this Schedule as operating any ship owned by, or chartered to, the company, subject to the following provisions.
(2) A company is not regarded as the operator of a ship where part only of the ship has been chartered to it.
For this purpose a company is not to be taken as having part only of a ship chartered to it by reason only of the ship being chartered to it jointly with one or more other persons.
(3) A company is not regarded as the operator of a ship that has been chartered out by it on bareboat charter terms, except as provided by the following provisions.
(4) A company is regarded as operating a ship that has been chartered out by it on bareboat charter terms if the person to whom it is chartered is not a third party.
For this purpose a “third party” means—
(a) in the case of a single company, any other person;
(b) in the case of a member of a group—
(i) any member of the group that is not a tonnage tax company (and does not become a tonnage tax company by virtue of the ship being chartered to it), or
(ii) any person who is not a member of the group.
(5) A company is not regarded as ceasing to operate a ship that has been chartered out by it on bareboat charter terms if—
(a) the ship is chartered out because of short-term over-capacity, and
(b) the term of the charter does not exceed three years.
(6) A company is regarded as operating a ship that has been chartered out by it on bareboat charter terms if the ship—
(a) is registered in the United Kingdom, and
(b) is in the service of a government department by reason of a charter by demise to the Crown,
and there is in force under section 308(2) of the Merchant Shipping Act 1995 an Order in Council providing for the registration of government ships in the service of that department.
In this sub-paragraph “government department” includes a Northern Ireland department.
1995 c. 21.

Qualifying ships
19 (1) For the purposes of this Schedule a “qualifying ship” means, subject to sub-paragraph (2), a seagoing ship of 100 tons or more gross tonnage used for—
(a) the carriage by sea of passengers,
Words in Sch. 22 para. 19(1)(a) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 4(2)(a), 18(1) (with Sch. 7 paras. 19-21)
(b) the carriage by sea of cargo,
Words in Sch. 22 para. 19(1)(b) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 4(2)(b), 18(1) (with Sch. 7 paras. 19-21)
(c) towage, salvage or other marine assistance carried out at sea, or
Words in Sch. 22 para. 19(1)(c) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 4(2)(c), 18(1) (with Sch. 7 paras. 19-21)
(d) transport by sea in connection with other services of a kind necessarily provided at sea.
Words in Sch. 22 para. 19(1)(d) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 4(2)(d), 18(1) (with Sch. 7 paras. 19-21)
(2) A vessel is not a qualifying ship for the purposes of this Schedule if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land.
(3) Sub-paragraph (1) is also subject to
(a) paragraph 20 (vessels excluded from being qualifying ships);
Word in Sch. 22 para. 19(3) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 4(3)(a), 18(1) (with Sch. 7 paras. 19-21)
(b) paragraph 20A (qualifying dredgers and tugs);
Sch. 22 para. 19(3)(b), (c) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 4(3)(b), 18(1) (with Sch. 7 paras. 19-21)
(c) paragraphs 22A to 22F (flagging).
(4) For the purposes of this paragraph a ship is a seagoing ship if it is certificated for navigation at sea by the competent authority of any country or territory.
(5) For the purposes of sub-paragraph (1) “sea” does not include—
(a) a port or harbour;
(b) an estuary, a tidal or other river or an inland waterway.
Sch. 22 para. 19(5) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 4(4), 18(1) (with Sch. 7 paras. 19-21)

Vessels excluded from being qualifying ships
20 (1) The following kinds of vessel are not qualifying ships for the purposes of this Schedule—
(a) fishing vessels or factory ships;
(b) pleasure craft;
(c) harbour or river ferries;
(d) offshore installations;
(e) tankers dedicated to a particular oil field;
(f) dredgers other than qualifying dredgers.
Sch. 22 para. 20(1)(f) substituted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 5(2), 18(1) (with Sch. 7 paras. 19-21)
(2) In sub-paragraph (1)(a) “factory ship” means a vessel providing processing services for the fishing industry.
(3) In sub-paragraph (1)(b) “pleasure craft” means a vessel of a kind whose primary use is for the purposes of sport or recreation.
(4) In sub-paragraph (1)(c) “harbour or river ferry” means a vessel used for harbour, estuary or river crossings.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 22 para. 20(5) repealed (22.7.2004) (with effect in accordance with Sch. 27 para. 7(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 7(1), Sch. 42 Pt. 2(19)
(6) For the purposes of sub-paragraph (1)(e) whether a tanker is dedicated to a particular oil field shall be determined in accordance with section 2 of the Oil Taxation Act 1983 (dedicated mobile assets).
1983 c. 56.
(7) In this Schedule “qualifying dredger” means a dredger which—
(a) is self-propelled, and
(b) is constructed or adapted for the carriage of cargo;
(but see further paragraph 20A).
Sch. 22 para. 20(7) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 5(3), 18(1) (with Sch. 7 paras. 19-21)

Qualifying dredgers and tugs
20A (1) This paragraph applies where a company operates a ship in an accounting period and the ship—
(a) is a qualifying dredger or a tug, and
(b) would, apart from this paragraph, be a qualifying ship.
(2) The ship shall not be regarded as a qualifying ship operated by the company in that accounting period unless it is used for one or more of the activities mentioned in paragraph 19(1)(a) to (d) for more than 50% of its operational time.
(3) In this paragraph “operational time”, in relation to a ship operated by a company in an accounting period, means the time during that accounting period during which the ship is—
(a) operated by the company, and
(b) used for any activity.
(4) For the purposes of sub-paragraph (2) assisting a self-propelled vessel into or out of a port or harbour is not to be regarded as use for an activity mentioned in paragraph 19(1)(c).
(5) For the purposes of sub-paragraph (3) any waiting time spent by a tug for the purposes of a particular activity is to be treated as time during which the tug is used for that activity.
Sch. 22 para 20A and cross-heading inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 6, 18(1) (with Sch. 7 paras. 19-21)

Power to modify exclusions
21 The Treasury may make provision by order amending paragraph 20 so as to add any description of vessel to, or remove any description of vessel from, the kinds of vessel that are excluded from being qualifying ships for the purposes of this Schedule.

Effect of change of use
22 (1) A qualifying ship that begins to be used for non-qualifying purposes ceases to be a qualifying ship when it begins to be so used, subject to the following provisions.
Words in Sch. 22 para. 22(1) substituted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 7(2), 18(2)
(2) If—
(a) a company operates a ship throughout an accounting period of the company, and
(b) in that period the ship is used for non-qualifying purposes on not more than 30 days,
Words in Sch. 22 para. 22(2)(b) substituted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 7(3), 18(2)
that use shall be disregarded in determining whether the ship is a qualifying ship at any time during that period.
(3) In the case of an accounting period shorter than a year, the figure of 30 days in sub-paragraph (2) shall be proportionately reduced.
(4) If a company operates a ship during part only of an accounting period of the company, sub-paragraph (2) has effect as if for “30 days", or the number of days substituted by sub-paragraph (3), there were substituted the number of days that bear to the length of that part of the accounting period the same proportion that 30 days does to a year.
(5) In this paragraph references to use for non-qualifying purposes are to—
(a) use for an activity other than any of the activities mentioned in paragraph 19(1)(a) to (d), or
(b) use as a vessel of a kind excluded by paragraph 20 from being a qualifying ship.
Words in Sch. 22 para. 22(5) substituted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 7(4), 18(2)
(6) This paragraph does not apply for the purposes of sub-paragraphs (2) to (5) of paragraph 20A (qualifying dredgers and tugs).
Sch. 22 para. 22(6) inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 7(5), 18(2)

Flagging: rule for ships other than dredgers and tugs
22A (1) This paragraph applies if the following conditions are satisfied in the case of a ship which—
(a) is neither a qualifying dredger nor a tug, and
(b) would, apart from this paragraph, be a qualifying ship.
(2) Condition 1 is that, at a time after the later of the reference date (see paragraph 22B(1)) and 30th June 2005,—
(a) in the case of a tonnage tax company which is a single company, the company begins, in a financial year which is not excepted (see paragraph 22B(2)), to operate the ship for the first time, or
(b) in the case of a tonnage tax company which is a member of a tonnage tax group, the company begins, in a financial year which is not excepted, to operate the ship for the first time, the ship not having previously been operated by any other member of the group.
(3) Condition 2 is that less than 60% of the company's total tonnage is Community-flagged (see paragraph 22B(3)) on average over the period—
(a) beginning with the first day of the financial year mentioned in condition 1, and
(b) ending with the day on which the company so begins to operate the ship.
(4) Condition 3 is that—
(a) the percentage of the company's total tonnage which is Community-flagged on average over the period mentioned in condition 2,
is less than
(b) the percentage of the company's total tonnage which was Community-flagged on the reference date.
(5) Condition 4 is that, on the date on which the company so begins to operate the ship, the ship is not registered in one of the Member States' registers (see paragraph 22B(7)).
(6) Where this paragraph applies in relation to the ship, the ship shall not, at any time on or after that date, be regarded as—
(a) a qualifying ship operated by the company, or
(b) if immediately before that date the company is a member of a tonnage tax group, a qualifying ship operated by any company that is or becomes a member of the group.
(7) But sub-paragraph (6) does not apply if—
(a) the ship has become registered in one of the Member States' registers by the end of the period of three months beginning with that date, or
(b) the conditions in sub-paragraph (8) are satisfied.
(8) Those conditions are that—
(a) a substitute ship which was not registered in one of the Member States' registers has, during the period mentioned in sub-paragraph (7)(a), become so registered, and
(b) no later than the end of that period—
(i) if the company is a single company, the company makes an election under this sub-paragraph in relation to the substitute ship, or
(ii) if the company is a member of a tonnage tax group, all the qualifying companies in the group jointly make such an election.
(9) In sub-paragraph (8) a “substitute ship” means a qualifying ship—
(a) the tonnage of which is no less than that of the ship mentioned in sub-paragraph (1), and
(b) which was first operated by the company or, if the company is a member of a tonnage tax group, by any other member of the group more than three months before that date;
and for this purpose the tonnage of a ship is to be determined on the same basis as it is under paragraph 22B(3).
(10) An election under sub-paragraph (8) is made by notice to the Inland Revenue.
Sch. 22 paras. 22A-22C and cross-headings inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 8, 18(1) (with Sch. 7 paras. 19-21)

Flagging: meaning of terms used in paragraph 22A
22B (1) In paragraph 22A “the reference date” means 17th January 2004 or, if later,—
(a) in the case of a single company, the date of the end of the accounting period in which the company became (or becomes) a tonnage tax company;
(b) in the case of a member of a group, the date of the end of the accounting period in which the group became (or becomes) a tonnage tax group;
but where the members of a group had (or have) different accounting periods at the time the group became (or becomes) a tonnage tax group, paragraph (b) has effect by reference to the first of those accounting periods.
(2) For the purposes of sub-paragraph (2) of paragraph 22A a financial year is excepted if it is designated by an order made by the Treasury as a financial year in relation to which that paragraph is not to have effect (see further paragraph 22C(1) to (3)).
(3) For the purposes of paragraph 22A the percentage of a company's total tonnage which is Community-flagged is—
(CFT/TT) x 100
where—
CFT is the aggregate tonnage of such of the relevant ships as are registered in one of the Member States' registers, and
TT is the aggregate tonnage of all the relevant ships.
(4) For the purposes of sub-paragraph (3) the ships which are the relevant ships are—
(a) if the company is a single company, the ships operated by the company, or
(b) if the company is a member of a tonnage tax group, the ships operated by each member of the group which is a qualifying company.
(5) Sub-paragraphs (3) and (4) are subject to any regulations made under paragraph 22C(4).
(6) A ship shall not be counted more than once in determining for the purposes of sub-paragraph (3) the aggregate tonnage of relevant ships.
(7) In this Schedule “Member States' registers” has the meaning given by the Annex to Commission communication C(2004) 43 — Community guidelines on State aid to maritime transport (as from time to time amended or replaced).

Flagging: provisions supplementing paragraphs 22A and 22B
22C (1) An order under paragraph 22B(2) designating a financial year shall be made if—
(a) the Treasury are satisfied, on the basis of the information available to them, that the percentage of the tonnage tax fleet which is Community-flagged has not decreased on average over a prescribed three year period, and
(b) the order is made before the beginning of that financial year.
(2) The Treasury may make provision by regulations for or in connection with—
(a) specifying the meaning, for the purposes of sub-paragraph (1)(a), of the percentage of the tonnage tax fleet which is Community-flagged;
(b) specifying the way in which an average is to be calculated for those purposes;
(c) requiring any tonnage tax company or tonnage tax group to provide prescribed information for the purposes of enabling the Treasury to determine whether the condition in sub-paragraph (1)(a) is met;
(d) imposing penalties in respect of a failure to comply with a provision of the regulations made by virtue of paragraph (c) (including, in prescribed cases or circumstances, the exclusion of a company or group from tonnage tax).
(3) Section 828(3) of the Taxes Act 1988 shall not apply in relation to an order under paragraph 22B(2).
(4) The Treasury may make provision by regulations as to the way in which the percentage of a company's total tonnage which is Community-flagged is to be calculated for the purposes of paragraph 22A.
(5) The provision that may be made by regulations under sub-paragraph (4) includes provision for or in connection with—
(a) determining the percentage of a company's total tonnage which is Community-flagged on average over a period;
(b) specifying the basis on which the tonnage of a ship is to be determined;
(c) treating ships which would, but for the regulations, be relevant ships for the purposes of paragraph 22B(3) as not being relevant ships for those purposes;
(d) including in the calculation set out in paragraph 22B(3) only such proportion of the tonnage of a relevant ship as may be prescribed.
(6) Regulations under this paragraph—
(a) may make different provision for different cases or circumstances, and
(b) may contain such supplementary, incidental, consequential and transitional provisions as appear to the Treasury to be necessary or expedient.
(7) In this paragraph “prescribed” means—
(a) specified in, or
(b) determined in accordance with,
regulations under this paragraph.

Flagging: rule on first operation of qualifying dredger or tug
22D (1) This paragraph applies if—
(a) a company begins to operate a ship which—
(i) is a qualifying dredger or a tug,
(ii) would, apart from this paragraph, be a qualifying ship, and
(iii) has not previously been operated by the company or, if the company is a member of a group, by any member of the group, and
(b) on the date on which the company so begins to operate the ship, the ship is not registered in one of the Member States' registers.
(2) The ship shall not, at any time on or after that date, be regarded as—
(a) a qualifying ship operated by the company, or
(b) if immediately before that date the company is a member of a group, a qualifying ship operated by any company that is or becomes a member of the group.
(3) But sub-paragraph (2) does not apply if the ship has become registered in one of the Member States' registers by the end of the period of three months beginning with that date.
Sch. 22 paras. 22D-22E and cross-headings inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 9, 18(1) (with Sch. 7 paras. 19-21)

Flagging: rule on subsequent re-flagging of qualifying dredger or tug
22E (1) This paragraph applies if—
(a) a qualifying ship operated by a company ceases to be registered in any of the Member States' registers, and
(b) the ship is a qualifying dredger or a tug.
(2) The ship shall not, at any time on or after the date on which it ceases to be so registered, be regarded as—
(a) a qualifying ship operated by the company, or
(b) if immediately before that date the company is a member of a group, a qualifying ship operated by any company that is or becomes a member of the group.

Flagging: restrictions where ship ceases to be qualifying ship under paragraph 22E
22F (1) This paragraph applies where a qualifying ship operated by a tonnage tax company ceases to be a qualifying ship by virtue of paragraph 22E.
(2) No notice may be given under section 130 of the Capital Allowances Act 2001 for the postponement of all or part of a relevant allowance to which—
(a) the company, or
(b) if immediately before the date on which the ship so ceases to be a qualifying ship (“the cessation date”) the company is a member of a tonnage tax group, any company that is or becomes a member of the group,
becomes entitled on or after the cessation date.
(3) In sub-paragraph (2) “relevant allowance” means an allowance in respect of—
(a) qualifying expenditure on the provision of the ship, or
(b) qualifying expenditure which—
(i) is incurred on the provision of the ship, and
(ii) is allocated to a single ship pool.
(4) No claim may be made under section 135 of that Act for deferment of all or part of a balancing charge—
(a) to which the company or, if immediately before the cessation date the company is a member of a tonnage tax group, any company that is or becomes a member of the group becomes liable, and
(b) which arises when there is a disposal event in respect of the ship on or after the cessation date.
(5) Relief in respect of a relevant loss shall not be given under section 37 of the Corporation Tax Act 2010 (losses: deduction from total profits of the same, or an earlier, accounting period).
Words in Sch. 22 para. 22F(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 316(2)(a) (with Sch. 2)
(6) Group relief under Part 5 of that Act shall not be available in respect of a relevant loss.
Words in Sch. 22 para. 22F(6) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 316(2)(b) (with Sch. 2)
(7) Accordingly, relief in respect of a relevant loss shall be given only under section 45 of that Act (carry forward of trade loss).
Words in Sch. 22 para. 22F(7) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 316(2)(c) (with Sch. 2)
(8) In sub-paragraphs (5) to (7) “relevant loss” means a loss which is incurred in respect of the ship on or after the cessation date in the course of a trade carried on by—
(a) the company, or
(b) if immediately before the cessation date the company is a member of a tonnage tax group, any company that is or becomes a member of the group.
Sch. 22 para 22F and cross-heading inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 10, 18(1) (with Sch. 7 paras. 19-21)

Part IV The training requirement

Introduction
23 (1) It is a condition of entering tonnage tax or making a renewal election that—
(a) in the case of a single company, the company, or
(b) in the case of a group, the group,
meets certain minimum obligations in connection with the training of seafarers.
(2) The provisions of this Part of this Schedule have effect for securing that result.

The minimum training obligation
24 (1) The Secretary of State may make provision by regulations as to the minimum obligation of a tonnage tax company as regards the training of seafarers.
(2) The regulations may—
(a) require the company to provide training for a minimum number of seafarers calculated on such basis as may be prescribed, and
(b) impose different requirements with respect to the training of officers and ratings.
Paragraph (b) is without prejudice to the general power to make different provision for different cases (see paragraph 36(2)(a)).
(3) The regulations may impose such requirements as to the nationality and ordinary residence of trainees as appear to the Secretary of State to be appropriate.
(4) References in this Part of this Schedule to “the minimum training obligation" are—
(a) in relation to a single company, to the minimum obligation of that company, and
(b) in relation to a group, to the minimum obligations of the qualifying companies in the group taken as a whole.

Meaning of “training commitment"
25 (1) References in this Part of this Schedule to a “training commitment" are to a statement by a company or group setting out how it proposes to meet the minimum training obligation.
(2) A training commitment is not effective for the purposes of this Part of this Schedule unless approved by the Secretary of State.
(3) Sub-paragraphs (1) and (2) are subject to—
paragraph 27(4) and (5) (power of Secretary of State to set training commitment), and
paragraph 28(2) (power of Secretary of State to adjust training commitment to take account of changed circumstances).

Approval of initial training commitment
26 (1) A company or group proposing to make a tonnage tax election must produce, and submit to the Secretary of State for approval, an initial training commitment.
(2) If the Secretary of State is satisfied that the proposals are adequate to meet the minimum training obligation, he shall approve the initial training commitment and issue a certificate to that effect.
(3) A tonnage tax election is ineffective unless such a certificate of approval is in force with respect to the training commitment of the company or group in respect of which the election is made.

Annual training commitment
27 (1) The Secretary of State may by regulations require a tonnage tax company or tonnage tax group—
(a) to produce a training commitment at such annual or other intervals as may be prescribed in respect of such period as may be prescribed, and
(b) to submit it to the Secretary of State for approval.
(2) If the Secretary of State is satisfied that the proposals are adequate to meet the minimum training obligation, he shall approve the training commitment and issue a certificate to that effect.
(3) It is an offence to fail to comply with any requirement imposed by regulations under sub-paragraph (1).
(4) The Secretary of State may make provision by regulations enabling him—
(a) to set the training commitment for a company or group if, after such period as may be prescribed, no training commitment has been submitted to and approved by him; and
(b) on the application of the company or group concerned, made after consultation with any prescribed person involved in the training of seafarers, to vary a training commitment set by him.
(5) A training commitment set by the Secretary of State has effect as if submitted by the company or group and approved by him.

Supplementary provisions about training commitments
28 (1) The Secretary of State may make provision by regulations—
(a) as to the form and contents of a training commitment;
(b) requiring an application for approval of a training commitment to be in such form and contain such information as may be prescribed;
(c) authorising the Secretary of State, when considering a training commitment, to consult any prescribed person involved in the training of seafarers;
(d) as to the procedure to be followed where the Secretary of State is minded not to approve a training commitment.
(2) The Secretary of State may make provision by regulations—
(a) enabling him, on the application of the company or group concerned, to adjust a training commitment (to any extent) to take account of changed circumstances;
(b) requiring an application for adjustment to be in such form and contain such information as may be prescribed;
(c) authorising the Secretary of State, when considering an application for adjustment, to consult any prescribed person involved in the training of seafarers;
(d) as to the procedure to be followed where the Secretary of State is minded not to make the adjustment applied for.
(3) The Secretary of State may by regulations make such provision as he thinks appropriate as to the effect in relation to a training commitment of a merger or other transaction resulting in a change of control of one or more companies.

Payments in lieu of training
29 (1) The Secretary of State may make provision by regulations—
(a) allowing a company or group, in such circumstances and to such extent as may be prescribed, to propose in its training commitment to meet the minimum training obligation by making payments in lieu of training; and
(b) requiring a company or group to make payments in lieu of training—
(i) where its training commitment provides for such payments;
(ii) where training is not provided in accordance with its training commitment.
(2) The regulations shall provide for payments in lieu of training—
(a) to be calculated on such basis as may be prescribed,
(b) to be made to or for the benefit of any prescribed person involved in the training of seafarers, and
(c) to be made at such intervals and in such manner as may be prescribed.
(3) The regulations may provide that if in any case there is a failure in relation to a company or group to comply with the requirements of this Part of this Schedule with respect to—
(a) the submission of training commitments, or
(b) the making of returns or provision of information,
the Secretary of State may determine to the best of his information and belief the amount of the payments in lieu of training to be made by the company or group.
(4) The regulations may provide that a payment in lieu of training that has become due but is unpaid—
(a) is a debt due to the Secretary of State or any prescribed person involved in the training of seafarers, and
(b) carries interest at such rate as may be prescribed.
(5) The regulations may provide for the costs or expenses of any legal or other proceedings for recovering the debt or interest to be recoverable, and to carry interest, in the same way as the debt.

Monitoring of compliance with training commitment
30 (1) The Secretary of State may make provision by regulations—
(a) requiring a return to be made to the Secretary of State or any prescribed person involved in the training of seafarers, at such intervals as may be prescribed, of such information as may be prescribed relating to—
(i) the training provided, and
(ii) any payments in lieu of training made,
by a tonnage tax company or tonnage tax group;
(b) authorising the Secretary of State to direct any person to provide such information as the Secretary of State may reasonably require for the purposes of ascertaining—
(i) what the minimum training obligation of a company or group should be,
(ii) whether the proposals in a training commitment are adequate to meet the minimum training obligation of a company or group, or
(iii) whether a company or group has complied with its training commitment;
(c) enabling an audit to be carried on on behalf of the Secretary of State of the accounts or other records—
(i) of a qualifying single company, or
(ii) of the qualifying companies in a group,
for the purpose of checking that any return or information provided to the Secretary of State is correct.
(2) A person commits an offence if without reasonable excuse—
(a) he fails to make a return that he is required to make by regulations under sub-paragraph (1)(a),
(b) having been directed under regulations under sub-paragraph (1)(b) to provide any information, he fails to comply with the direction, or
(c) he obstructs a person carrying out an audit under regulations under sub-paragraph (1)(c).

Higher rate of payment in case of failure to meet training commitment
31 (1) The Secretary of State may by regulations provide that—
(a) if a company fails to meet its training commitment in any period, the amount of any payments in lieu of training that fall to be made by the company in a subsequent period shall be at a higher rate; and
(b) if a group fails to meet its training commitment in any period, the amount of any payments in lieu of training that fall to be made by any member of the group in a subsequent period shall be at a higher rate.
(2) The regulations may contain provision as to—
(a) the periods by reference to which it is to be determined whether a company or group has met its training commitment;
(b) the circumstances in which a company or group is to be treated as failing to meet its training commitment;
(c) the method of calculating the higher rate of payment; and
(d) any circumstances in which the higher rate is not to be payable despite the failure of a company or group to meet its training commitment.
(3) The regulations may make provision having the effect that the rate of payments in lieu of training is progressively increased if a company or group fails to meet its training commitment in successive periods.

Certificate of non-compliance
32 (1) The Secretary of State may by regulations make provision authorising the Secretary of State to issue a certificate of non-compliance in the following cases.
(2) The regulations may authorise the issue of a certificate of non-compliance in respect of a single company if—
(a) the company fails to meet its training commitment for successive periods amounting to not less than two years, or
(b) the company, or any of its officers, commits an offence under this Schedule.
(3) The regulations may authorise the issue of a certificate of non-compliance in respect of a group if—
(a) the group fails to meet its training commitment for successive periods amounting to not less than two years, or
(b) a member of the group, or an officer of a member, commits an offence under this Schedule.
(4) If such regulations are made they shall provide that a certificate of non-compliance must be issued unless the Secretary of State is satisfied that there are good reasons why a certificate should not be issued.
(5) No renewal election may be made in respect of a company or group in relation to which a certificate of non-compliance is in force.

Certificates of non-compliance: supplementary provisions
33 (1) The Secretary of State may make provision by regulations—
(a) enabling a company or group in respect of which a certificate of non-compliance has been issued to apply to the Secretary of State to cancel the certificate;
(b) requiring any such application to be in such form and contain such information as may be prescribed;
(c) authorising or requiring the Secretary of State, when considering such an application, to consult any prescribed person involved in the training of seafarers;
(d) as to the procedure to be followed where the Secretary of State is minded not to cancel a certificate of non-compliance.
(2) The Secretary of State may by regulations make such provision as he thinks appropriate as to the effect on a certificate of non-compliance of a merger or demerger relating to the company or group in respect of which the certificate is in force.

Disclosure of information
34 (1) No obligation as to secrecy or other restriction on the disclosure of information imposed by statute or otherwise prevents the disclosure of information—
(a) by the Secretary of State to the Inland Revenue for the purpose of assisting the Inland Revenue to discharge their functions under the Corporation Tax Acts so far as relating to matters arising under this Schedule, or
(b) by the Inland Revenue to the Secretary of State for the purpose of assisting the Secretary of State to discharge his functions under this Part of this Schedule.
(2) No obligation as to secrecy or other restriction on the disclosure of information imposed by statute or otherwise prevents the disclosure of information—
(a) by the Secretary of State to any prescribed person involved in the training of seafarers, or
(b) by any such person to the Secretary of State,
for the purposes of assisting the Secretary of State to discharge his functions under this Part of this Schedule.
Sch. 22 para. 34(2) applied (31.8.2000) by S.I. 2000/2129, reg. 25
(3) Information obtained by such disclosure as is mentioned in sub-paragraph (1) or (2) shall not be further disclosed except for the purposes of legal proceedings arising out of the functions referred to.
Sch. 22 para. 34(3) powers of disclosure extended (14.12.2001) by 2001 c. 24, s. 17, Sch. 4 Pt. I para. 49

Offences
35 (1) It is an offence for a person to provide for any of the purposes of this Part of this Schedule information that he knows or has reasonable cause to believe is false in a material particular.
(2) A person committing any offence under this Part of this Schedule, is liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum, and
(b) on conviction on indictment, to a fine.

General provisions about regulations
36 (1) Regulations under this Part of this Schedule shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.
(2) Regulations under this Part of this Schedule—
(a) may make different provision for different cases, and
(b) may contain such supplementary, incidental and transitional provisions as appear to the Secretary of State to be necessary or expedient.
(3) In this Part of this Schedule “prescribed” means prescribed by regulations made by the Secretary of State.
(4) Regulations under this Part of this Schedule may make provision as to the obligations of a company in respect of any part of the period—
(a) beginning with 1st January 2000, and
(b) ending immediately before the first regulations under this Part come into force,
during which the company is, or is treated as having been, subject to tonnage tax.
This includes power to require payments in lieu of training to be made in respect of any such part of that period.

Part V Other requirements

The requirement that not more than 75% of fleet tonnage is chartered in
37 (1) It is a requirement of entering or remaining within tonnage tax—
(a) in the case of a single company, that not more than 75% of the net tonnage of the qualifying ships operated by it is chartered in;
(b) in the case of a group, that not more than 75% of the aggregate net tonnage of the qualifying ships operated by the members of the group that are qualifying companies is chartered in.
(2) For this purpose a ship is “chartered in"—
(a) in relation to a single company, if it is chartered to the company otherwise than on bareboat charter terms, or
(b) in relation to a group, if it is chartered otherwise than on bareboat charter terms to a qualifying member of the group by a person who is not a qualifying member of the group.
In paragraph (b) “qualifying member of the group” means a qualifying company that is a member of the group.
(3) A ship shall not be counted more than once in determining for the purposes of sub-paragraph (1)(b) the aggregate net tonnage of the qualifying ships operated by the members of a group that are qualifying companies.
(4) In the following provisions the requirement in this paragraph is referred to as “the 75% limit"—
paragraph 38 (election not effective if limit exceeded), and
paragraphs 39 and 40 (exclusion of company or group where limit exceeded).
(5) References to the limit being exceeded in an accounting period are to its being exceeded on average over the period in question.

The 75% limit: election not effective if limit exceeded
38 (1) Where a tonnage tax election is made before the end of the initial period and the 75% limit is exceeded in the first relevant accounting period, the election is treated as never having been of any effect.
(2) Where a tonnage tax election is made after the end of the initial period, then—
(a) if the 75% limit is exceeded in the first relevant accounting period, the election does not have effect in relation to that period;
(b) if the 75% limit is exceeded in the first and second relevant accounting periods, the election does not have effect in relation to either of those periods; and
(c) if the 75% limit is exceeded in the first, second and third relevant accounting periods, the election is treated as never having been of any effect.
(3) For the purposes of sub-paragraphs (1) and (2) the first, second or third relevant accounting period means—
(a) in relation to a single company, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of the company after its entry into tonnage tax;
(b) in relation to a group, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of a member of the group that would have been a tonnage tax company.
(4) Sub-paragraphs (1) and (2) do not apply to a renewal election.

The 75% limit: exclusion of company if limit exceeded
39 (1) If the 75% limit is exceeded in two or more consecutive accounting periods of a single company subject to tonnage tax, the Inland Revenue may give notice excluding the company from tonnage tax.
(2) The effect of the notice is that the company’s tonnage tax election ceases to be in force from such date as may be specified in the notice.
The specified date must not be earlier than the beginning of the accounting period of the company that follows the second consecutive accounting period of the company in which the limit is exceeded.

The 75% limit: exclusion of group if limit exceeded
40 (1) If the 75% limit is exceeded in relation to a tonnage tax group in two or more consecutive accounting periods of any tonnage tax company that is a member of the group (“the relevant company”), the Inland Revenue may give notice excluding the group from tonnage tax.
(2) The effect of the notice is that the group’s tonnage tax election ceases to be in force from such date as may be specified in the notice.
The specified date must not be earlier than the beginning of the accounting period of the relevant company that follows the second consecutive accounting period of that company in which the limit is exceeded.
(3) Notice under this paragraph need only be given to the relevant company.
This is subject to any arrangements under paragraph 120 (arrangements for dealing with group matters).

The requirement not to enter into tax avoidance arrangements
41 (1) It is a condition of remaining within tonnage tax that a company is not a party to any transaction or arrangement that is an abuse of the tonnage tax regime.
(2) A transaction or arrangement is such an abuse if in consequence of its being, or having been, entered into the provisions of this Schedule fall to be applied in a way that results (or would but for this paragraph result) in—
(a) a tax advantage being obtained for—
(i) a company other than a tonnage tax company, or
(ii) a tonnage tax company in respect of its non-tonnage tax activities,
or
(b) the amount of the tonnage tax profits of a tonnage tax company being artificially reduced.
(3) In this paragraph “tax advantage” has the meaning given by section 840ZA of the Taxes Act 1988.
Sch. 22 para. 41(3) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 395 (with Sch. 2)
(4) A ... lease is not to be taken as being an abuse of the tonnage tax regime by reason of the lessor obtaining capital allowances as a result of the lease being, or having been, entered into.
In this sub-paragraph “lease”, and “lessor” in relation to a lease, have the meaning given by paragraph 89(2).
Word in Sch. 22 para. 41(4) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 2(1)(a), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
Words in Sch. 22 para. 41(4) substituted (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 2(1)(b) (with Sch. 32 para. 4)

Tax avoidance: exclusion from tonnage tax
42 (1) If a tonnage tax company is a party to any such transaction or arrangement as is mentioned in paragraph 41(1), the Inland Revenue may—
(a) if it is a single company, give notice excluding it from tonnage tax;
(b) if it is a member of a group, give notice excluding the group from tonnage tax.
(2) The effect of the notice in the case of a single company is that the company’s tonnage tax election ceases to be in force from the beginning of the accounting period in which the transaction or arrangement was entered into.
(3) The effect of such a notice in the case of a group is that the group’s tonnage tax election ceases to be in force from such date as may be specified in the notice.
The specified date must not be earlier than the beginning of the earliest accounting period in which any member of the group entered into the transaction or arrangement in question.
(4) The provisions of paragraphs 138 and 139 (exit charge: chargeable gains and balancing charges) apply where a company ceases to be a tonnage tax company by virtue of this paragraph.
(5) Notice under this sub-paragraph (1)(b) need only be given to the company mentioned in the opening words of that sub-paragraph.
This is subject to any arrangements under paragraph 120 (arrangements for dealing with group matters).

Appeals
43 (1) An appeal may be made against a notice given by the Inland Revenue under—
paragraph 39 or 40 (exclusion of company or group from tonnage tax if 75% limit exceeded), or
paragraph 42 (exclusion from tonnage tax of company or group where tax avoidance arrangement entered into).
Words in Sch. 22 para. 43(1) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 294(2)
(2) Notice of appeal must be given to the Inland Revenue within 30 days of the date of issue of the notice appealed against.
(3) In the case of a notice under paragraph 40 or 42(1)(b) only one appeal may be brought, but it may be brought jointly by two or more members of the group concerned.

The requirement to prove compliance with safety etc standards
43A (1) The Secretary of State may make provision by regulations for or in connection with requiring qualifying companies or qualifying groups to provide evidence of compliance with prescribed standards relating to—
(a) health and safety in connection with qualifying ships which are not registered in any of the Member States' registers;
(b) environmental performance of such ships;
(c) working conditions on such ships.
(2) The provision that may be made by regulations under this paragraph includes provision for or in connection with—
(a) requiring returns to be made at prescribed intervals;
(b) authorising the Secretary of State to require persons to provide prescribed information in prescribed cases or circumstances;
(c) enabling audits to be carried out on behalf of the Secretary of State;
(d) authorising the Secretary of State to issue certificates of non-compliance in prescribed cases or circumstances;
(e) the effect of such a certificate (including preventing the making of a renewal election when such a certificate is in force);
(f) enabling persons to apply to the Secretary of State for the cancellation of such a certificate;
(g) requiring or enabling the Secretary of State to revoke a tonnage tax election after a prescribed period of non-compliance;
(h) the making of appeals;
(i) authorising the disclosure of information between the Secretary of State and the Inland Revenue.
(3) Regulations under this paragraph may create criminal offences in respect of failures to comply with requirements imposed by the regulations.
(4) Regulations under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.
(5) Regulations under this paragraph—
(a) may make different provision for different cases, and
(b) may contain such supplementary, incidental and transitional provisions as appear to the Secretary of State to be necessary or expedient.
(6) In this paragraph “prescribed” means prescribed by regulations under this paragraph.
Para 43A and cross-heading inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 11, 18(2)

Part VI Relevant shipping profits

Introduction
44 (1) For the purposes of this Schedule the relevant shipping profits of a tonnage tax company are—
(a) its relevant shipping income (as defined below), and
(b) so much of its chargeable gains as is effectively excluded from the charge to tax by the provisions of Part VIII of this Schedule.
(2) The “relevant shipping income” of a tonnage tax company means—
(a) its income from tonnage tax activities (see paragraphs 45 to 48), and
(b) any income that is relevant shipping income under—
paragraph 49 (distributions of overseas shipping companies), or
paragraph 50 (certain interest etc.),
but subject to paragraph 51 (general exclusion of investment income).

Tonnage tax activities
45 (1) References in this Schedule to the “tonnage tax activities" of a tonnage tax company are to—
(a) its core qualifying activities (see paragraph 46),
(b) its qualifying secondary activities to the extent that they do not exceed the permitted level (see paragraph 47), and
(c) its qualifying incidental activities (see paragraph 48).
(2) Sub-paragraph (1) has effect subject to paragraph 51(2) (exclusion of activities giving rise to investment income).

Core qualifying activities
46 (1) A tonnage tax company’s “core qualifying activities" are—
(a) its activities in operating qualifying ships, and
(b) other ship-related activities that are a necessary and integral part of the business of operating its qualifying ships.
(2) A company’s activities in operating qualifying ships means the activities mentioned in paragraph 19(1)(a) to (d) by virtue of which the ship is a qualifying ship.

Qualifying secondary activities
47 (1) The Inland Revenue may make provision by regulations as to—
(a) the descriptions of activity that are to be regarded as qualifying secondary activities, and
(b) the permitted level in relation to any such activity or description of activity.
(2) The regulations may set the permitted level or provide for its determination by reference to such factors as may be specified in the regulations.

Qualifying incidental activities
48 (1) A company’s incidental activities means its ship-related activities that—
(a) are incidental to its core qualifying activities, and
(b) are not qualifying secondary activities.
(2) If the turnover in an accounting period of the company from its incidental activities (taken together) does not exceed 0.25% of the company’s turnover in that period from—
(a) its core qualifying activities, and
(b) its qualifying secondary activities to the extent that they do not exceed the permitted level,
the company’s incidental activities in that period are qualifying incidental activities.

Relevant shipping income: distributions of overseas shipping companies
49 (1) Income of a tonnage tax company consisting in a dividend or other distribution of an overseas company is relevant shipping income if the following conditions are met.
(2) The conditions are—
(a) that the overseas company operates qualifying ships;
(b) that more than 50% of the voting power in the overseas company is held by a company resident in a member State, or that two or more companies each of which is resident in a member State hold in aggregate more than 50% of that voting power;
(c) that the 75% limit is not exceeded in relation to the overseas company in any accounting period in respect of which the distribution is paid;
(d) that all the income of the overseas company is such that, if it were a tonnage tax company, it would be relevant shipping income;
(e) that the distribution is paid entirely out of profits arising at a time when—
(i) the conditions in paragraphs (a) to (d) were met, and
(ii) the tonnage tax company was subject to tonnage tax; and
(f) the profits of the overseas company out of which the distribution is paid are subject to a tax on profits (in the country of residence of the company or elsewhere, or partly in that country and partly elsewhere).
(3) For the purposes of sub-paragraph (2)(c) the “75% limit” is the requirement set out in paragraph 37 (requirement that not more than 75% of tonnage is chartered in) as it applies to a single company.
(4) In this paragraph an “overseas company” means a company that is not resident in the United Kingdom.

Relevant shipping income: certain interest etc.
50 (1) Income to which this paragraph applies is relevant shipping income only to the extent that it would apart from this Schedule fall to be taken into account as trading income from a trade consisting of the company’s tonnage tax activities.
(2) This paragraph applies to—
(a) anything giving rise to a credit that would fall to be brought into account for the purposes of Part 5 of the Corporation Tax Act 2009 (loan relationships); and
Words in Sch. 22 para. 50(2)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(2)(a) (with Sch. 2 Pts. 1, 2)
Word in Sch. 22 para. 50(2)(a) inserted (24.7.2002 with effect as mentioned in s. 79(3) of the amending Act) by 2002 c. 23, s. 79, Sch. 23 Pt. 2 para. 23(2)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 22 para. 50(2)(b) repealed (24.7.2002 with effect as mentioned in s. 79(3) of the amending Act) by 2002 c. 23, s. 79, Sch. 40 Pt. 3(10) Note
(c) any credit falling to be brought into account in accordance with Part 7 of the Corporation Tax Act 2009 (derivative contracts).
Words in Sch. 22 para. 50(2)(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(2)(b) (with Sch. 2 Pts. 1, 2)

General exclusion of investment income
51 (1) Income from investments is not relevant shipping income.
(2) To the extent that an activity gives rise to income from investments it is not regarded as part of a company’s tonnage tax activities.
(3) For the purposes of this paragraph “income from investments” includes anything chargeable to tax under—
(a) Part 4 of the Corporation Tax Act 2009 (property income),
(b) section 299 of that Act (loan relationships: non-trading profits),
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 22 para. 51(3)(c) omitted (6.4.2014) by virtue of The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 35(a) (with reg. 32)
(d) Chapter 7 of Part 10 of that Act (annual payments not otherwise charged) , or
Words in Sch. 22 para. 51(3)(d) substituted (6.4.2014) by The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 35(b) (with reg. 32)
Sch. 22 para. 51(3)(e) and word inserted (6.4.2014) by The Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I. 2013/2819), regs. 1(3), 35(c) (with reg. 32)
(e) regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013.
Sch. 22 para. 51(3) substituted for Sch. 22 para. 51(3)(4) (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(3) (with Sch. 2 Pts. 1, 2)
(5) Sub-paragraph (1) above does not affect income that is relevant shipping income under—
paragraph 49 (distributions of overseas shipping companies), or
paragraph 50 (certain interest etc.).

Part VII The ring fence: general provisions

Accounting period ends on entry or exit
52 An accounting period ends (if it would not otherwise do so) when a company enters or leaves tonnage tax.

Tonnage tax trade
53 (1) The tonnage tax activities of a tonnage tax company are treated for corporation tax purposes as a separate trade (the company’s “tonnage tax trade”) distinct from all other activities carried on by the company.
(2) Sub-paragraph (1) shall not be read as requiring a company to be treated—
(a) as setting up and commencing a new trade on entry into tonnage tax, or
(b) as permanently ceasing to carry on a trade on leaving tonnage tax.

Profits of controlled foreign companies
54 (1) A tonnage tax company is not subject to any liability at step 5 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 (“TIOPA 2010”) in any accounting period in respect of profits of a CFC if in that period distributions of the CFC made to the tonnage tax company would be relevant shipping income of the latter (see paragraph 49); and, accordingly, the tonnage tax company is not to be a chargeable company for the purposes of Part 9A of TIOPA 2010 in relation to the CFC's accounting period in question.
Words in Sch. 22 para. 54(1) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 19(2)(a) (with Sch. 20 para. 50(9))
Word in Sch. 22 para. 54(1) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 19(2)(b) (with Sch. 20 para. 50(9))
Words in Sch. 22 para. 54(1) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 19(2)(c) (with Sch. 20 para. 50(9))
(2) In relation to a CFC which—
(a) is a member of a tonnage tax group, and
(b) is a tonnage tax company by virtue of the group's tonnage tax election, or would be if it were within the charge to corporation tax,
the corporation tax assumptions within the meaning of Part 9A of TIOPA 2010 are to be taken to include the following assumption.
Sch. 22 para. 54(2)-(5) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 19(3) (with Sch. 20 para. 50(9))
(3) The CFC is to be assumed to be a single company that is a tonnage tax company.
(4) Nothing in section 371SL(1) of TIOPA 2010 affects sub-paragraphs (2) and (3) above.
(5) In this paragraph “CFC” has the same meaning as in Part 9A of TIOPA 2010.

General exclusion of reliefs, deductions and set-offs
55 No relief, deduction or set-off of any description is allowed against the amount of a company’s tonnage tax profits.

Exclusion of loss relief
56 (1) When a company enters tonnage tax, any losses that have accrued to it before entry and are attributable—
(a) to activities that under tonnage tax become part of the company’s tonnage tax trade, or
(b) to a source of income that under tonnage tax becomes relevant shipping income,
are not available for loss relief in any accounting period beginning on or after the company’s entry into tonnage tax.
(2) Any apportionment necessary to determine the losses so attributable shall be made on a just and reasonable basis.
(3) In sub-paragraph (1) “loss relief” includes any means by which a loss might be used to reduce the amount in respect of which that company, or any other company, is chargeable to tax.

Exclusion of relief or set-off against tax liability
57 (1) Any relief or set-off against a company’s tax liability for an accounting period does not apply in relation to—
(a) so much of that tax liability as is attributable to the company’s tonnage tax profits, or
(b) so much of that tax liability as is attributable to tonnage profits of a CFC apportioned to the company at step 3 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010.
Words in Sch. 22 para. 57(1)(b) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 20(2) (with Sch. 20 para. 50(9))
(2) Relief to which this paragraph applies includes, but is not limited to, any relief or set-off under—
(a) sections 2 and 6 of the Taxation (International and Other Provisions) Act 2010 (double taxation relief by agreement with territories outside the United Kingdom),
Sch. 22 para. 57(2)(a)(aa) substituted for Sch. 22 para. 57(2)(a) (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 56 (with Sch. 9 paras. 1-9, 22)
(aa) section 18(1)(b) and (2) of that Act (unilateral relief from double taxation), or
(b) regulations under section 32 of the Finance Act 1998 (unrelieved surplus advance corporation tax).
1998 c. 36.
(3) Sub-paragraph (1)(b) applies whether or not the company to which the profits are apportioned is subject to tonnage tax.
(4) For the purposes of sub-paragraph (1)(b)—
(a) “tonnage profits” means so much of the CFC's chargeable profits for its accounting period in question as, applying the corporation tax assumptions, are calculated in accordance with paragraph 4 of this Schedule; and
(b) so much of those chargeable profits as are tonnage profits shall be treated as apportioned at step 3 in section 371BC(1) of the Taxation (International and Other Provisions) Act 2010 in the same proportions as those profits (taken generally) are apportioned.
Sch. 22 para. 57(4)(4A) substituted for Sch. 22 para. 57(4) (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 20(3) (with Sch. 20 para. 50(9))
(4A) In sub-paragraphs (1)(b) and (4) terms defined in Part 9A of the Taxation (International and Other Provisions) Act 2010 have the same meaning as in that Part.
(5) For the purposes of any such regulations as are mentioned in sub-paragraph (2)(b), a company’s tonnage tax profits shall be left out of account in determining the company’s profits charged to corporation tax.
This does not affect the computation under those regulations of shadow ACT on distributions made by a tonnage tax company, whether paid out of tonnage tax profits or other profits.
(6) This paragraph does not affect—
(a) any reduction under Chapter 3A of Part 8 of CTA 2010 (marginal relief for companies with small ring fence profits), or
Sch. 22 para. 57(6)(a) substituted (with effect in accordance with Sch. 1 para. 22 of the amending Act) by Finance Act 2014 (c. 26), Sch. 1 para. 7
(b) any set off under section 967 or 968 of the Corporation Tax Act 2010 (set off for income tax borne by deduction).
Words in Sch. 22 para. 57(6)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 316(3)(b) (with Sch. 2)

Transactions not at arm’s length: between tonnage tax company and another person
58 (1) In relation to provision made or imposed as between a tonnage tax company and another person by a transaction or series of transactions that—
(a) falls in relation to the tonnage tax company to be regarded as made or imposed in the course of, or with respect to, its tonnage tax trade, and
(b) does not fall in relation to the other person to be regarded as made or imposed in the course of, or with respect to, a tonnage tax trade carried on by that person,
Part 4 of the Taxation (International and Other Provisions) Act 2010 (transactions not at arm's length) has effect with the omission of sections 174 to 184, 187 to 189 and 191 to 196 (elimination of double counting etc).
Words in Sch. 22 para. 58(1) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 119(2) (with Sch. 9 paras. 1-9, 22)
(2) Expressions used in Part 4 of the Taxation (International and Other Provisions) Act 2010 have the same meaning in this paragraph.
Words in Sch. 22 para. 58(2) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 119(3) (with Sch. 9 paras. 1-9, 22)
(3) Nothing in this paragraph affects the computation of a company’s tonnage tax profits.

Transactions not at arm’s length: between tonnage tax trade and other activities of same company
59 (1) Part 4 of the Taxation (International and Other Provisions) Act 2010 (transactions not at arm’s length) applies to provision made or imposed as between a company’s tonnage tax trade and other activities carried on by it as if—
(a) that trade and those activities were carried on by two different persons,
(b) the provision were made or imposed between those persons by means of a transaction, and
(c) the two persons were both controlled by the same person at the time of the making or imposition of the provision.
Words in Sch. 22 para. 59(1) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 119(4) (with Sch. 9 paras. 1-9, 22)
(2) As applied by sub-paragraph (1), Part 4 of the Taxation (International and Other Provisions) Act 2010 has effect with the omission of sections 174 to 184, 187 to 189 and 191 to 196 (elimination of double counting etc).
Sch. 22 para. 59(2) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 119(5) (with Sch. 9 paras. 1-9, 22)
(3) Expressions used in Part 4 of the Taxation (International and Other Provisions) Act 2010 have the same meaning in this paragraph.
Words in Sch. 22 para. 59(3) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 119(6) (with Sch. 9 paras. 1-9, 22)
(4) Nothing in this paragraph affects the computation of a company’s tonnage tax profits.

Transactions not at arm’s length: duty to give notice
60 (1) Not more than 90 days after—
(a) the making of an election under this Schedule, or the occurrence of any other event, as a result of which a company enters, or is taken to have entered, tonnage tax, or
(b) the making of an election under this Schedule as a result of which a company will become a tonnage tax company at a later date,
the company shall give notice under this paragraph to any person whose tax liability may be affected by paragraph 58 (transactions not at arm’s length).
(2) The notice must state—
(a) that the company has become a tonnage tax company, or
(b) that an election has been made under this Schedule as a result of which the company will become a tonnage tax company,
and inform the person to whom it is given of the possible application of the provisions of Part 4 of the Taxation (International and Other Provisions) Act 2010 in relation to transactions between the company and that person.
Words in Sch. 22 para. 60(2) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 119(7) (with Sch. 9 paras. 1-9, 22)

Treatment of finance costs: single company
61 (1) This paragraph applies to a tonnage tax company which is a single company carrying on tonnage tax activities and other activities.
(2) An adjustment shall be made if it appears, in relation to an accounting period of the company, that the company’s deductible finance costs outside the ring fence exceed a fair proportion of the company’s total finance costs.
(3) The company’s “deductible finance costs outside the ring fence” means the total of the amounts that may be brought into account in respect of finance costs in calculating for the purposes of corporation tax the company’s profits other than relevant shipping profits.
(4) A company’s “total finance costs” means so much of the company’s finance costs as could, if there were no tonnage tax election, be brought into account in calculating the company’s profits for the purposes of corporation tax.
(5) What proportion of the company’s total finance costs should be deductible outside the ring fence shall be determined on a just and reasonable basis by reference to the extent to which the funding in relation to which the costs are incurred is applied in such a way that any profits arising, directly or indirectly, would be relevant shipping profits.
(6) Where an adjustment falls to be made under this paragraph, an amount equal to the excess referred to in sub-paragraph (2) shall be brought into account as if it were a non-trading credit falling for the purposes of Part 5 of the Corporation Tax Act 2009 (loan relationships) to be brought into account in respect of a loan relationship of the company in respect of non-tonnage tax activities.
Words in Sch. 22 para. 61(6) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(4) (with Sch. 2 Pts. 1, 2)

Treatment of finance costs: group company
62 (1) This paragraph applies to a tonnage tax company which is a member of a tonnage tax group where the activities carried on by the members of the group include activities other than tonnage tax activities.
(2) An adjustment shall be made if it appears, in relation to an accounting period of the company, that the group’s deductible finance costs outside the ring fence exceed a fair proportion of the total finance costs of the group.
(3) A group’s “deductible finance costs outside the ring fence” means so much of the group’s finance costs as may be brought into account in calculating for the purposes of corporation tax—
(a) in the case of a group member that is a tonnage tax company, the company’s profits other than relevant shipping profits, and
(b) in the case of a group member that is not a tonnage tax company, the company’s profits.
(4) A group’s “total finance costs” means so much of the group’s finance costs as could, if there were no tonnage tax election, be brought into account in calculating for the purposes of corporation tax the profits of any member of the group.
(5) What proportion of the group’s total finance costs should be deductible outside the ring fence shall be determined on a just and reasonable basis by reference to the extent to which the funding in relation to which the costs are incurred is applied in such a way that any profits arising, directly or indirectly, would be relevant shipping profits.
(6) Where an adjustment falls to be made under this paragraph, an amount equal to the relevant proportion of the excess referred to in sub-paragraph (2) shall be brought into account as if it were a non-trading credit falling for the purposes of Part 5 of the Corporation Tax Act 2009 (loan relationships) to be brought into account in respect of a loan relationship of the company in respect of non-tonnage tax activities.
For this purpose “the relevant proportion" is the proportion that the company’s tonnage tax profits bear to the tonnage tax profits of all the members of the group.
Words in Sch. 22 para. 62(6) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(5) (with Sch. 2 Pts. 1, 2)

Meaning of “finance costs"
63 (1) For the purposes of paragraphs 61 and 62 “finance costs” means the costs of debt finance.
(2) In calculating the costs of debt finance, the matters to be taken into account include—
(a) any costs giving rise to a trading or non-trading debit under Part 5 of the Corporation Tax Act 2009 (loan relationships);
Words in Sch. 22 para. 63(2)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(6)(a) (with Sch. 2 Pts. 1, 2)
(b) any credit or debit falling to be brought into account in accordance with Part 7 of the Corporation Tax Act 2009 (derivative contracts) in relation to debt finance;
Sch. 22 para. 63(2)(b) substituted (24.7.2002 with effect as mentioned in s. 83(3)(4) of the amending Act) by 2002 c. 23, s. 83, Sch. 27 para. 23(3)
Words in Sch. 22 para. 63(2)(b) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(6)(b) (with Sch. 2 Pts. 1, 2)
(c) any exchange gain or loss within the meaning given by section 475 of the Corporation Tax Act 2009 in relation to debt finance;
Words in Sch. 22 para. 63(2)(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 470(6)(c) (with Sch. 2 Pts. 1, 2)
(d) the finance cost—
(i) implicit in a payment under a finance lease, or
(ii) payable on debt factoring or any similar transaction;
(dd) where the tonnage tax company is the lessee under a long funding operating lease, the amount deductible (or the total amount that could, if there were no tonnage tax election, be deductible) in respect of payments under the lease in computing the profits of the lessee for the purposes of corporation tax (after first making against any such amount any reductions falling to be made by virtue of section 379 of the Corporation Tax Act 2010); and
Sch. 22 para. 63(2)(dd) substituted (with effect in accordance with Sch. 9 para. 9(4) to the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 9(2)
Words in Sch. 22 para. 63(2)(dd) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 316(4) (with Sch. 2)
(e) any other costs arising from what would be considered on normal accounting principles to be a financing transaction.
(3) No adjustment shall be made under paragraph 61 or 62 if, in calculating for a period the company’s, or as the case may be, the group’s deductible finance costs outside the ring fence, the amount taken into account in respect of costs and losses is exceeded by the amount taken into account in respect of profits and gains.
(4) In this paragraph “long funding operating lease” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act).
Sch. 22 para. 63(4) inserted (with effect in accordance with Sch. 9 para. 9(4) to the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 9(3)

Part VIII Chargeable gains and allowable losses on tonnage tax assets

Chargeable gains: tonnage tax assets
64 (1) In this Part of this Schedule a “tonnage tax asset” means an asset that is used wholly and exclusively for the purposes of the tonnage tax activities of a tonnage tax company.
(2) Where for one or more continuous periods of at least a year part of an asset has been used wholly and exclusively for the purposes of the tonnage tax activities of a tonnage tax company and part has not, this Part of this Schedule shall apply as if the part so used were a separate asset.
(3) Where sub-paragraph (2) applies, any necessary apportionment of the gain or loss on the whole asset shall be made on a just and reasonable basis.

Chargeable gains: disposal of tonnage tax asset
65 (1) When an asset is disposed of that is or has been a tonnage tax asset—
(a) any gain or loss on the disposal is a chargeable gain or allowable loss only to the extent (if any) to which it is referable to periods during which the asset was not a tonnage tax asset, and
(b) any such chargeable gain or allowable loss on a disposal by a tonnage tax company is treated as arising otherwise than in the course of the company’s tonnage tax trade.
(2) For the purposes of sub-paragraph (1) the amount of the gain or loss on a disposal means what would be the amount of the chargeable gain or allowable loss apart from this paragraph.
(3) The proportion of that gain or loss referable to periods during which the asset was not a tonnage tax asset is given by:
P-PTTAP
where:
P is the total length of the period since the asset was created or, if later, the last third-party disposal, and
PTTA is the length of the period (or the aggregate length of the periods) since—
(a) the asset was created, or
(b) if later, the last third-party disposal,
during which the asset was a tonnage tax asset.
(4) In sub-paragraph (3) a “third-party disposal” means a disposal (or deemed disposal) that is not treated as one on which neither a gain nor a loss accrues to the person making the disposal.

Chargeable gains: losses brought forward
66 A tonnage tax election does not affect the deduction under section 8(1) of the Taxation of Chargeable Gains Act 1992 (corporation tax: computation of chargeable gains) of allowable losses that accrued to a company before it became a tonnage tax company.
1992 c. 12.

Chargeable gains: roll-over relief for business assets
67 (1) Sections 152 and 153 of the Taxation of Chargeable Gains Act 1992 (roll-over relief for business assets) do not apply if or to the extent that the new assets are tonnage tax assets.
1992 c. 12.
(2) Where relief under either of those sections is, or has been, claimed in respect of the disposal of an asset (“Asset No.1”) and the acquisition of another asset (“Asset No.2”) that subsequently becomes a tonnage tax asset, the claimant is not (or, as the case may be, shall cease to be) entitled under that section to—
(a) a reduction of the consideration for the disposal of Asset No.1, and
(b) a corresponding reduction of the expenditure for the acquisition of Asset No.2,
but so much of the chargeable gain arising on the disposal of Asset No.1 as is equal to the amount of the reduction that would have been made is treated as not accruing until Asset No.2 is disposed of.
(3) Any chargeable gain accruing as a result of the rules in sub-paragraph (1) or (2) is treated as arising otherwise than in the course of the company’s tonnage tax trade.
Sch. 22 para. 67(2) modified (24.7.2002 with application as mentioned in s. 43(4) of the amending Act) by 1992 c. 12, s. 179(B), Sch. 7AB para. 10 (as inserted by 2002 c. 23, s. 43(1)(2), Sch. 7)

Part IX The ring fence: capital allowances: general

Introduction
68 (1) This Part of this Schedule makes provision about capital allowances where a company enters, leaves or is subject to tonnage tax.
(2) The general scheme of this Part of this Schedule is that—
(a) entry of a company into tonnage tax does not of itself give rise to any balancing charges or balancing allowances,
(b) a company subject to tonnage tax is not entitled to capital allowances in respect of expenditure incurred for the purposes of its tonnage tax trade, whether before or after its entry into tonnage tax, and
(c) on leaving tonnage tax—
(i) a company is treated as having incurred qualifying expenditure on its tonnage tax plant and machinery assets of an amount equal to the lower of cost and market value, where it leaves tonnage tax on expiry of an election or on the taking effect of a withdrawal notice, but
(ii) otherwise, a company is put broadly in the position it would have been in if it had never been subject to tonnage tax.
Sch. 22 para. 68(2)(c) substituted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 12(2), 18(2)
(3) A company’s tonnage tax trade is not a qualifying activity for the purposes of determining the company’s entitlement to capital allowances.

Entry: plant and machinery: assets to be used wholly for tonnage tax trade
69 (1) On a company’s entry into tonnage tax any unrelieved qualifying expenditure attributable to plant or machinery that is to be used wholly for the purposes of the company’s tonnage tax trade is taken to a single pool (the company’s “tonnage tax pool”).
(2) In this paragraph “unrelieved qualifying expenditure" has the same meaning as in Chapter 5 of Part 2 of the Capital Allowances Act 2001.
Sch. 22 para. 69(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(2)
(3) The amount of unrelieved qualifying expenditure attributable to plant or machinery in a class pool, or the main pool, is the proportion of the whole given by:
AVPV
where:
AV is the aggregate market value of the assets concerned immediately before entry into tonnage tax, and
PV is the aggregate market value at that time of all the assets in the pool.
(4) References in this paragraph to unrelieved qualifying expenditure include qualifying expenditure to the extent to which it is unrelieved by virtue of notice having been given under section 130 of the Capital Allowances Act 2001 (notice postponing first-year or writing-down allowance)
No allowance may be claimed in respect of any such expenditure taken to the company’s tonnage tax pool.
Words in Sch. 22 para. 69(4) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) for Sch. 22 para. 69(a)(b) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(3)

Entry: plant and machinery: assets to be used partly for tonnage tax trade
70 (1) This paragraph applies where, on a company’s entry into tonnage tax, plant and machinery is to be used partly for the purposes of the company’s tonnage tax trade and partly for the purposes of a qualifying activity carried on by the company.
(2) Sections 61(1)(e), 206(3) and 207 of the Capital Allowances Act 2001 (effect of use partly for qualifying activity and partly for other purposes) apply as follows—
(a) references to a qualifying activity shall be read as not including references to the tonnage tax trade, and
(b) references to purposes other than those of a qualifying activity shall be read as including references to the purposes of the tonnage tax trade.
Sch. 22 para. 70(2) substituted (28.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(4)

Entry: ships acquired and disposed of within twelve months
71 (1) This paragraph applies if a company—
(a) acquires a qualifying ship within the period of six months before the company enters tonnage tax, and
(b) disposes of the ship before the end of the period of twelve months beginning with the day on which the ship was acquired.
(2) The aggregate amount of the capital allowances to which the company is entitled for the period or periods before entry into tonnage tax in respect of its expenditure on acquiring the ship is limited to the amount by which that expenditure exceeds the market value of the ship on the company’s entry into tonnage tax.

Entry: deferred balancing charge on disposal of ship
72 (1) This paragraph applies where deferment of a balancing charge has been claimed under sections 135 to 156 of the Capital Allowances Act 2001 (balancing charge on disposal of ship to be deferred and set against new expenditure incurred within six years) by a company that subsequently enters tonnage tax.
Words in Sch. 22 para. 72(1) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(5)
(2) Expenditure on new shipping incurred by a company subject to tonnage tax shall not be taken into account for the purposes of those sections unless the company that incurred the balancing charge—
(a) was a qualifying company for the purposes of this Schedule at the time the balancing charge arose, or
(b) would have been such a company had this Schedule been in force at that time.
(3) Subject to sub-paragraph (2)—
(a) the company’s entry into tonnage tax does not affect the operation of those sections, and
(b) the expenditure on new shipping that is to be taken into account for the purposes of those sections shall be determined as if the company was not subject to tonnage tax.

During: plant and machinery: new expenditure partly for tonnage tax purposes
73 (1) This paragraph applies where a company subject to tonnage tax incurs expenditure on the provision of plant or machinery partly for the purposes of its tonnage tax trade and partly for the purposes of a qualifying activity.
(2) Sections 206(1), (2) and (4) and 207 of the Capital Allowances Act 2001 (operation of single asset pool for mixed use assets) apply as follows—
(a) references to a qualifying activity shall be read as not including references to the tonnage tax trade, and
(b) references to purposes other than those of a qualifying activity shall be read as including references to the purposes of the tonnage tax trade.
Sch. 22 para. 73(2) substituted (23.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579(1), Sch. 2 para. 108(6)

During: plant and machinery: asset beginning to be used for tonnage tax trade
74 A company’s tonnage tax pool is not increased by reason of an asset beginning to be used for the purposes of the company’s tonnage tax trade after the company’s entry into tonnage tax.

During: plant and machinery: change of use of tonnage tax asset
75 (1) This paragraph applies where, at a time when a company is subject to tonnage tax, plant or machinery used for the purposes of the company’s tonnage tax trade begins to be used wholly or partly for purposes other than those of that trade.
(2) If the asset was acquired before entry into tonnage tax, section 61(1)(e) of the Capital Allowances Act 2001 applies (disposal event if plant or machinery begins to be used wholly or partly for purposes other than those of the qualifying activity), but reading the reference in that provision to the qualifying activity as a reference to the tonnage tax trade.
Sch. 22 para. 75(2)(3) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(7)
(3) If the asset was acquired after entry into tonnage tax and begins to be used wholly or partly for the purposes of a qualifying activity carried on by the company, section 13 of the Capital Allowances Act 2001 (use for qualifying activity of plant or machinery provided for other purposes) applies as follows—
(a) references to purposes which were not those of any qualifying activity shall be read as including references to the purposes of the tonnage tax trade, and
(b) references to the qualifying activity carried on by him shall be read as not including references to the tonnage tax trade.

During: plant and machinery: change of use of non-tonnage tax asset
76 (1) This paragraph applies where, at a time when a company is subject to tonnage tax, plant or machinery used for the purposes of a qualifying activity carried on by the company begins to be used wholly or partly for the purposes of the company’s tonnage tax trade.
(2) Sections 61(1)(e), 206(3) and 207 of the Capital Allowances Act 2001 (effect of use partly for qualifying activity and partly for other purposes) apply as follows—
(a) references to a qualifying activity shall be read as not including references to the tonnage tax trade, and
(b) references to purposes other than those of a qualifying activity shall be read as including references to the purposes of the tonnage tax trade.
Sch. 22 para. 76(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(8)

During: plant and machinery: disposals
77 (1) This paragraph applies if when a company is subject to tonnage tax a disposal event occurs in relation to plant or machinery—
(a) in respect of which qualifying expenditure was incurred by the company before its entry into tonnage tax,
(b) some or all of the expenditure on which was carried to the tonnage tax pool on the company’s entry into tonnage tax, and
(c) which is used by the company for the purposes of its tonnage tax trade.
(2) A “disposal event” means an event as a result of which the company is required under Part 2 of the Capital Allowances Act 2001 to bring a disposal value into account.
In determining whether such an event has occurred references in that Part of that Act to a qualifying activity shall be read as including the company’s tonnage tax trade.
Words in Sch. 22 para. 77(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 22, ss. 578, 579, Sch. 2 para. 108(9)
(3) Where this paragraph applies—
(a) the disposal value to be brought into account in respect of any plant or machinery is limited to its market value when the company entered tonnage tax, and
(b) the disposal value is set against the unrelieved qualifying expenditure in the company’s tonnage tax pool.
(4) If the amount of the disposal value is less than or equal to the amount of unrelieved qualifying expenditure in the company’s tonnage tax pool, the amount of unrelieved qualifying expenditure is reduced or extinguished accordingly.
(5) If—
(a) the amount of the disposal value exceeds the amount of unrelieved qualifying expenditure, or
(b) there is no unrelieved qualifying expenditure in the pool,
the company is liable to a balancing charge.
(6) The amount of the balancing charge is—
(a) where sub-paragraph (5)(a) applies, the amount of the excess, or
(b) where sub-paragraph (5)(b) applies, the amount of the disposal value.
This is subject to any reduction under paragraph 78.

During: plant and machinery: reduction of balancing charges
78 (1) The amount of any balancing charge under this Part of this Schedule is reduced by reference to the number of whole years the company has been subject to tonnage tax at the time of the disposal event giving rise to the charge.
(2) The following table shows the percentage reduction:
Number of years	Percentage reduction
1	15%
2	30%
3	45%
4	60%
5	75%
6	90%
7 or more	100%

During: plant and machinery: giving effect to balancing charge
79 (1) A balancing charge under this Part of this Schedule—
(a) is treated as arising in connection with a trade (other than its tonnage tax trade) carried on by the company, and
(b) is made in taxing that trade.
(2) Subject to paragraph 80 (deferment of balancing charge in case of reinvestment), the charge must be given effect in the accounting period in which it arises.
79A (1) This paragraph applies if—
(a) a balancing charge under this Part of this Schedule arises to the company on the disposal of any plant or machinery, and
(b) the plant or machinery is taken into account in calculating income that the company is treated as receiving under section 383 or 417 of the Corporation Tax Act 2010 (sales of lessors) as a result of section 394ZA of that Act (company joining tonnage tax group).
(2) The balancing charge is to be reduced by the relevant part of the sales of lessors expense so far as relief has not previously been given for that expense (whether under this sub-paragraph or otherwise).
(3) “The sales of lessors expense” means—
(a) the expense which the company is treated as incurring under section 383 or 417 of the Corporation Tax Act 2010 as a result of section 394ZA of that Act, or
(b) if section 386 or 419 of that Act applies or has applied, the expense which derives from the expense within paragraph (a).
(4) If the sales of lessors expense is incurred at a time when the company is in tonnage tax, the “relevant part” of that expense is so much of it as, on a just and reasonable basis, is attributable to the matters set out in paragraph 56(1)(a) or (b).
(5) If—
(a) the sales of lessors expense is not incurred at a time when the company is in tonnage tax,
(b) that expense is taken into account in calculating a loss made by the company in a trade, and
(c) the loss is one to which paragraph 56 applies,
the “relevant part” of the sales of lessors expense is so much of the apportioned loss as, on a just and reasonable basis, is derived from the sales of lessors expense.
(6) The reference here to the apportioned loss is to the loss that is attributable to the matters set out in paragraph 56(1)(a) or (b).
Sch. 22 para. 79A inserted (with effect in accordance with s. 24(10) of the amending Act) by Finance Act 2012 (c. 14), s. 24(8)

During: plant and machinery: deferment of balancing charge
80 (1) If—
(a) a balancing charge under this Part of this Schedule arises in connection with the disposal of a qualifying ship, and
(b) within the requisite period the company incurs capital expenditure on acquiring one or more other qualifying ships, and
(c) the company claims relief under this paragraph,
only the amount (if any) by which the balancing charge exceeds that expenditure must be given effect in the accounting period in which the charge arises and the rest may be held over.
(2) For the purposes of this paragraph—
(a) the disposal of a qualifying ship includes any event within section 61(1)(a) to (d) of the Capital Allowances Act 2001 occurring with respect to a qualifying ship, and
Words in Sch. 22 para. 80(2)(4) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579(1), Sch. 2 para. 108(9)(10)
(b) the requisite period is the period beginning one year before, and ending two years after, the date of the disposal.
(3) If the new qualifying ship (or any of them) is disposed of before the end of the period of seven years after the company in question entered tonnage tax—
(a) there is a balancing charge under this paragraph when the disposal occurs, and
(b) the amount of that charge is equal to the amount held over under sub-paragraph (1) by reference to the acquisition of that ship.
This is subject to any reduction under paragraph 78 and to any further deferment under this paragraph.
(4) Sections 135 to 156 of the Capital Allowances Act 2001 (deferment of balancing charges) do not apply in relation to balancing charges arising when the company is subject to tonnage tax.
(5) The fact that there is a balancing charge under this paragraph does not affect the operation of paragraph 77 in a case where that paragraph also applies.

During: plant and machinery: surrender of unrelieved qualifying expenditure
81 (1) This paragraph applies where—
(a) a company subject to tonnage tax is liable to a balancing charge under this Part of this Schedule,
(b) another tonnage tax company which is a member of the same group has unrelieved qualifying expenditure in its tonnage tax pool, and
(c) the two companies have been members of the same group for not less than a year at the date of the disposal giving rise to the balancing charge.
(2) The latter company may surrender to the former all or part of its unrelieved qualifying expenditure, and the amount of the balancing charge shall be reduced or extinguished accordingly.
(3) The provisions of Part VIII of Schedule 18 to the Finance Act 1998 (corporation tax self-assessment: claims for group relief), except paragraph 77 (joint amended returns), apply in relation to relief under this paragraph as they apply in relation to group relief.
1998 c. 36.

During: industrial buildings: mixed use
82 If any identifiable part of a building or structure is used for the purposes of a company’s tonnage tax trade, that part is treated for the purposes of Part 3 of the Capital Allowances Act 2001 as used otherwise than as an industrial building.
Sch 22. para. 82 substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(12)

During: industrial buildings: balancing charges
83 (1) This paragraph applies where, in an accounting period during which a company is subject to tonnage tax, a balancing event occurs in relation to an industrial building in respect of which qualifying expenditure was incurred by the company before its entry into tonnage tax.
Words in Sch. 22 para. 83(1) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(13)
(2) A “balancing event” means an event by reason of which the company is required by Part 3 of the Capital Allowances Act 2001 to bring into account any proceeds. In determining whether such an event has occurred references in that Part of that Act to a trade or undertaking shall be read as including the company’s tonnage tax trade.
Words in Sch. 22 para. 83(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(14)
(3) Where this paragraph applies—
(a) the proceeds to be brought into account in respect of the industrial building are limited to the market value of the relevant interest when the company entered tonnage tax; and
Sch. 22 para. 83(3)(a) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(15)
(b) the amount of any balancing charge under that Part is reduced in accordance with paragraph 78.

During: industrial buildings: residue of qualifying expenditure
84 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 22 para. 84 omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 22

Exit: plant and machinery
85 (1) If a company leaves tonnage tax—
(a) the amount of qualifying expenditure under Part 2 of the Capital Allowances Act 2001 (plant and machinery allowances) (plant and machinery), and
Words in Sch. 22 para. 85(1) substituted (22.3.2002 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(18)
(b) the pools to which such expenditure is to be allocated for the purposes of that Part,
shall be determined under this paragraph.
(1A) Sub-paragraph (1C) applies where the company leaves tonnage tax—
(a) on the expiry of a tonnage tax election, or
(b) on a tonnage tax election ceasing to be in force under paragraph 13(2A) (taking effect of withdrawal notice under paragraph 15A).
Sch. 22 para. 85(1A)-(1C) inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 13(2), 18(2)
(1B) In any other case, sub-paragraph (2) applies.
(1C) Where this sub-paragraph applies, the amount of qualifying expenditure in respect of each asset used by the company for the purposes of its tonnage tax activities and held by the company when it leaves tonnage tax shall be taken to be—
(a) the market value of the asset at the time the company leaves tonnage tax, or
(b) if less, the amount of expenditure incurred on the provision of the asset that would have been qualifying expenditure if the company had not been subject to tonnage tax.
(2) Where this sub-paragraph applies, for each asset used by the company for the purposes of its tonnage tax activities and held by the company when it leaves tonnage tax there shall be determined—
(a) the amount of expenditure incurred on the provision of the asset that would have been qualifying expenditure if the company had not been subject to tonnage tax, and
(b) the written down value of that amount by reference to the period since the expenditure was incurred.
Words in Sch. 22 para. 85(2) inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 13(3), 18(2)
(3) The Inland Revenue shall make provision by regulations as to the basis on which the writing down is to be done.
The regulations may make different provision for different descriptions of asset.

Exit: industrial buildings
86 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 22 para. 86 omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 22

Meaning of “not entitled to capital allowances"
87 (1) Where any provision of this Part of this Schedule states that a person is not entitled to capital allowances in respect of expenditure on plant or machinery—
(a) no annual investment allowance or first-year allowance is to be be given in respect of that expenditure, and
Words in Sch. 22 para. 87(1)(a) substituted (with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 19(2)
(b) the expenditure shall be disregarded for the purposes of calculating the person’s entitlement to a writing-down allowance or balancing allowance or liability to a balancing charge.
Sch. 22 para. 87(1)(b) substituted (23.1.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(20)
(2) If there is no entitlement to capital allowances in respect of expenditure, there is no entitlement to capital allowances in respect of any additional VAT liability incurred in respect of it.

Interpretation
88 (1) In this Part of this Schedule—
“capital allowance” means any allowance under the Capital Allowances Act 2001;
“qualifying activity” means any activity in respect of which a person may be entitled to a capital allowance;
“qualifying expenditure” means expenditure in respect of which a person is or may be entitled to a capital allowance.
Sch. 22 para. 88: definition of “capital allowance" substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(21)
Sch. 22 para. 88: definition of “qualifying activity" substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(21)
(2) In this Part of this Schedule any reference to pooling or to single asset pools, class pools or the main pool shall be construed in accordance with sections 53 and 54 of the Capital Allowances Act 2001.
Sch. 22 para. 88(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) for Sch. 22 para. 88(2)(3) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(22)
(4) Other expressions relating to capital allowances have the same meaning in this Part of this Schedule as in the Capital Allowances Act 2001.
Words in Sch. 22 para. 88(4) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(23)

Part X The ring fence: capital allowances: ship leasing

Introduction
89 (1) In the case of a ... lease of a qualifying ship provided, directly or indirectly, to a company within tonnage tax, the provisions of Part 2 of the Capital Allowances Act 2001 have effect subject to and in accordance with the provisions of—
paragraphs 90 and 91 (defeased leasing),
paragraphs 91A to 91F (long funding leases),
paragraph 92 (sale and lease back arrangements, and
paragraphs 94 to 102 (quantitative restrictions on allowances).
This is subject to paragraph 89A (exception for ordinary charters).
Word in Sch. 22 para. 89(1) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(2), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
Words in Sch. 22 para. 89(1)(2) inserted (23.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(24)(25)
Words in Sch. 22 para. 89(1) inserted (with effect in accordance with Sch. 8 para. 15 and Sch. 9 para. 10(5) to the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 10(2)
Words in Sch. 22 para. 89(1) inserted (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(3) (with Sch. 32 para. 4)
(2) In this Part of this Schedule “lease” means any arrangements that provide for a ship to be leased or otherwise made available by a person (“the lessor”) to another person (“the lessee”).
Sch. 22 para. 89(2) substituted (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(4) (with Sch. 32 para. 4)
(3) Other expressions used in this Part of this Schedule have the same meaning as in Part IX of this Schedule (the ring fence: capital allowances: general).

Quantitative restrictions not to apply to ordinary charters
89A (1) Paragraphs 94 to 102, and paragraph 89(1) so far as relating to those paragraphs, do not apply in the following cases.
(2) The first case is where the ship is chartered out by a person who is responsible—
(a) for the operation of the ship, including the appointment of the master and those members of the crew engaged in navigation, throughout the period of the charter, and
(b) for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses other than those directly incidental to a particular voyage or to the employment of the ship during that period.
For the purposes of this sub-paragraph a person is “responsible” if he is responsible as principal or if he appoints another person, other than the lessee or a person connected with the lessee, to be responsible in his place.
(3) The second case is where—
(a) the ship is chartered out by a person acting in the course of a trade that consists of, or to a significant extent includes, operating ships, and
(b) the conditions in sub-paragraph (4) are met.
(4) Those conditions are—
(a) that the period of the charter does not exceed seven years, and there is no provision or agreement under which it could be extended beyond seven years;
(b) that the period of the charter, together with any other periods in the same ten years during which the ship is chartered out to the lessee or a person connected with him, does not exceed seven years in total;
(c) that there are no arrangements under which the lessee or a person connected with him may acquire the ship, whether directly or indirectly, from the lessor.
In paragraph (b) “the same ten years” means any period of ten years that includes the period of the charter mentioned in that paragraph.
(5) References in this paragraph to the period of a charter are to the term specified in the lease or, if longer, the actual period during which the ship is chartered.
(6) Section 1122 of the Corporation Tax Act 2010 (connected persons) applies for the purposes of this paragraph.
Words in Sch. 22 para. 89A(6) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 316(5) (with Sch. 2)
Sch. 22 para. 89A and heading inserted (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(5) (with Sch. 32 para. 4)

Defeased leasing
90 (1) The lessor under the ... lease is not entitled to capital allowances in respect of expenditure on the provision of the ship if—
(a) the lease, or
(b) any transaction or series of transaction of which the lease forms a part,
makes provision the effect of which is to remove the whole, or the greater part of, any non-compliance risk which, apart from that provision, would fall directly or indirectly on the lessor.
Word in Sch. 22 para. 90(1) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(2), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
(2) For this purpose a “non-compliance risk” means a risk that a loss will be sustained by any person if payments under the lease are not made in accordance with its terms.
(3) For the purposes of this paragraph the lessor and any persons connected with him shall be treated as the same person.
(4) In this paragraph “connected person” has the meaning given by section 839 of the Taxes Act 1988.

Defeased leasing: excepted forms of security
91 (1) Paragraph 90 (defeased leasing) is subject to the following exceptions.
(2) It does not apply to the provision of security of any of the following kinds by the lessee, or a person connected with the lessee—
(a) a mortgage of the ship;
(b) security attaching—
(i) to the ship’s earnings, or
(ii) to the proceeds of insurance policies on the ship;
(c) security over rental rebates arising from the arm’s length sale of the ship;
(d) any other form of security relating to assets, sums or rights arising directly from the ordinary operation of the ship or from arm’s length transactions involving the ship.
In this sub-paragraph “the ship” means the ship that is the subject of the lease.
(3) It does not apply to the provision of security by the lessee, or a person connected with the lessee, if the following conditions are met—
(a) no deposit of money or other property by way of security is obtained by the lessor or any third party;
(b) any payments under the security are limited to the amount of any rental payments under the lease in respect of which the lessee is in default.
(4) It does not apply to the provision of security by a third party where no security other than security of a kind mentioned in sub-paragraph (2)(a) to (d) is held by the third party or any person connected with the third party.
(5) It does not apply to the provision of security by a third party if the following conditions are met—
(a) no deposit of money or other property by way of security is obtained by the lessor or any third party;
(b) the security does not involve the assumption of any obligations of the lessee under the lease in return for a payment made (directly or indirectly) by the lessee or a person connected with him;
(c) the security does not give rise to any payments to the lessor unless the lessee defaults on the rental payments under the lease;
(d) any payments under the security are limited to the amount of the rental payments in default.
(6) For the purposes of this paragraph the lessor and any persons connected with him shall be treated as the same person.
(7) In this paragraph—
“connected person” has the meaning given by section 839 of the Taxes Act 1988; and
“third party” means a person not connected with either the lessor or the lessee.

Long funding leases: conditions for alternative treatment
91A (1) This paragraph applies if the lease would fall to be regarded as a long funding lease for the purposes of Part 2 of the Capital Allowances Act 2001, apart from this paragraph.
(2) The lease is to be treated for tax purposes as not being a long funding lease at any time when the lease—
(a) meets the conditions in sub-paragraph (3), or
(b) is expected to meet those conditions when the ship is first brought into use under the lease,
but this is subject to the qualification in sub-paragraph (4) and the exception in sub-paragraph (5).
(3) The conditions are—
(a) that the lease falls within paragraph 91B (lease to tonnage tax company or group),
(b) that the lease falls within paragraph 91C (tonnage tax company to operate and manage qualifying ship),
(c) that the lease falls within paragraph 91D (period and rate of sublease of qualifying ship).
(4) The condition in paragraph (c) of sub-paragraph (3) has to be met, or be expected to be met, only at times when the company within tonnage tax is leasing the ship to a company not within tonnage tax.
(5) The conditions in paragraphs (b) and (c) of sub-paragraph (3) do not have to be met, or be expected to be met, if the lease was finalised (within the meaning of Part 4 of Schedule 8 to the Finance Act 2006) before 1st April 2006.
(6) Sub-paragraph (2) is subject to paragraph 91E (anti-avoidance).
Sch. 22 paras. 91A-91F and cross-heading inserted (with effect in accordance with Sch. 8 para. 15 and Sch. 9 para. 10(5) to the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 10(3)

Lease to tonnage tax company or group
91B (1) A lease falls within this paragraph if—
(a) it is a lease of a qualifying ship provided directly to a company within tonnage tax, or
(b) it is a lease of a qualifying ship provided indirectly to a company within tonnage tax (“T”) and sub-paragraph (2) applies.
(2) This sub-paragraph applies where—
(a) the owner of the qualifying ship provides it directly to a company (“C”) under a lease,
(b) C provides the qualifying ship directly to T under a lease, and
(c) C and T are in the same group.

Tonnage tax company to operate and manage qualifying ship
91C (1) A lease of a qualifying ship provided, directly or indirectly, to a company within tonnage tax (“T”) falls within this paragraph if T is responsible—
(a) for the operation of the ship, including the appointment of the master and those members of the crew engaged in navigation, and
(b) for defraying all expenses in connection with the ship, or substantially all such expenses other than those directly incidental to a particular voyage or to the employment of the ship during any period for which the ship is leased by T to another person.
(2) For the purposes of this paragraph, T is “responsible” if—
(a) he is responsible as principal, or
(b) he appoints another person (“P”) to be responsible in his place and the condition in sub-paragraph (3) is met.
(3) The condition is that—
(a) P is not a person to whom the ship is leased by T and is not connected with such a person, or
(b) P is a company within tonnage tax.
(4) Any reference in this paragraph to a lease by T includes a reference to a contract of affreightment entered into by T that provides for the carriage of goods by the qualifying ship.
(5) Section 1122 of the Corporation Tax Act 2010 (connected persons) applies for the purposes of this paragraph.
Words in Sch. 22 para. 91C(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 316(6) (with Sch. 2)

Period and rate of sublease of qualifying ship
91D (1) A lease of a qualifying ship provided, directly or indirectly, to a company within tonnage tax (“T”) falls within this paragraph if each lease of the ship by T (a “sublease”) to a company not within tonnage tax meets the conditions in sub-paragraph (2).
(2) The conditions are—
(a) that the amount payable under the sublease is the market rate, and
(b) that the period of the sublease does not exceed 7 years.
(3) For the purposes of this paragraph the market rate is the rate at which the qualifying ship could reasonably be expected to be leased, taking into account all the circumstances of the lease including the period of the lease, the date at which the lease commences and the size and description of the qualifying ship.
(4) For the purposes of this paragraph the period of a sublease is the period comprising—
(a) the term specified in the sublease, and
(b) any subsequent periods which meet the conditions in sub-paragraph (5).
(5) The conditions are that—
(a) there is an option to continue the sublease for that period, and
(b) the amount payable under the sublease for that period is not the market rate applicable at the start of that period.
(6) Where—
(a) an option to continue a sublease for a period is exercised, and
(b) the amount payable under the sublease for that period is the market rate applicable at the start of that period,
the parties to the sublease are to be treated for the purposes of this paragraph as if the sublease had terminated immediately before the commencement of the period and a new sublease had immediately been entered into.
(7) Where a sublease is for an indefinite period, the period of the sublease is to be taken for the purposes of this paragraph to be a period of more than 7 years, unless the condition in sub-paragraph (8) is met.
(8) The condition is that—
(a) the amount payable under the sublease must be reviewed at least once every 7 years, and
(b) if the amount payable under the sublease is found on such a review not to be the market rate applicable at the time of the review, it must be changed to the market rate applicable at that time.
(9) Where there is an option to continue a sublease for an indefinite period, the period of the sublease is to be taken for the purposes of this paragraph to be a period of more than 7 years, unless the condition in sub-paragraph (10) is met.
(10) The condition is that the amount payable under the sublease for any period for which the option may be exercised is the market rate applicable at the start of that period, except that—
(a) the amount for the time being payable under the sublease may subsequently be changed at any time to the market rate applicable at that time,
(b) the amount payable under the sublease must be reviewed at least once every 7 years, and
(c) if the amount payable under the sublease is found on such a review not to be the market rate applicable at the time of the review, it must be changed to the market rate applicable at that time.
(11) Any reference in this paragraph to a lease by T includes a reference to a contract of affreightment entered into by T that provides for the carriage of goods by the qualifying ship.

Anti-avoidance
91E Paragraph 91A(2) does not have effect in the case of the lease if the main purpose, or one of the main purposes—
(a) of the leasing of the ship,
(b) of a series of transactions of which the leasing of the ship is one, or
(c) of any of the transactions in such a series,
was to obtain a writing down allowance determined without regard to any of paragraphs 90, 92 and 94 to 102 in respect of expenditure incurred by any person on the provision of the ship.

Consequences of paragraph 91A(2) ceasing to have effect
91F (1) This paragraph applies if sub-paragraph (2) of paragraph 91A ceases to have effect in relation to a lease (the “existing lease”) because one or more of the conditions in sub-paragraph (3) of that paragraph cease to be met.
(2) In any such case it is to be assumed for tax purposes that—
(a) the existing lease terminates at the time of the cessation;
(b) another lease (the “new lease”) is entered into immediately after the cessation;
(c) the term of the new lease is the portion of the term of the existing lease that remains unexpired at the time of the cessation;
(d) the date on which the cessation occurs is the date of both—
(i) the inception of the new lease, and
(ii) the commencement of the term of the new lease.
(3) Where this paragraph applies, subsection (4) of section 70X of the Capital Allowances Act 2001 (transfers, assignments etc by lessee) does not.
(4) For the purposes of this paragraph, the following expressions have the meaning given in Chapter 6A of Part 2 of the Capital Allowances Act 2001 (interpretation of provisions about long funding leases)—
“commencement”, in relation to the term of a lease;
“inception”, in relation to a lease;
“term”, in relation to a lease;
“terminate”.

Sale and lease-back arrangements
92 (1) The lessor under the ... lease is not entitled to capital allowances if the lease is part of sale and lease-back arrangements.
Word in Sch. 22 para. 92(1) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(2), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
(2) For this purpose “sale and lease-back arrangements” means, subject to sub-paragraphs (3) and (3A), any arrangements that take the following form:
Words in Sch. 22 para. 92(2) substituted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 14(2), 18(2)
Step One The ship is owned by a tonnage tax company and used for the purposes of its tonnage tax trade.
Step Two A transaction is entered into, as a result of which (apart from this paragraph) capital allowances would become available to the lessor, under which—
(a) the ship (or an interest in it) is sold, or
(b) a person enters into a contract on the performance of which he will or may become the owner of the ship (or an interest in it), or
(c) a person entitled to the benefit of any such contract assigns the benefit of it so far as it relates to the ship (or an interest in it).
Step Three After the time of that transaction the ship is used for the purposes of a tonnage tax trade carried on—
(a) by the original company, or
(b) by another tonnage tax company that is a member of the same group,
without having been used since that time for the purposes of any other trade (except that of leasing).
(3) This paragraph does not apply if the ship is newly-constructed and the transaction mentioned in Step Two in sub-paragraph (2) is effected not more than four months after the first occasion on which the ship is brought into use by any person for any purpose.
(3A) This paragraph does not apply if—
(a) expenditure is incurred on enhancing the ship or on converting it to another use,
(b) the amount of that expenditure—
(i) is greater than 33% of the market value of the ship immediately after completion of the enhancement or conversion, and
(ii) is equal to or greater than the market value of the interest in the ship which is the subject of the transaction mentioned in Step Two in sub-paragraph (2), and
(c) that transaction is effected not more than four months after the first occasion following completion of the enhancement or conversion on which the ship is brought into use by any person for any purpose.
Sch. 22 para. 92(3A) inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 14(3), 18(2)
(4) A person is regarded for the purposes of this paragraph as owning a ship if it is treated as owned by him for the purposes of Part 2 of the Capital Allowances Act 2001.
Words in Sch. 22 para. 92(4) substituted (22.3.2001) by 2001 c. 2,

Certificates required to support claim by ... lessor
93 (1) Any claim by the lessor under a ... lease for capital allowances in respect of expenditure on the provision of a qualifying ship must be accompanied by a certificate by the lessor and the lessee stating ...—
(a) that the ship is not leased, directly or indirectly, to a company subject to tonnage tax, or
(b) that neither paragraph 90 (defeased leasing) nor paragraph 92 (sale and lease-back arrangements) applies in relation to the lease and, if the lease is one that would (apart from paragraph 91A) fall to be regarded as a long funding lease for the purposes of Part 2 of the Capital Allowances Act 2001, that paragraph 91A(2) has effect in relation to the lease.
Words in Sch. 22 para. 93(1)(b) inserted (with effect in accordance with Sch. 8 para 15 and Sch. 9 para. 10(5) to the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 10(4)
Word in Sch. 22 para. 93(1) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(2), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
Words in Sch. 22 para. 93(1) repealed (10.7.2003) (with effect in accordance with Sch. 43 Pt. 3(11) Note of the amending Act) by Finance Act 2003 (c. 14), Sch. 43 Pt. 3(11)
(2) If any matter so certified ceases to be the case, the lessor must give notice of that fact to the Inland Revenue.
(3) Any such notice must be given within three months after the end of the chargeable period in which the change takes place.
(4) In the second column of the Table in section 98 of the Taxes Management Act 1970 (penalty for failure to provide information etc.), after the final entry insert—

		“Paragraph 93(2) of Schedule 22 to the Finance Act 2000..”

1970 c. 9.
Word in Sch. 22 para. 93 heading repealed (10.7.2003) (with effect in accordance with Sch. 43 Pt. 3(11) Note of the amending Act) by Finance Act 2003 (c. 14), Sch. 43 Pt. 3(11)

Quantitative restrictions on allowances
94 (1) Where the lessor under the ... lease is entitled to capital allowances in respect of expenditure on the provision of the ship, the following provisions apply.
Word in Sch. 22 para. 94(1) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(2), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
(2) There is no entitlement to any annual investment allowance or first-year allowance.
Words in Sch. 22 para. 94(2) inserted (with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 19(3)
(3) The lessor is entitled—
(a) in respect of the first £40 million of the cost of providing the ship, to writing-down allowances at the rate determined under sub-paragraph (3A) on the reducing balance, and
Sch. 22 para. 94(3)(a) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Words in Sch. 22 para. 94(3)(a) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(2)(a)
(b) in respect of the next £40 million, to writing-down allowances at the rate specified in section 104D(1) of the Capital Allowances Act 2001 on the reducing balance.
Sch. 22 para. 94(3)(b) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Words in Sch. 22 para. 94(3)(b) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(2)(b)
(3A) The rate mentioned in sub-paragraph (3)(a) is—
(a) if the rate of the writing down allowance to which the lessor would be entitled in respect of the expenditure apart from this paragraph is that specified in section 56(1) of the Capital Allowances Act 2001, that rate, and
(b) otherwise, the rate specified in section 104D(1) of that Act.
Sch. 22 para. 94(3A) inserted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(2)(c)
(4) The expenditure ... shall be allocated to separate pools in accordance with sub-paragraph (4A) and dealt with under Part 2 of the Capital Allowances Act 2001 in the same way as expenditure allocated to a class pool.
...
Sch. 22 para. 94(4) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Words in Sch. 22 para. 94(4) omitted (with effect in accordance with s. 57(8)-(9) of the amending Act) by virtue of Finance Act 2011 (c. 11), s. 57(2)(d)(i)
Words in Sch. 22 para. 94(4) inserted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(2)(d)(ii)
Words in Sch. 22 para. 94(4) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(27)
Words in Sch. 22 para. 94(4) omitted (with effect in accordance with s. 57(8)-(9) of the amending Act) by virtue of Finance Act 2011 (c. 11), s. 57(2)(d)(iii)
(4A) The expenditure is to be allocated to the following pools—
(a) to the extent that it is expenditure in respect of which the lessor is entitled to writing down allowance at the rate specified in section 56(1) of the Capital Allowances Act 2001, a pool to be known as “the tonnage tax (main rate) pool”, and
(b) to the extent that it is expenditure in respect of which the lessor is entitled to writing down allowance at the rate specified in section 104D(1) of that Act, a pool to be known as “the tonnage tax (special rate) pool”.
Sch. 22 para. 94(4A) inserted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(2)(e)
(5) If the cost of providing the ship exceeds £80 million, the lessor is not entitled to capital allowances in respect of the excess.

Quantitative restrictions: further provisions as to rate bands, limit and pooling
95 (1) The rate bands and limit in paragraph 94 (quantitative restrictions on allowances) apply separately in relation to each ship.
(2) The amounts specified in that paragraph apply in relation to the whole cost of providing the ship.
(3) If—
(a) the cost is shared by two or more persons, or
(b) a person acquires a part share in the ship,
that paragraph applies as if there were substituted in sub-paragraph (3)(a) and (b) and sub-paragraph (5) in relation to each person the proportion of the figure specified that his share of the cost bears to the whole cost.
(4) The pools referred to in sub-paragraph (4A) of that paragraph are class pools of all expenditure of a lessor that falls to be allocated to a tonnage tax (main rate) or tonnage tax (special rate) pool in respect of ships leased by him.
Sch. 22 para. 95(4) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Word in Sch. 22 para. 95(4) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(3)(a)
Words in Sch. 22 para. 95(4) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(3)(b)

Quantitative restrictions: meaning of “cost of providing ship"
96 (1) For the purposes of paragraph 94 (quantitative restrictions on allowances) the cost of providing the ship means the total cost of providing it in a state ready to be brought into use for the purposes for which it is normally to be used.
This includes the cost of any accessories or additional equipment, or fitting out, necessary for the operation of the ship for those purposes.
(2) The cost of providing the ship shall be determined without regard to the provisions of the Capital Allowances Act 2001 as to—
(a) when expenditure is treated as incurred, or
(b) when expenditure may be brought into account as qualifying expenditure.
Words in Sch. 22 para. 96(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(28)
(3) Further capital expenditure by the lessor on the ship shall be added to the original cost of providing the ship to determine—
(a) whether the lessor is entitled to capital allowances in respect of the further expenditure, and
(b) if he is, the rate of writing-down allowances to which he is entitled.
References to the cost of providing the ship shall accordingly be read as including any such further expenditure.
(4) The amounts to be taken into account under this paragraph are limited to the amounts that would otherwise have been qualifying expenditure for the purposes of capital allowances.

Quantitative restrictions: treatment of disposal proceeds
97 (1) The following provisions apply where—
(a) there is a disposal of a ship in relation to which paragraph 94 applies to restrict the capital allowances available, and
(b) a disposal value falls fall to be brought into account.
The reference in paragraph (a) to a disposal of ship includes a disposal of a part of a ship, or of an interest in a ship or a part of a ship.
(2) The disposal value is first allocated between the tonnage tax (main rate) pool and the tonnage tax (special rate) pool in the same proportions as the cost of providing the ship was allocated to those pools.
Sch. 22 para. 97(2)-(4) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Words in Sch. 22 para. 97(2) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(4)(a)
(3) If the amount allocated to the tonnage tax (main rate) pool exceeds the amount of qualifying expenditure remaining in that pool, any excess shall be taken to the tonnage tax (special rate) pool.
Words in Sch. 22 para. 97(3) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(4)(a)
(4) A balancing charge arises only if the amount taken to the tonnage tax (special rate) pool exceeds the amount of qualifying expenditure remaining in that pool.
Words in Sch. 22 para. 97(4) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(4)(b)

Quantitative restrictions: change of circumstances bringing case within restrictions
98 (1) The provisions of this paragraph apply where—
(a) the lessor under a ... lease has been entitled to capital allowances in circumstances in which paragraph 94 (quantitative restrictions on allowances) did not apply, and
Word in Sch. 22 para. 98(1)(a) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(2), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
(b) a change of circumstances brings the case within paragraph 89(1) so that the restrictions in paragraph 94 do apply.
(2) In this paragraph—
“the relevant period” means the period beginning—
(a) with the beginning of the accounting period of the lessor in which there occurs the change of circumstances in relation to which this paragraph applies, or
(b) if since the beginning of that period there has been a change of circumstances in relation to which paragraph 99 applied (change taking case out of restrictions), with the time of that change (or if there has been more than one such change, the last of them),
and ending with the time of the change of circumstances in relation to which this paragraph applies; and
“the lessor’s normal pool” means the lessor’s pool that contains the qualifying expenditure relating to the ship at the beginning of the relevant period.
(3) At the beginning of the relevant period an amount (“amount A”) equal to—
(a) the tax written down value of the ship as at that time, or
(b) if less, the amount of unrelieved qualifying expenditure in the lessor’s normal pool at that time,
shall be brought into account as a disposal value in the lessor’s normal pool.
(4) At the same time an amount of qualifying expenditure equal to amount A shall be taken to a separate single-asset pool (“the temporary pool”).
(5) Any qualifying expenditure or other items relating to the ship that would otherwise have been brought into account in the lessor’s normal pool in the relevant period shall instead be brought into account in the temporary pool.
(6) At the end of the relevant period, the temporary pool shall be closed as if the ship had been disposed of by the lessor for an amount equal to its tax written down value at that time (“amount B”), and any resulting balancing allowance or balancing charge shall be given effect.
(7) The lessor shall be treated as if he had incurred qualifying expenditure equal to amount B on the provision of the ship for the purposes of the lessee’s tonnage tax trade immediately after the end of the relevant period.
(8) There shall be allocated to the lessor’s tonnage tax (main rate) and tonnage tax (special rate) pools the same proportions of amount B as the proportions of the actual cost of providing the ship that would have been so allocated if the case had been within paragraph 89(1) at all material times.
Sch. 22 para. 98(8) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Words in Sch. 22 para. 98(8) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(5)

Quantitative restrictions: change of circumstances taking case out of restrictions
99 (1) The provisions of this paragraph apply where—
(a) the lessor under a ... lease has been entitled to capital allowances in circumstances in which paragraph 94 (quantitative restrictions on allowances) applied, and
Word in Sch. 22 para. 99(1)(a) repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 1(2), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
(b) a change of circumstances takes the case out of paragraph 89(1) so that the restrictions in paragraph 94 no longer apply.
(2) When the change of circumstances occurs a disposal value shall be brought into account by the lessor equal to the tax written down value of the ship as at that time.
The provisions of paragraph 97 (treatment of disposal proceeds) apply as regards the allocation of that amount to the lessor’s tonnage tax (main rate) and tonnage tax (special rate) pools.
Sch. 22 para. 99(2) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Words in Sch. 22 para. 99(2) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(6)(a)
(3) The lessor shall be treated as if he had incurred qualifying expenditure on the provision of the ship for the purposes of the lessee’s non-tonnage tax trade immediately after the change of circumstances occurs.
(4) The amount of that expenditure shall be taken to be the amount that the tax written down value of the ship would have been, at the time the change of circumstances occurs, had paragraph 94 never applied.
Words in Sch. 22 para. 99(4) substituted (with effect in accordance with s. 57(8)-(9) of the amending Act) by Finance Act 2011 (c. 11), s. 57(6)(b)
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 22 para. 99(5) modified (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(5)-(7)
Sch. 22 para. 99(5) omitted (with effect in accordance with s. 57(8)-(9) of the amending Act) by virtue of Finance Act 2011 (c. 11), s. 57(6)(c)

Determination of tax written down value, etc.
100 (1) This paragraph supplements paragraphs 98 and 99.
(2) The “tax written down value” of the ship at any time means what would be the amount of unrelieved qualifying expenditure at that time determined on the following assumptions—
(a) that the qualifying expenditure relating to the ship had been held in a single asset pool, and
(b) that there had been made to the lessor—
(i) the first-year allowance (if any) that was actually made to him,
(ii) any first-year allowance falling to be made to him that was postponed under section 130 of the Capital Allowances Act 2001, and
Words in Sch. 22 para. 100(2)(b)(ii) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(29)
(iii) the maximum amount of any writing-down allowances that, on the preceding assumptions, could have been made.
(3) The references in paragraph 98(3)(b) and sub-paragraph (2) above to the amount of “unrelieved qualifying expenditure" are to the unrelieved qualifying expenditure that would otherwise have been carried forward under Chapter 5 of Part 2 of the Capital Allowances Act 2001.
Words in Sch. 22 para. 100(3) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(30)
(4) For the purpose of determining that amount at a time other than the beginning or end of an accounting period of the lessor, it shall be assumed that an accounting period of the lessor began or ended at that time.

Quantitative restrictions: power to alter amounts by regulations
101 (1) The Inland Revenue may by regulations alter the amounts for the time being specified in sub-paragraph (3)(a) and (b) and sub-paragraph (5) of paragraph 94 (quantitative restrictions on allowances).
(2) The regulations may contain such incidental, supplementary and transitional provisions as appear to the Inland Revenue to be appropriate.

Exclusion of leases entered into on or before 23rd December 1999
102 The provisions of this Part do not apply in relation to a finance lease entered into on or before 23rd December 1999.

Part XI Special rules for offshore activities

Introduction
103 (1) This Part of this Schedule sets out special rules that apply where a qualifying ship operated by a tonnage tax company is engaged in offshore activities.
(2) The rules in this Part of this Schedule do not apply in an accounting period unless the total number of days in that period on which qualifying ships operated by that company are engaged in offshore activities exceeds 30.

Meaning of “offshore activities"
104 (1) In this Part of this Schedule “offshore activities” means activities in connection with the exploration or exploitation of so much of the seabed or subsoil or their natural resources as is situated in the UK sector of the continental shelf.
(1A) But none of the following activities is to be regarded as an offshore activity—
(a) offshore supply services;
(b) towage, salvage or other marine assistance;
(c) anchor handling;
(d) carriage of liquids or gases;
(e) safety or rescue services;
(f) the carriage of cargo in connection with dredging.
Sch. 22 para. 104(1A), (1B) inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 15(2), 18(1) (with Sch. 7 paras. 19-21)
(1B) The Treasury may make provision by order amending sub-paragraph (1A) by—
(a) adding, or
(b) varying,
any description of activity.
(2) The “UK sector of the continental shelf” means—
(a) any area designated by Order in Council under section 1(7) of the Continental Shelf Act 1964, and
1964 c. 29.
(b) any waters within the seaward limits of the territorial sea of the United Kingdom.

Vessels to which special provisions do not apply
105 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 22 para. 105 repealed (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 16, 18(1), Sch. 11 Pt. 2(10) (with Sch. 7 paras. 19-21)

Treatment of periods of inactivity
106 A period between contracts when a qualifying ship is not working shall not be taken to be a period during which the ship is engaged in offshore activities unless—
(a) the period of inactivity is specifically related to a forthcoming offshore activity, and
(b) it is impractical for the vessel to undertake other work in the meantime.

Profits from offshore activities to be computed according to ordinary rules
107 (1) The profits of a tonnage tax company from a qualifying ship in respect of periods during which the ship is engaged in offshore activities (its “offshore profits”) are computed and charged to tax in accordance with ordinary corporation tax principles as if they were not part of the company’s relevant shipping profits.
(2) Accordingly, the number of days in an accounting period during which a qualifying ship is so engaged shall be left out of account for the purposes of paragraph 4 (calculation of tonnage tax profits by reference to daily profit).

Application of ring fence provisions
108 (1) The provisions of Part VII (the ring fence: general provisions) apply in relation to a company’s offshore activities as if they were not tonnage tax activities.
(2) The provisions of this Schedule apply in relation to a company’s offshore profits as they apply to profits other than relevant shipping profits.

Chargeable gains from assets used for offshore activities
109 A period during which an asset is used for the purposes of offshore activities is treated for the purposes of paragraph 65 (chargeable gains on disposal of tonnage tax asset) as if it were a period during which the asset was not a tonnage tax asset.

Capital allowances: general
110 (1) A tonnage tax company may claim capital allowances for capital expenditure incurred in providing plant or machinery for the purposes of its offshore activities.
(2) In such a case Part 2 of the Capital Allowances Act 2001 applies as if—
(a) an asset used for the purposes of the company’s offshore activities were provided by the company for those purposes on the first occasion after entry into tonnage tax on which it is brought into use for those purposes, and
(b) an amount of capital expenditure (the “notional qualifying expenditure”) had been incurred at that time on its provision.
Words in Sch. 22 para. 110(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001, c. 2, ss. 578, 579, Sch. 2 para. 108(31)
(3) The amount of the notional qualifying expenditure is given by paragraph 112 (existing assets) or paragraph 113 (new assets).
(4) Where an asset to which this paragraph applies ceases permanently to be used for the purposes of the company’s offshore activities, it is treated for the purposes of Part 2 of the Capital Allowances Act 2001 as it applies by virtue of this paragraph as if it had been disposed of at market value.
This does not apply if a disposal value is required to be brought into account under section 61(1) of that Act apart from this sub-paragraph.
Words in Sch. 22 para. 110(4) substituted (22.3.2001 with effect as noted in 579(1)) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(32)(a)
Words in Sch. 22 para. 110(4) substituted (22.3.2001 with effect as mentioned in s. 579 of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(32)(b)

Capital allowances: proportionate reduction of allowances
111 (1) This paragraph applies where in an accounting period of the company an asset to which paragraph 110 applies is used for the purposes of the company’s offshore activities on some only of the days in the period.
(2) The amount of any writing-down allowance for that period in respect of expenditure incurred on the provision of the asset is restricted to the relevant proportion of the full allowance.
(3) Any writing-down allowance for a subsequent accounting period of the company in respect of such expenditure shall be calculated as if an allowance had been made of an amount equal to the full allowance, whether or not that amount (or any amount) was in fact claimed.
(4) For the purposes of this paragraph the full allowance means the allowance (if any) that would have been available apart from this paragraph.
(5) For the purposes of this paragraph the relevant proportion of the full allowance is given by:
OSDAPD
where:
OSD is the number of days in the accounting period on which the asset was used for the purposes of the company’s offshore activities; and
APD is the number of days in that period.

Capital allowances: notional qualifying expenditure: existing assets
112 (1) This paragraph applies to determine the amount of notional qualifying expenditure for the purposes of paragraph 110 where the company was entitled before entry into tonnage tax to capital allowances in respect of expenditure on providing the asset.
(2) If the asset was brought into use for the purposes of the company’s offshore activities immediately on entry into tonnage tax, the notional qualifying expenditure is equal to any unrelieved qualifying expenditure attributable to the asset.
(3) In this paragraph “unrelieved qualifying expenditure” means the unrelieved qualifying expenditure that would otherwise have been carried forward under Chapter 5 of Part 2 of the Capital Allowances Act 2001.
Sch. 22 para. 112(3) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(33)
(4) The amount of unrelieved qualifying expenditure attributable to plant or machinery in a class pool, or the main pool, is the proportion of the whole given by:
AVPV
where:
AV is the market value of the asset concerned immediately before entry into tonnage tax, and
PV is the aggregate market value at that time of all the assets in the pool.
(5) References in this paragraph to unrelieved qualifying expenditure include qualifying expenditure to the extent to which it is unrelieved by virtue of notice having been given under section 130 of the Capital Allowances Act 2001 (notice postponing first-year or writing-down allowance)—
Words in Sch. 22 para. 112(5) substituted (22.3.2001 with effect as mentioned in 579(1) of the amended Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(34)
(6) If the asset was not brought into use for the purposes of the company’s offshore activities immediately on entry into tonnage tax, the notional qualifying expenditure is the amount given by sub-paragraph (2) but written down in respect of the period between the company’s entry into tonnage tax and the asset being brought into use for those purposes.
(7) The Inland Revenue shall make provision by regulations as to the basis on which the writing down mentioned in sub-paragraph (6) is to be done.
The regulations may make different provision for different descriptions of asset.

Capital allowances: notional qualifying expenditure: new assets
113 (1) This paragraph applies to determine the amount of notional qualifying expenditure for the purposes of paragraph 110 where the company was not entitled before entry into tonnage tax to capital allowances in respect of expenditure on providing the asset.
(2) If the asset was brought into use for the purposes of the company’s offshore activities immediately on being acquired by the company, the notional qualifying expenditure is equal to the amount that would fall to be brought into account as qualifying expenditure under Part 2 of the Capital Allowances Act 2001 apart from this Schedule.
Words in Sch. 22 para. 113(2) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(35)
(3) If the asset was not brought into use for the purposes of the company’s offshore activities immediately on being acquired by the company, the notional qualifying expenditure is the amount referred to in sub-paragraph (2) written down in respect of the period between its acquisition by the company and its being brought into use for those purposes.
(4) The Inland Revenue shall make provision by regulations as to the basis on which the writing down mentioned in sub-paragraph (3) is to be done.
The regulations may make different provision for different descriptions of asset.

The training requirement
114 (1) The fact that a qualifying ship is used for the purposes of offshore activities does not affect the training requirement but an allowance is made under this paragraph.
(2) The amount of the allowance in an accounting period is equal to the aggregate of—
(a) the cash equivalent of the training provided that would not have had to be provided, and
(b) any payments in lieu of training made that would not have had to be made,
if the days on which the ship was engaged in offshore activities had been days on which it was not engaged in tonnage tax activities.
For the purposes of paragraph (a) the cash equivalent of training shall be calculated by reference to the current rate of payments in lieu of training.
(3) The amount of the allowance may be deducted by the company in computing the amount of corporation tax payable for that accounting period, so far as that is attributable to offshore activities.
(4) If in any accounting period the company is unable to deduct the full amount of—
(a) any allowance to which it is entitled under this paragraph for that period, and
(b) any amount brought forward under this sub-paragraph,
the balance may be carried forward and set against the amount of corporation tax payable in the next accounting period, so far as that is attributable to offshore activities.
(5) No deduction may be made by a company in computing its profits from offshore activities in respect of expenditure incurred in meeting the training requirement.

Interpretation
115 Expressions used in this Part of this Schedule that are defined for the purposes of Part VIII or IX of this Schedule have the same meaning in this Part.

Part XII Groups, mergers and related matters

Meaning of “group" and “member of group"
116 In this Schedule a “group” means—
(a) all the companies controlled by an individual, or
(b) where a company that is not controlled by another person controls one or more other companies, that company and all the companies controlled by it.
References to membership of a group shall be construed accordingly.

Companies treated as controlled by an individual
117 (1) For the purposes of this Schedule an individual is treated as controlling any company that is controlled—
(a) by him alone, or
(b) by him together with one or more associates of his, or
(c) subject to sub-paragraph (2), by any associate of his, with or without any other such associates.
(2) An individual shall not be treated as controlling a company by virtue of sub-paragraph (1)(c) if he does not have any significant influence over the affairs of the company in question.

Meaning of “control"
118 (1) In this Schedule “control”, in relation to a company, means the power of a person to secure—
(a) by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or
(b) by virtue of any powers conferred by the articles of association or other document regulating that or any other company,
that the affairs of the company are conducted in accordance with his wishes.
(2) For the purposes of this paragraph there shall be attributed to a person—
(a) any rights or powers which another person holds on his behalf or may be required to exercise at his direction or on his behalf,
(b) any rights or powers—
(i) of a company of which he has, or he and his associates have, control, or
(ii) of any two or more such companies, and
(c) any rights or powers of any associate of his, or of any two or more associates of his.
(3) The references in paragraphs (b) and (c) of sub-paragraph (2) to rights or powers of a company or associate include rights or powers attributed to the company or associate under paragraph (a) of that sub-paragraph.
(4) The references in paragraphs (b) and (c) of sub-paragraph (2) to rights or powers of an associate do not include rights or powers attributed to the associate under those paragraphs.

Company not to be treated as member of more than one group
119 (1) For the purposes of this Schedule a company may not, at the same time, be a member—
(a) of a tonnage tax group and a qualifying non-tonnage tax group, or
(b) of more than one tonnage tax group.
(2) If the rules in paragraphs 116 to 118 would produce that result in relation to a company, the following rules apply.
(3) As between a tonnage tax group and a qualifying non-tonnage tax group, the company shall be treated as a member of the tonnage tax group and not of the non-tonnage tax group.
(4) As between two tonnage tax groups, the company shall be treated as a member of the group whose tonnage tax election was made first and not of the other tonnage tax group.
(5) In the case of group elections made at the same time, the company may choose which election it joins in.
It is treated for the purposes of this Schedule as a member of the group in respect of which that election is made and not of any other tonnage tax group.

Arrangements for dealing with group matters
120 (1) The Inland Revenue may enter into arrangements with the qualifying companies in a group for one of those companies to deal on behalf of the group in relation to matters arising under this Schedule that may conveniently be dealt with on a group basis.
(2) Any such arrangements—
(a) may make provision in relation to cases where companies become or cease to be members of a group;
(b) may make provision for or in connection with the termination of the arrangements; and
(c) may make such supplementary, incidental, consequential or transitional provision as is necessary or expedient for the purposes of the arrangements.
(3) Any such arrangements do not affect—
(a) any requirement under this Schedule that an election be made jointly by all the qualifying companies in the group; or
(b) any liability under this Schedule or any other provision of the Tax Acts of a company to which the arrangements relate.
(4) The Secretary of State may also make such arrangements in relation to matters arising under this Schedule in relation to which he has functions.

Meaning of “merger" and “demerger"
121 (1) In this Schedule—
“merger” means a transaction by which one or more companies become members of a group, and
“demerger” means a transaction by which one or more companies cease to be members of a group.
(2) References to a merger to which a group is a party include any merger affecting a member of the group.

Merger: between tonnage tax groups or companies
122 (1) This paragraph applies where there is a merger—
(a) between two or more tonnage tax groups,
(b) between one or more tonnage tax groups and one or more tonnage tax companies, or
(c) between two or more tonnage tax companies.
(2) In all those cases the group resulting from the merger is a tonnage tax group as if a group election had been made.
(3) That deemed election continues in force, subject to the provisions of this Schedule—
(a) if there is a dominant party to the merger, until that party’s tonnage tax election would have expired;
(b) if there is no dominant party, until whichever of the existing tonnage tax elections had the longest period left to run would have expired.

Merger: tonnage tax group or company and qualifying non-tonnage tax group or company
123 (1) This paragraph applies where there is a merger between a tonnage tax group or company (“T”) and a qualifying non-tonnage tax group or company (“QNT”).
(2) If T is the dominant party, the group resulting from the merger is a tonnage tax group as if a group election had been made.
That deemed election continues in force, subject to the provisions of this Schedule, until T’s election would have expired.
(3) If QNT is the dominant party, T’s tonnage tax election ceases to be in force as from the date of the merger.
(4) If there is no dominant party—
(a) the group resulting from the merger may elect that T shall be treated as the dominant party (with the result that sub-paragraph (2) applies), and
(b) if it does not do so, T’s tonnage tax election ceases to be in force as from the date of the merger.
(5) Any election under sub-paragraph (4)(a) must be made—
(a) jointly by all the qualifying companies in the group resulting from the merger,
(b) by notice to the Inland Revenue,
(c) within twelve months of the merger.

Merger: tonnage tax group or company and non-qualifying group or company
124 (1) This paragraph applies where there is a merger between a tonnage tax group or company (“T”) and a non-qualifying group or company.
(2) In that case the group resulting from the merger is a tonnage tax group by virtue of T’s election.

Merger: non-qualifying group or company and qualifying non-tonnage tax group or company
125 (1) This paragraph applies where there is a merger between a non-qualifying group or company (“NQ”) and a qualifying non-tonnage tax group or company.
(2) In that case, if NQ is the dominant party the group resulting from the merger may make a tonnage tax election having effect as from the date of the merger.
(3) Any such election must be made—
(a) jointly by all the qualifying companies in the group resulting from the merger,
(b) by notice to the Inland Revenue,
(c) within twelve months of the merger.

Meaning of “dominant party" in relation to merger
126 (1) This paragraph explains what is meant by the references in this Schedule to the “dominant party” in relation to a merger.
(2) The “dominant party" is determined as follows—
(a) if the turnover generated by the relevant activities of one of the parties to the merger is more than twice that of the other, that one is the dominant party;
(b) if not, there is no dominant party.
(3) The relevant activities of a party to a merger are—
(a) for the purposes of—
(i) paragraph 122 (merger between tonnage tax groups or companies), or
(ii) paragraph 123 (merger between tonnage tax group or company and qualifying non-tonnage tax group or company),
the tonnage tax activities of that party;
(b) for the purposes of paragraph 125 (merger between non-qualifying group or company and qualifying non-tonnage tax group or company), all the activities of that party.
(4) The basis on which (and the periods by reference to which) the turnover from relevant activities is to be determined for the purposes of those paragraphs shall be such as may be agreed between the parties and the Inland Revenue.
(5) In default of such agreement—
(a) the Inland Revenue shall decide, and
(b) an appeal may be made against their decision.
Words in Sch. 22 para. 126(5)(b) substituted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 294(3)
(6) Notice of appeal must be given to the Inland Revenue within 30 days of their decision being notified to the parties.

Demerger: single company
127 (1) This paragraph applies where a tonnage tax company ceases to be a member of a tonnage tax group and does not become a member of another group.
(2) In that case—
(a) the company in question remains a tonnage tax company as if a single company election had been made, and
(b) that deemed election continues in force, subject to the provisions of this Schedule, until the group election would have expired.
(3) If two or more members of the previous group remain, and any of them is a qualifying company, the group consisting of those companies is a tonnage tax group by virtue of the previous group election.

Demerger: group
128 (1) This paragraph applies where a tonnage tax group splits into two or more groups.
(2) In that case each new group that contains a qualifying company that was a tonnage tax company before the demerger is a tonnage tax group as if a group election had been made.
(3) That deemed election continues in force, subject to the provisions of this Schedule, until the group election would have expired.

Duty to notify Inland Revenue of group changes
129 (1) A tonnage tax company that becomes or ceases to be a member of a group, or of a particular group, must give notice to the Inland Revenue of that fact.
(2) The notice must be given within the period of twelve months beginning with the date on which the company became or ceased to be a member of the group.
(3) In the second column of the Table in section 98 of the Taxes Management Act 1970 (penalties for failure to provide information etc.), after the final entry insert—

		“Paragraph 129 of Schedule 22 to the Finance Act 2000..”

1970 c. 9.

Part XIII Application of provisions to partnerships

Introduction
130 (1) The Inland Revenue may make provision by regulations as to the application of this Schedule in relation to activities carried on by a company in partnership.
(2) Nothing in the following provisions of this Part of this Schedule shall be read as restricting the generality of this power.

Calculation of partnership profits
131 The regulations may provide that—
(a) for the purpose of calculating the profits of a partner which is a tonnage tax company, the profits of the partnership shall be calculated as if the partnership were a tonnage tax company, and
(b) for the purpose of calculating the profits of a partner which is not a tonnage tax company, the profits of the partnership shall be calculated as if the partnership were not a tonnage tax company.

Qualifying partnerships
132 (1) The regulations may provide that activities carried on by a company in partnership are not to be regarded as qualifying activities of that company unless the partnership is a qualifying partnership.
“Qualifying activities” here means core qualifying activities, qualifying secondary activities or qualifying incidental activities.
(2) Subject to any provision made by the regulations, a “qualifying partnership” means a partnership that if it were a company would meet the requirements in paragraph 16(1) (qualifying companies).

Ships owned by or chartered to partners
133 The regulations may provide that a ship which is not partnership property but which—
(a) is owned by or chartered to a member (or two or more members) of a partnership, and
(b) is a ship in relation to which activities of the partnership business are carried on,
shall be treated as if it were owned by or chartered to every member of the partnership and as if everything done by or to any of the partners in relation to it had been done by or to all the partners.

Transactions not at arm’s length
134 The regulations may provide that for the purposes of paragraphs 58 and 59 (transactions not at arm’s length) the partnership shall be treated—
(a) as an entity separate and distinct from the persons that are its members, and
(b) as if it were a tonnage tax company.

Adjustments for capital allowance purposes
135 The regulations may provide that where a partner leaves tonnage tax, such adjustments shall be made for capital allowance purposes, in relation to that partner and all or any of the other partners, with respect to—
(a) the amount of qualifying expenditure under Part 2 of the Capital Allowances Act 2001 (plant and machinery allowances), and
Words in Sch. 22 para. 135(a) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(36)
(b) the amount of the residue of qualifying expenditure under Part 3 of that Act(industrial buildings allowances),
Words in Sch. 22 para. 135(b) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, ss. 578, 579, Sch. 2 para. 108(36)
as may be specified in the regulations.

General
136 Regulations under this Part of this Schedule—
(a) may make different provision for different cases, and
(b) may contain such supplementary, incidental and transitional provision as appears to the Inland Revenue to be appropriate.

Part XIV Withdrawal of relief etc. on company leaving tonnage tax

Introduction
137 (1) This Part of this Schedule applies where a company ceases to be a tonnage tax company.
(2) The provisions of paragraphs 138 and 139 (exit charges: chargeable gains and balancing charges) apply where a company ceases to be a tonnage tax company—
(a) on ceasing to be a qualifying company for reasons relating wholly or mainly to tax, or
(b) under paragraph 42 (exclusion from tonnage tax where tax avoidance arrangements entered into).
(3) Paragraph 140 (ten year disqualification from re-entry into tonnage tax) applies in every case where a company ceases to be a tonnage tax company otherwise than on the expiry of a tonnage tax election.

Exit charge: chargeable gains
138 (1) Paragraph 65(1)(a) (chargeable gain: disposal of tonnage tax assets) has effect in relation to gains (but not losses) on all relevant disposals as if the company had never been a tonnage tax company.
(2) For this purpose a “relevant disposal” means a disposal—
(a) on or after the day on which the company ceases to be a tonnage tax company, or
(b) at any time during the period of six years immediately preceding that day when the company was a tonnage tax company.
(3) Where sub-paragraph (1) operates to increase the amount of the chargeable gain on a disposal made at a time within the period mentioned in sub-paragraph (2)(b), the gain is treated to the extent of the increase—
(a) as arising immediately before the company ceased to be a tonnage tax company, and
(b) as not being relevant shipping profits of the company.
(4) No relief, deduction or set-off of any description is allowed against the amount of that increase or the corporation tax on that amount.

Exit charge: balancing charges
139 (1) This paragraph applies if in a relevant accounting period during which the company was a tonnage tax company it was liable to a balancing charge in relation to which paragraph 78 (phasing-out of balancing charges) applied to reduce the amount of the charge.
(2) For this purpose a “relevant accounting period” means an accounting period ending not more than six years before the day on which the company ceased to be a tonnage tax company.
(3) The company is treated as having received an additional amount of profits chargeable to corporation tax equal to the aggregate of the amounts by which those balancing charges were reduced.
(4) Those additional profits are treated—
(a) as arising immediately before the company ceased to be a tonnage tax company, and
(b) as not being relevant shipping profits of the company.
(5) No relief, deduction or set-off of any description is allowed against those profits or against corporation tax on them.

Ten year disqualification from re-entry into tonnage tax
140 (1) A company election made by a former tonnage tax company is ineffective if made before the end of the period of ten years beginning with the date on which the company ceased to be a tonnage tax company.
(2) A group election that—
(a) is made in respect of a group whose members include a former tonnage tax company, and
(b) would result in that company becoming a tonnage tax company,
is ineffective if made before the end of the period of ten years beginning with the date on which that company ceased to be a tonnage tax company.
(3) Sub-paragraphs (1) and (2) do not prevent a company becoming a tonnage tax company under and in accordance with the rules in Part XII of this Schedule (groups, mergers and related matters).
(4) In this paragraph “former tonnage tax company” means a company that is not a tonnage tax company but has previously been a tonnage tax company.

Second or subsequent application of this Part
141 Where this Part of this Schedule applies on a second or subsequent occasion on which a company ceases to be a tonnage tax company (whether or not this Part applied on any of the previous occasions)—
(a) the references to the company ceasing to be a tonnage tax company shall be read as references to the last occasion on which it did so, and
(b) the references to the period during which the company was a tonnage tax company do not include any period before its most recent entry into tonnage tax.

Part XV Supplementary provisions

Meaning of “ship"
142 In this Schedule “ship” means any vessel used in navigation, and includes a hovercraft.

Meaning of “on bareboat charter terms"
143 In this Schedule a charter “on bareboat charter terms” means a hiring of a ship for a stipulated period on terms which give the charterer possession and control of the ship, including the right to appoint the master and crew.

Meaning of “associate"
144 (1) In this Schedule “associate”, in relation to an individual, means—
(a) a relative of that individual;
(b) a partner of that individual;
(c) the trustee or trustees of any settlement in relation to which—
(i) that individual, or
(ii) any relative (whether living or dead) of that individual,
is or was a settlor;
(d) where that individual is interested in any shares or obligations of a company that are subject to a trust, the trustee or trustees of the settlement concerned;
(e) where that individual is interested in any shares or obligations of a company that are part of the estate of a deceased person, the personal representatives of the deceased.
(2) In sub-paragraph (1)(a) and (c)(ii) “relative” means spouse or civil partner, parent or remoter forebear, child or remoter issue, or brother or sister.
Section 831(4) of the Taxes Act 1988 applies for the purposes of this paragraph as it applies for the purposes of that Act.
Words in Sch. 22 para. 144(2) substituted (5.12.2005) by Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 133
(3) In sub-paragraph (1)(c) and (d) “settlement” and “settlor” have the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).
Words in Sch. 22 para. 144(3) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 522 (with Sch. 2)

Exercise of functions conferred on “the Inland Revenue"
145 (1) Any power to make regulations conferred by this Schedule on “the Inland Revenue" is exercisable only by the Board.
(2) Subject to that, references in this Schedule to “the Inland Revenue" are to any officer of the Board.

Meaning of “company" and related expressions
146 In this Schedule—
“company” means a body corporate or unincorporated association, but does not include a partnership;
“controlled foreign company” has the same meaning as in Chapter IV of Part XVII of the Taxes Act 1988 (tax avoidance: controlled foreign companies);
“single company” means a company that is not a member of a group.

Index of defined expressions
147 In this Schedule the following expressions are defined or otherwise explained by the provisions indicated:
associate (of an individual)	paragraph 144
bareboat charter terms	paragraph 143
capital allowances (in Part IX)	paragraph 88(1)
certificate of non-compliance (with training requirement)	paragraph 32
company	paragraph 146
company election	paragraph 7(1)(a)
control	paragraph 118 (and see paragraph 117)
controlled foreign company	paragraph 146
core qualifying activities	paragraph 46
cost of providing the ship (in Part X)	paragraph 96
demerger	paragraph 121(1)
dominant party (in relation to a merger)	paragraph 126
entering (or leaving) tonnage tax	paragraph 2(2)
finance costs (in paragraphs 61 and 62)	paragraph 63
. . .	. . .
group	paragraph 116
group election	paragraph 7(1)(b)
initial period	paragraph 10(1) (and see paragraph 11(2))
Inland Revenue	paragraph 145
lease (and lessor and lessee) (in Part X)	paragraph 89(2)
leaving (or entering) tonnage tax	paragraph 2(2)
member of group	paragraph 116
Member States' registers	paragraph 22B(7)
merger	paragraph 121(1)
minimum training obligation	paragraph 24
offshore activities (in Part XI)	paragraph 104
offshore profits (in Part XI)	paragraph 107(1)
payments in lieu of training	paragraph 29
pooling and related expressions (in Parts IX, X and XI)	paragraph 88(2) and (3)
operating (a ship)	paragraph 18
qualifying activity and qualifying expenditure (in Parts IX, X and XI)	paragraph 88(1)
qualifying company	paragraph 16(1) (and see paragraph 17)
qualifying dredger	paragraph 20(7)
qualifying group	paragraph 16(2)
qualifying incidental activities	paragraph 48
qualifying secondary activities	paragraph 47
qualifying ship	paragraphs 19 to 22
relevant shipping income	paragraph 44(2)
relevant shipping profits	paragraph 44(1) (and see paragraph 108(2))
renewal election	paragraph 15(1)
the 75% limit (on chartered-in tonnage)	paragraph 37
ship	paragraph 142
single company	paragraph 146
subject to tonnage tax	paragraph 2(2)
tonnage	paragraph 6(1)
tonnage tax	paragraph 1(1)
tonnage tax activities	paragraph 45 (and see paragraph 108(1))
tonnage tax asset (in Parts VIII and XI)	paragraph 64
tonnage tax company	paragraph 2(1)
tonnage tax election	paragraph 1(2) (and see Part II)
tonnage tax group	paragraph 2(1)
tonnage tax pool (in Part IX)	paragraph 69
tonnage tax profits	paragraphs 3 to 5 (and see Part XI)
tonnage tax trade	paragraph 53(1)
training commitment	paragraph 25 (and see paragraphs 27(4) and (5) and 28(2))
Words in Sch. 22 para. 147 repealed (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 2(2)(a), Sch. 43 Pt. 3(11) (with Sch. 32 para. 4)
Words in Sch. 22 para. 147 inserted (10.7.2003) (with effect in accordance with Sch. 32 para. 3 of the amending Act) by Finance Act 2003 (c. 14), Sch. 32 para. 2(2)(b) (with Sch. 32 para. 4)
Words in Sch. 22 para. 147 inserted (1.7.2005) by Finance Act 2005 (c. 7), Sch. 7 paras. 17(2), 18(1) (with Sch. 7 paras. 19-21)

SCHEDULE 23 Tax treatment of amounts relating to acquisition etc. of certain rights
Section 87.

Rights to which this Schedule applies
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax treatment of expenditure on acquisition and receipts from disposal
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax treatment of amounts arising from revaluation
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax treatment must accord with accounting approach in relevant group accounts
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transitional provision in relation to IRUs
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 23 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 523, Sch. 3 (with Sch. 2)

SCHEDULE 24 New Schedule 4A to the Taxation of Chargeable Gains Act 1992
Section 91(2).

The Schedule inserted after Schedule 4 to the Taxation of Chargeable Gains Act 1992 is as follows:

“Schedule 4A Disposal of interest in settled property: deemed disposal of underlying assets

Circumstances in which this Schedule applies
1 This Schedule applies where there is a disposal of an interest in settled property for consideration.

Meaning of “interest in settled property"
2 (1) For the purposes of this Schedule an “interest in settled property” means any interest created by or arising under a settlement.
(2) This includes any right to, or in connection with, the enjoyment of a benefit—
(a) created by or arising directly under a settlement, or
(b) arising as a result of the exercise of a discretion or power—
(i) by the trustees of a settlement, or
(ii) by any person in relation to settled property.

Meaning of “for consideration"
3 (1) For the purposes of this Schedule a disposal is “for consideration” if consideration is given or received by any person for, or otherwise in connection with, any transaction by virtue of which the disposal is effected.
(2) In determining for the purposes of this Schedule whether a disposal is for consideration there shall be disregarded any consideration consisting of another interest under the same settlement that has not previously been disposed of by any person for consideration.
(3) In this Schedule “consideration” means actual consideration, as opposed to consideration deemed to be given by any provision of this Act.

Deemed disposal of underlying assets
4 (1) Where this Schedule applies and the following conditions are met—
(a) the condition as to UK residence of the trustees (see paragraph 5),
(b) the condition as to UK residence of the settlor (see paragraph 6), and
(c) the condition as to settlor interest in the settlement (see paragraph 7),
the trustees of the settlement are treated for all purposes of this Act as disposing of and immediately reacquiring the relevant underlying assets.
This is referred to below in this Schedule as the “deemed disposal".
(2) In paragraphs 5, 6 and 7 “the relevant year of assessment” means the year of assessment in which the disposal of the interest in settled property is made.
(3) The deemed disposal is treated as taking place when the disposal of the interest in settled property is made.
This is subject to paragraph 13(3)(a) where the beginning of the disposal and its effective completion fall in different years of assessment.

Condition as to UK residence of trustees
5 (1) The condition as to UK residence of the trustees is that the trustees of the settlement were either—
(a) resident in the United Kingdom during the whole or part of the relevant year of assessment, or
(b) ordinarily resident in the United Kingdom during that year.
(2) For this purpose the trustees shall not be regarded as resident or ordinarily resident in the United Kingdom at any time when they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.
(3) This paragraph has effect subject to paragraph 13(3)(b) where the beginning of the disposal and its effective completion fall in different years of assessment.

Condition as to UK residence of settlor
6 (1) The condition as to UK residence of the settlor is that in the relevant year of assessment, or any of the previous five years of assessment, a person who is a settlor in relation to the settlement either—
(a) was resident in the United Kingdom during the whole or part of the year, or
(b) was ordinarily resident in the United Kingdom during the year.
(2) Sub-paragraph (1) has effect subject to paragraph 13(3)(c) where the beginning of the disposal and its effective completion fall in different years of assessment.
(3) No account shall be taken for the purposes of this paragraph of any year of assessment before the year 1999-00.

Condition as to settlor interest in the settlement
7 (1) The condition as to settlor interest in the settlement is that at any time in the relevant period the settlement—
(a) was a settlor-interested settlement, or
(b) comprised property derived, directly or indirectly, from a settlement that at any time in that period was a settlor-interested settlement.
(2) The relevant period for this purpose is the period—
(a) beginning two years before the beginning of the relevant year of assessment, and
(b) ending with the date of the disposal of the interest in settled property.
This is subject to paragraph 13(3)(d) where the beginning of the disposal and its effective completion fall in different years of assessment.
(3) The relevant period shall not be treated as beginning before 6th April 1999.
If the rule in sub-paragraph (2) (or, where relevant, that in paragraph 13(3)(d)) would produce that result, the relevant period shall be treated as beginning on that date.
(4) For the purposes of this paragraph a “settlor-interested settlement” means a settlement in which a person who is a settlor in relation to the settlement has an interest or had an interest at any time in the relevant period.
The provisions of section 77(2) to (5) and (8) apply to determine for the purposes of this paragraph whether a settlor has (or had) an interest in the settlement.
(5) The condition as to settlor interest in the settlement is treated as not met in a year of assessment—
(a) where the settlor dies during the year, or
(b) in a case where the settlor is regarded as having an interest in the settlement by reason only of—
(i) the fact that property is, or will or may become, payable to or applicable for the benefit of his spouse, or
(ii) the fact that a benefit is enjoyed by his spouse,
where the spouse dies, or the settlor and the spouse cease to be married, during the year.

The relevant underlying assets
8 (1) Where the interest disposed of is a right in relation to a specific fund or other defined part of the settled property, the deemed disposal is of the whole or part of each of the assets comprised in that fund or part.
In any other case the deemed disposal is of the whole or part of each of the assets comprised in the settled property.
(2) Where the interest disposed of is an interest in a specific fraction or amount of the income or capital of—
(a) the settled property, or
(b) a specific fund or other defined part of the settled property,
the deemed disposal is of a corresponding part of each of the assets comprised in the settled property or, as the case may be, each of the assets comprised in that fund or part.
In any other case the deemed disposal is of the whole of each of the assets so comprised.
(3) Sub-paragraphs (1) and (2) have effect subject to paragraph 13(4)(a) where the identity of the underlying assets changes during the period between the beginning of the disposal and its effective completion.
(4) Where part only of an asset is comprised in a specific fund or other defined part of the settled property, that part of the asset shall be treated for the purposes of this Schedule as if it were a separate asset.

Character of deemed disposal
9 (1) The deemed disposal shall be taken—
(a) to be for a consideration equal to the whole or, as the case may be, a corresponding part of the market value of each of the assets concerned, and
(b) to be a disposal under a bargain at arm’s length.
(2) Sub-paragraph (1)(a) shall be read with paragraph 13(4)(b) where the value of the assets changes during the period between the beginning of the disposal and its effective completion.

Avoidance of double-counting
10 (1) The provisions of this paragraph have effect to prevent there being both a deemed disposal under this Schedule in relation to the disposal of an interest in settled property and a chargeable disposal of the interest itself.
A “chargeable disposal” means one in relation to which section 76(1) does not apply.
(2) If there would be a chargeable gain on the disposal of the interest in the settlement, then—
(a) if—
(i) the chargeable gain on the disposal of the interest would be greater than the net chargeable gain on the deemed disposal, or
(ii) there would be no net chargeable gain on the deemed disposal,
the provisions of this Schedule as to a deemed disposal do not apply; and
(b) in any other case, the provisions of this Schedule as to a deemed disposal apply and no chargeable gain is treated as accruing on the disposal of the interest in the settlement.
(3) If there would be an allowable loss on the disposal of the interest in the settlement, then—
(a) if there would be a greater net allowable loss on the deemed disposal, the provisions of this Schedule as to a deemed disposal do not apply; and
(b) in any other case, the provisions of this Schedule as to a deemed disposal apply and no allowable loss is treated as accruing on the disposal of the interest in the settlement.
(4) If there would be neither a chargeable gain nor an allowable loss on the disposal of the interest in the settlement, then—
(a) if there would be a net allowable loss on the deemed disposal, the provisions of this Schedule as to a deemed disposal do not apply; and
(b) in any other case, the provisions of this Schedule as to a deemed disposal apply.
(5) For the purposes of this paragraph—
(a) there is a net chargeable gain on a deemed disposal if the aggregate of the chargeable gains accruing to the trustees in respect of the assets involved exceeds the aggregate of the allowable losses so accruing; and
(b) there is a net allowable loss on a deemed disposal if the aggregate of the allowable losses accruing to the trustees in respect of the assets involved exceeds the aggregate of the chargeable gains so accruing.

Recovery of tax from person disposing of interest
11 (1) This paragraph applies where chargeable gains accrue to the trustees on the deemed disposal and—
(a) tax becomes chargeable on and is paid by the trustees in respect of those gains, or
(b) a person who is a settlor in relation to the settlement recovers from the trustees under section 78 an amount of tax in respect of those gains.
(2) The trustees are entitled to recover the amount of the tax referred to in sub-paragraph (1)(a) or (b) from the person who disposed of the interest in the settlement.
(3) For this purpose the trustees may require an inspector to give that person a certificate specifying—
(a) the amount of the gains in question, and
(b) the amount of tax that has been paid.
Any such certificate shall be conclusive evidence of the facts stated in it.

Meaning of “settlor"
12 The provisions of section 79(1) and (3) to (5) (meaning of “settlor”) apply for the purposes of this Schedule as they apply for the purposes of sections 77 and 78.

Cases where there is a period between the beginning of the disposal and its effective completion
13 (1) This paragraph applies in a case where there is a period between the beginning of the disposal of an interest in settled property and the effective completion of the disposal.
(2) For the purposes of this Schedule—
(a) the beginning of the disposal is—
(i) in the case of a disposal involving the exercise of an option, when the option is granted, and
(ii) in any other case of a disposal under a contract, when the contract is entered into; and
(b) the effective completion of the disposal means the point at which the person acquiring the interest becomes for practical purposes unconditionally entitled to the whole of the intended subject matter of the disposal.
(3) Where this paragraph applies and the beginning of the disposal and its effective completion fall in different years of assessment—
(a) the deemed disposal is treated as taking place in the year of assessment in which the disposal is effectively completed;
(b) the condition in paragraph 5 (condition as to residence of trustees) is treated as met if it is met in relation to either of those years of assessment or any intervening year;
(c) the condition in paragraph 6 (condition as to residence of settlor) is treated as met if it is met in relation to either or both of those years of assessment or any intervening year; and
(d) the relevant period for the purposes of paragraph 7 (condition as to settlor interest) is the period—
(i) beginning two years before the beginning of the first of those years of assessment, and
(ii) ending with the effective completion of the disposal.
(4) If the identity or value of the underlying assets changes during the period between the beginning of the disposal and its effective completion, the following provisions apply—
(a) an asset is treated as comprised in the settled property and, where relevant, in any specific fund or other defined part of the settled property to which the deemed disposal relates if it is so comprised at any time in that period;
(b) the market value of any asset for the purposes of the deemed disposal is taken to be its highest market value at any time during that period.
(5) The provisions in sub-paragraph (4) do not apply to an asset if during that period it is disposed of by the trustees under a bargain at arm’s length and is not reacquired.

Exception: maintenance funds for historic buildings
14 If the trustees of a settlement have elected that section 691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc.) shall have effect in the case of a settlement or part of a settlement in relation to a year of assessment, this Schedule does not apply in relation to the settlement or part for that year.”

.
1992 c. 12).

SCHEDULE 25 New Schedule 4B to the Taxation of Chargeable Gains Act 1992
Section 92(2).

The Schedule inserted after Schedule 4A to the Taxation of Chargeable Gains Act 1992 is as follows:

“Schedule 4B Transfers of value by trustees linked with trustee borrowing

General scheme of this Schedule
1 (1) This Schedule applies where trustees of a settlement—
(a) make a transfer of value (see paragraph 2) in a year of assessment in which the settlement is within section 77, 86 or 87 (see paragraph 3), and
(b) in accordance with this Schedule the transfer of value is treated as linked with trustee borrowing (see paragraphs 4 to 9).
(2) Where this Schedule applies the trustees are treated as disposing of and immediately reacquiring the whole or a proportion of each of the chargeable assets that continue to form part of the settled property (see paragraphs 10 to 13).

Transfers of value
2 (1) For the purposes of this Schedule trustees of a settlement make a transfer of value if they—
(a) lend money or any other asset to any person,
(b) transfer an asset to any person and receive either no consideration or a consideration whose amount or value is less than the market value of the asset transferred, or
(c) issue a security of any description to any person and receive either no consideration or a consideration whose amount or value is less than the value of the security.
(2) References in this Schedule to “the material time", in relation to a transfer of value, are to the time when the loan is made, the transfer is effectively completed or the security is issued.
The effective completion of a transfer means the point at which the person acquiring the asset becomes for practical purposes unconditionally entitled to the whole of the intended subject matter of the transfer.
(3) In the case of a loan, the amount of value transferred is taken to be the market value of the asset.
(4) In the case of a transfer, the amount of value transferred is taken to be—
(a) if any part of the value of the asset is attributable to trustee borrowing, the market value of the asset;
(b) if no part of the value of the asset is attributable to trustee borrowing, the market value of the asset reduced by the amount or value of any consideration received for it.
Paragraph 12 below explains what is meant by the value of an asset being attributable to trustee borrowing.
(5) In the case of the issue of a security, the amount of value transferred shall be taken to be the value of the security reduced by the amount or value of any consideration received by the trustees for it.
(6) References in this paragraph to the value of an asset are to its value immediately before the material time, unless the asset does not exist before that time in which case its value immediately after that time shall be taken.

Settlements within section 77, 86 or 87
3 (1) This paragraph explains what is meant in this Schedule by a settlement being “within section 77, 86 or 87” in a year of assessment.
(2) A settlement is “within section 77" in a year of assessment if, assuming—
(a) that there were chargeable gains accruing to the trustees from the disposal of any or all of the settled property, and
(b) that the condition in subsection (1)(b) of that section was met,
chargeable gains would, under that section, be treated as accruing to the settlor in that year.
Expressions used in this sub-paragraph have the same meaning as in section 77.
(3) A settlement is “within section 86" in a year of assessment if, assuming—
(a) that there were chargeable gains accruing to the trustees by virtue of disposals of any of the settled property originating from the settlor, and
(b) that the other elements of the condition in subsection (1)(e) of that section were met,
chargeable gains would, under that section, be treated as accruing to the settlor in that year.
Expressions used in this sub-paragraph have the same meaning as in section 86.
(4) A settlement is “within section 87" in a year of assessment if, assuming—
(a) there were trust gains for the year within the meaning of subsection (2) of that section, and
(b) that beneficiaries of the settlement received capital payments from the trustees in that year or had received such payments in an earlier year,
chargeable gains would, under that section or section 89(2), be treated as accruing to the beneficiaries in that year.
Expressions used in this sub-paragraph have the same meaning as in section 87.

Trustee borrowing
4 (1) For the purposes of this Schedule trustees of a settlement are treated as borrowing if—
(a) money or any other asset is lent to them, or
(b) an asset is transferred to them and in connection with the transfer the trustees assume a contractual obligation (whether absolute or conditional) to restore or transfer to any person that or any other asset.
In the following provisions of this Schedule “loan obligation” includes any such obligation as is mentioned in paragraph (b).
(2) The amount borrowed (the “proceeds" of the borrowing) is taken to be—
(a) in the case of a loan, the market value of the asset;
(b) in the case of a transfer, the market value of the asset reduced by the amount or value of any consideration received for it.
(3) References in this paragraph to the market value of an asset are to its market value immediately before the loan is made, or the transfer is effectively completed, unless the asset does not exist before that time in which case its market value immediately after that time shall be taken.
The effective completion of a transfer means the point at which the person acquiring the asset becomes for practical purposes unconditionally entitled to the whole of the intended subject matter of the transfer.

Transfer of value linked with trustee borrowing
5 (1) For the purposes of this Schedule a transfer of value by trustees is treated as linked with trustee borrowing if at the material time there is outstanding trustee borrowing.
(2) For the purposes of this Schedule there is outstanding trustee borrowing at any time to the extent that—
(a) any loan obligation is outstanding, and
(b) there are proceeds of trustee borrowing that have not been either—
(i) applied for normal trust purposes, or
(ii) taken into account under this Schedule in relation to an earlier transfer of value.
(3) An amount of trustee borrowing is “taken into account" under this Schedule in relation to a transfer of value if the transfer of value is in accordance with this Schedule treated as linked with trustee borrowing.
The amount so taken into account is—
(a) the amount of the value transferred by that transfer of value, or
(b) if less, the amount of outstanding trustee borrowing at the material time in relation to that transfer of value.

Application of proceeds of borrowing for normal trust purposes
6 (1) For the purposes of this Schedule the proceeds of trustee borrowing are applied for normal trust purposes in the following circumstances, and not otherwise.
(2) They are applied for normal trust purposes if they are applied by the trustees in making a payment in respect of an ordinary trust asset and the following conditions are met—
(a) the payment is made under a transaction at arm’s length or is not more than the payment that would be made if the transaction were at arm’s length;
(b) the asset forms part of the settled property immediately after the material time or, if it does not do so, the alternative condition in paragraph 8 below is met; and
(c) the sum paid is (or but for section 17 or 39 would be) allowable under section 38 as a deduction in computing a gain accruing to the trustees on a disposal of the asset.
(3) They are applied for normal trust purposes if—
(a) they are applied by the trustees in wholly or partly discharging a loan obligation of the trustees, and
(b) the whole of the proceeds of the borrowing connected with that obligation (or all but an insignificant amount) have been applied by the trustees for normal trust purposes.
(4) They are applied for normal trust purposes if they are applied by the trustees in making payments to meet bona fide current expenses incurred by them in administering the settlement or any of the settled property.

Ordinary trust assets
7 (1) The following are “ordinary trust assets” for the purposes of this Schedule—
(a) shares or securities;
(b) tangible property, whether movable or immovable, or a lease of such property;
(c) property not within paragraph (a) or (b) which is used for the purposes of a trade, profession or vocation carried on—
(i) by the trustees, or
(ii) by a beneficiary who has an interest in possession in the settled property;
(d) any right in or over, or any interest in, property of a description within paragraph (b) or (c).
(2) In sub-paragraph (1)(a) “securities” has the same meaning as in section 132.

The alternative condition for assets no longer part of the settled property
8 (1) The alternative condition referred to in paragraph 6(2)(b) in relation to an asset which no longer forms part of the settled property is that—
(a) the asset is treated as having been disposed of by virtue of section 24(1), or
(b) one or more ordinary trust assets which taken together directly or indirectly represent the asset—
(i) form part of the settled property immediately after the material time, or
(ii) are treated as having been disposed of by virtue of section 24(1).
(2) Where there has been a part disposal of the asset, the condition in paragraph 6(2)(b) and the provisions of sub-paragraph (1) above may be applied in any combination in relation to the subject matter of the part disposal and what remains.
(3) References in this paragraph to an asset include part of an asset.

Normal trust purposes: power to make provision by regulations
9 (1) The Treasury may make provision by regulations as to the circumstances in which the proceeds of trustee borrowing are to be treated for the purposes of this Schedule as applied for normal trust purposes.
(2) The regulations may—
(a) add to, amend or repeal any of the provisions of paragraphs 6 to 8 above,
(b) make different provision for different cases, and
(c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit.

Deemed disposal of remaining chargeable assets
10 (1) Where in accordance with this Schedule a transfer of value by trustees is treated as linked with trustee borrowing, the trustees are treated for all purposes of this Act—
(a) as having at the material time disposed of, and
(b) as having immediately reacquired,
the whole or a proportion (see paragraph 11) of each of the chargeable assets that form part of the settled property immediately after the material time (“the remaining chargeable assets”).
(2) The deemed disposal and reacquisition shall be taken—
(a) to be for a consideration equal to the whole or, as the case may be, a proportion of the market value of each of those assets, and
(b) to be under a bargain at arm’s length.
(3) For the purposes of sub-paragraph (1) an asset is a chargeable asset if a gain on a disposal of the asset by the trustees at the material time would be a chargeable gain.

Whether deemed disposal is of whole or a proportion of the assets
11 (1) This paragraph provides for determining whether the deemed disposal and reacquisition is of the whole or a proportion of each of the remaining chargeable assets.
(2) If the amount of value transferred—
(a) is less than the amount of outstanding trustee borrowing, and
(b) is also less than the effective value of the remaining chargeable assets,
the deemed disposal and reacquisition is of the proportion of each of the remaining chargeable assets given by:
VTEV
where—
VT is the amount of value transferred, and
EV is the effective value of the remaining chargeable assets.
(3) If the amount of value transferred—
(a) is not less than the amount of outstanding trustee borrowing, but
(b) is less than the effective value of the remaining chargeable assets,
the deemed disposal and reacquisition is of the proportion of each of the remaining chargeable assets given by:
TBEV
where—
TB is the amount of outstanding trustee borrowing, and
EV is the effective value of the remaining chargeable assets.
(4) In any other case the deemed disposal and reacquisition is of the whole of each of the remaining chargeable assets.
(5) For the purposes of this paragraph the effective value of the remaining chargeable assets means the aggregate market value of those assets reduced by so much of that value as is attributable to trustee borrowing.
(6) References in this paragraph to amounts or values, except in relation to the amount of value transferred, are to amounts or values immediately after the material time.

Value attributable to trustee borrowing
12 (1) For the purposes of this Schedule the value of an asset is attributable to trustee borrowing to the extent determined in accordance with the following rules.
(2) Where the asset itself has been borrowed by trustees, the value of the asset is attributable to trustee borrowing to the extent that the proceeds of that borrowing have not been applied for normal trust purposes.
This is in addition to any extent to which the value of the asset may be attributable to trustee borrowing by virtue of sub-paragraph (3).
(3) The value of any asset is attributable to trustee borrowing to the extent that—
(a) the trustees have applied the proceeds of trustee borrowing in acquiring or enhancing the value of the asset, or
(b) the asset represents directly or indirectly an asset whose value was attributable to the trustees having so applied the proceeds of trustee borrowing.
(4) For the purposes of this paragraph an amount is applied by the trustees in acquiring or enhancing the value of an asset if it is applied wholly and exclusively by them—
(a) as consideration in money or money’s worth for the acquisition of the asset,
(b) for the purpose of enhancing the value of the asset in a way that is reflected in the state or nature of the asset,
(c) in establishing, preserving or defending their title to, or to a right over, the asset, or
(d) where the asset is a holding of shares or securities that is treated as a single asset, by way of consideration in money or money’s worth for additional shares or securities forming part of the same holding.
(5) Trustees are treated as applying the proceeds of borrowing as mentioned in sub-paragraph (4) if and to the extent that at the time the expenditure is incurred there is outstanding trustee borrowing.
(6) In sub-paragraph (4)(d) “securities” has the same meaning as in section 132.

Assets and transfers
13 (1) In this Schedule any reference to an asset includes money expressed in sterling.
References to the value or market value of such an asset are to its amount.
(2) Subject to sub-paragraph (3), references in this Schedule to the transfer of an asset include anything that is or is treated as a disposal of the asset for the purposes of this Act, or would be if sub-paragraph (1) above applied generally for the purposes of this Act.
(3) References in this Schedule to a transfer of an asset do not include a transfer of an asset that is created by the part disposal of another asset.”

.
1992 c. 12.

SCHEDULE 26 Transfers of value: attribution of gains to beneficiaries
Section 92(4).

Part I New Schedule 4C to the Taxation of Chargeable Gains Act 1992
1 The Schedule inserted after Schedule 4B to the Taxation of Chargeable Gains Act 1992 is as follows:

“Schedule 4C Transfers of value: attribution of gains to beneficiaries

Introduction
1 (1) This Schedule applies where in any year of assessment a chargeable gain or allowable loss accrues by virtue of Schedule 4B to trustees of a settlement within section 87.
For this purpose a settlement is “within section 87" for a year of assessment if in that year the conditions specified in section 87(1) or section 88(1) are met in relation to the trustees of the settlement.
(2) The provisions of this Schedule have effect in relation to any such chargeable gain or allowable loss as is mentioned in sub-paragraph (1) above in place of the provisions of sections 86A to 95.
(3) No account shall be taken—
(a) of any such chargeable gain or allowable loss in computing the trust gains for a year of assessment in accordance with sections 87 to 89; or
(b) of any chargeable gain or allowable loss to which those sections apply in computing the Schedule 4B trust gains in accordance with this Schedule.

General scheme of this Schedule
2 The general scheme of this Schedule is that—
(a) Schedule 4B trust gains are attributed to beneficiaries—
(i) of the transferor settlement, or
(ii) of any transferee settlement,
who have received capital payments from the trustees; and
(b) any allowable loss accruing by virtue of Schedule 4B may only be set against a chargeable gain so accruing.

Computation of Schedule 4B trust gains
3 (1) This paragraph explains what is meant for the purposes of this Schedule by “Schedule 4B trust gains”.
(2) The Schedule 4B trust gains are computed in relation to each transfer of value to which that Schedule applies.
(3) In relation to a transfer of value the amount of the Schedule 4B trust gains for the purposes of this Schedule is given by—
CA-SG-AL
where—
CA is the chargeable amount computed under paragraph 4 or 5 below,
SG is the amount of any gains attributed to the settlor that fall to be deducted under paragraph 6 below, and
AL is the amount of any allowable losses that may be deducted under paragraph 7 below.

Chargeable amount: non-resident settlement
4 (1) If the transfer of value is made in a year of assessment during which the trustees of the transferor settlement are at no time resident or ordinarily resident in the United Kingdom the chargeable amount is computed under this paragraph.
(2) Where this paragraph applies the chargeable amount is the amount on which the trustees would have been chargeable to tax under section 2(2) by virtue of Schedule 4B if they had been resident or ordinarily resident in the United Kingdom in the year.

Chargeable amount: dual resident settlement
5 (1) If the transfer of value is made in a year of assessment where—
(a) the trustees of the transferor settlement are resident in the United Kingdom during any part of the year or ordinarily resident in the United Kingdom during the year, and
(b) at any time of such residence or ordinary residence they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom,
the chargeable amount is computed under this paragraph.
(2) Where this paragraph applies the chargeable amount is the lesser of—
(a) the amount on which the trustees would be chargeable to tax under section 2(2) by virtue of Schedule 4B on the assumption that the double taxation relief arrangements did not apply, and
(b) the amount on which the trustees would be so chargeable to tax by virtue of disposals of protected assets.
(3) For this purpose “protected assets” has the meaning given by section 88(4).

Gains attributed to settlor
6 (1) For the purposes of this Schedule the chargeable amount in relation to a transfer of value shall be reduced by the amount of any chargeable gains arising by virtue of that transfer of value that—
(a) are by virtue of section 86(4) treated as accruing to the settlor, or
(b) where section 10A applies, are treated by virtue of that section (as it has effect subject to paragraph 12 below) as accruing to the settlor in the year of return.
(2) In determining for the purposes of sub-paragraph (1)(a) the amount of chargeable gains arising by virtue of a transfer of value that are treated as accruing to the settlor, there shall be disregarded any losses which arise otherwise than by virtue of Schedule 4B.
(3) In computing the chargeable amount in relation to a transfer of value the effect of sections 77 to 79 shall be ignored.

Reduction for allowable losses
7 (1) An allowable loss arising under Schedule 4B in relation to a transfer of value by the trustees of a settlement may be taken into account in accordance with this paragraph to reduce for the purposes of this Schedule the chargeable amount in relation to another transfer of value by those trustees.
(2) Any such allowable loss goes first to reduce chargeable amounts arising from other transfers of value made in the same year of assessment.
If there is more than one chargeable amount and the aggregate amount of the allowable losses is less than the aggregate of the chargeable amounts, each of the chargeable amounts is reduced proportionately.
(3) If in any year of assessment the aggregate amount of the allowable losses exceeds the aggregate of the chargeable amounts, the excess shall be carried forward to the next year of assessment and treated for the purposes of this paragraph as if it were an allowable loss arising in relation to a transfer of value made in that year.
(4) Any reduction of a chargeable amount under this paragraph is made after any deduction under paragraph 6.

Attribution of gains to beneficiaries
8 (1) The Schedule 4B trust gains relating to a transfer of value shall be treated as chargeable gains accruing to beneficiaries—
(a) of the transferor settlement, and
(b) of any transferee settlement,
in accordance with the following rules.
(2) The Schedule 4B trust gains shall be treated as chargeable gains accruing to beneficiaries who—
(a) receive capital payments from the trustees in the year of assessment in which the transfer of value is made, or
(b) have received such payments in any earlier year,
to the extent that such payments exceed the amount of any gains attributed to the beneficiaries under section 87(4) or 89(2).
(3) Any Schedule 4B trust gains remaining after the application of sub-paragraph (2) in relation to the year of assessment in which the transfer of value was made shall be carried forward to the following year of assessment and treated for the purposes of this paragraph as if they were gains from a transfer of value made in that year.
(4) The attribution of chargeable gains to beneficiaries under this paragraph shall be made in proportion to, but shall not exceed, the amounts of the capital payments received by them.

Attribution of gains to beneficiaries: supplementary
9 (1) A capital payment shall be left out of account—
(a) for the purposes of paragraph 8, to the extent that chargeable gains have, by reason of it, been treated as accruing to the recipient in an earlier year of assessment; and
(b) for the purposes of sections 87(4) and (5) and 89(2), to the extent that chargeable gains have, by reason of it, been treated as accruing to the recipient under paragraph 8.
(2) A beneficiary shall not be charged to tax on chargeable gains treated by virtue of paragraph 8 as accruing to him in any year unless he is domiciled in the United Kingdom at some time in that year.
(3) For the purposes of paragraph 8 capital payments received—
(a) before 21st March 2000, or
(b) before the year of assessment preceding the year of assessment in which the transfer of value is made,
shall be disregarded.

Residence of trustees from whom capital payment received
10 (1) Subject to sub-paragraph (2) below, it is immaterial for the purposes of paragraph 8 that the trustees of the transferor settlement, or any transferee settlement, are or have at any time been resident or ordinarily resident in the United Kingdom.
(2) A capital payment received by a beneficiary of a settlement from the trustees in a year of assessment—
(a) during the whole of which the trustees are resident in the United Kingdom, or
(b) in which the trustees are ordinarily resident in the United Kingdom,
shall be disregarded for the purposes of paragraph 8 if it was made before, but was not made in anticipation of, chargeable gains accruing under Schedule 4B or of a transfer of value being made to which that Schedule applies.
(3) For the purposes of sub-paragraph (2) the trustees of a settlement shall not be regarded as resident or ordinarily resident in the United Kingdom at any time when they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

Taper relief
11 Without prejudice to so much of this Schedule as requires section 2A to be applied in the computation of the amount of Schedule 4B trust gains, chargeable gains that are treated as accruing to beneficiaries under this Schedule shall not be eligible for taper relief.

Attribution of gains to settlor in section 10A cases
12 (1) This paragraph applies where by virtue of section 10A an amount of gains—
(a) arising under Schedule 4B in an intervening year, and
(b) falling within section 86(1)(e),
would (apart from this Schedule) be treated as accruing to a person (“the settlor”) in the year of return.
(2) Where this paragraph applies, only so much (if any) of the Schedule 4B trust gains falling within section 86(1)(e) as exceeds the amount charged to beneficiaries shall fall in accordance with section 10A to be attributed to the settlor for the year of return.
(3) The “amount charged to beneficiaries” means, subject to sub-paragraph (4) below, the total of the amounts on which beneficiaries of the transferor or transferee settlements are charged to tax under this Schedule by reference to those gains for all the intervening years.
(4) Where the property comprised in the transferor settlement has at any time included property not originating from the settlor, only so much (if any) of any capital payment taken into account for the purposes of paragraph 8 above as, on a just and reasonable apportionment, is properly referable to property originating from the settlor shall be taken into account in computing the amount charged to beneficiaries.
(5) Expressions used in this paragraph and section 10A have the same meanings in this paragraph as in that section; and paragraph 8 of Schedule 5 shall apply for the construction of the references in sub-paragraph (4) above to property originating from the settlor as it applies for the purposes of that Schedule.

Increase in tax payable under this Schedule
13 (1) This paragraph applies where—
(a) a capital payment is made by the trustees of a settlement,
(b) the payment is made in circumstances where paragraph 8 above treats chargeable gains as accruing in respect of the payment, and
(c) a beneficiary is charged to tax in respect of the payment by virtue of that paragraph.
(2) The tax payable by the beneficiary in respect of the payment shall be increased by the amount found under sub-paragraph (3) below, except that it shall not be increased beyond the amount of the payment; and an assessment may charge tax accordingly.
(3) The amount is one equal to the interest that would be yielded if an amount equal to the tax which would be payable by the beneficiary in respect of the payment (apart from this paragraph) carried interest for the chargeable period at the specified rate.
The “specified rate” means the rate for the time being specified in section 91(3).
(4) The chargeable period is the period which—
(a) begins with the later of the 2 days specified in sub-paragraph (5) below, and
(b) ends with 30th November in the year of assessment following that in which the capital payment is made.
(5) The 2 days are—
(a) 1st December in the year of assessment following that in which the transfer of value was made, and
(b) 1st December falling 6 years before 1st December in the year of assessment following that in which the capital payment is made.

Interpretation
14 (1) In this Schedule—
(a) “transfer of value” has the same meaning as in Schedule 4B; and
(b) references to the time at which a transfer of value was made are to the time which is the material time for the purposes of that Schedule.
(2) In this Schedule, in relation to a transfer of value—
(a) references to the transferor settlement are to the settlement the trustees of which made the transfer of value; and
(b) references to a transferee settlement are to any settlement of which the settled property includes property representing, directly or indirectly, the proceeds of the transfer of value.
(3) References in this Schedule to beneficiaries of a settlement include—
(a) persons who have ceased to be beneficiaries by the time the chargeable gains accrue, and
(b) persons who were beneficiaries of the settlement before it ceased to exist,
but who were beneficiaries of the settlement at a time in a previous year of assessment when a capital payment was made to them.”

.
1992 c. 12.

Part II Consequential amendments

Taxation of Chargeable Gains Act 1992 (c.12)
2 In section 90 of the Taxation of Chargeable Gains Act 1992 (transfers between settlements), after subsection (4) add—

“(5) This section shall not apply—
(a) to a transfer to the extent that it is in accordance with Schedule 4B treated as linked with trustee borrowing; or
(b) to any chargeable gains arising by virtue of that Schedule.”

.
1992 c. 12.
3 In section 96 of the Taxation of Chargeable Gains Act 1992 (payments by and to companies), in subsections (1) and (2) after “sections 87 to 90" insert “ and Schedule 4C ”
1992 c. 12.
4 In section 97 of the Taxation of Chargeable Gains Act 1992 (supplementary provisions)—
(a) in subsections (1), (3)(a), (4) and (7), after “sections 86A to 96", and
(b) in subsections (5) and (8), after “sections 86A to 90",
insert “ and Schedule 4C ”.
1992 c. 12.
5 In section 98 of the Taxation of Chargeable Gains Act 1992, after subsection (2) add—

“(3) The provisions of subsections (1) and (2) above have effect as if the references to sections 87 to 90 included references to Schedule 4C.”

.
1992 c. 12.

Taxes Act 1988
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 26 para. 6 repealed (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)

SCHEDULE 27 Group relief in case of non-resident companies etc.
Section 97.

Part I Amendments of Chapter IV of Part X of the Taxes Act 1988

Availability of relief
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 27 paras. 1-6 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limits on amount of relief
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amendments of Schedule 18 to the Taxes Act 1988
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commencement
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II Consequential amendments

Section 76 of the Taxes Act 1988
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 27 para. 7 repealed (22.7.2004) (with effect in accordance with s. 42 of the amending Act) by Finance Act 2004 (c. 12), Sch. 42 Pt. 2(3)

Section 434A of the Taxes Act 1988
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 27 para. 8 repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 27 Pt. 2(7)

Section 502 of the Taxes Act 1988
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 27 para. 9 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

Schedule 24 to the Taxes Act 1988
10 In Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits etc. of foreign companies), make paragraph 5 sub-paragraph (1) of that paragraph; and after that sub-paragraph insert—

“(2) Where, under Chapter IV of Part X, any relief is in fact surrendered by the company and allowed to another company by way of group relief, it shall be assumed that the chargeable profits of the company, apart from this paragraph, are to be increased by an amount of additional profits equal to the amount of the relief so surrendered and allowed.”

.

Schedule 18 to the Finance Act 1998
11 In paragraph 68 of Schedule 18 to the Finance Act 1998 (contents of claim for group relief), after sub-paragraph (2) insert—

“(3) A claim for group relief must also state whether or not there is a company mentioned in sub-paragraph (4) that was not resident in the United Kingdom in either or both of the following periods—
(a) the accounting period of the surrendering company to which the surrender relates,
(b) the corresponding accounting period of the claimant company.
(4) Those companies are the claimant company, the surrendering company and any other company by reference to which—
(a) the claimant company and the surrendering company are members of the same group, or
(b) the conditions specified in section 402(3) of the Taxes Act 1988 for the making of the claim are satisfied in the case of the claimant company and the surrendering company.”

.
1998 c. 36.

Commencement
12 (1) Paragraphs 7, 8, 10 and 11 have effect in relation to accounting periods ending on or after 1st April 2000.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 27 para. 12(2) repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 3 Pt. 1 (with Sch. 2)

SCHEDULE 28 Recovery of tax payable by non-resident company
Section 98.

Introduction
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies that may be required to pay unpaid tax
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notice requiring payment of unpaid tax
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Time limit for giving notice
4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limit on amount payable in consortium case
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 28 repealed (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 317, Sch. 3 Pt. 1 (with Sch. 2)

SCHEDULE 29 Chargeable gains: non-resident companies and groups etc.
Section 102.

Part I Application of Taxation of Chargeable Gains Act 1992

Main amendments
1 (1) In section 170 of the Taxation of Chargeable Gains Act 1992 (groups of companies: interpretation), the following provisions shall cease to have effect—
(a) paragraph (a) of subsection (2) (which provides that references to companies apply only to companies resident in the United Kingdom); and
(b) in subsection (9)(b) the words “(although resident in the United Kingdom)".
1992 c. 12.
(2) The above amendments (referred to in this Schedule as “the main amendments”) have effect in accordance with the following provisions of this Schedule.

Transfers within a group
2 (1) Section 171 of the Taxation of Chargeable Gains Act 1992 (transfers within a group: general provisions) is amended as follows.
1992 c. 12.
(2) For subsection (1) (treatment for corporation tax purposes of transfer of asset within group) substitute—

“(1) Where—
(a) a company (“company A”) disposes of an asset to another company (“company B”) at a time when both companies are members of the same group, and
(b) the conditions in subsection (1A) below are met,
company A and company B are treated for the purposes of corporation tax on chargeable gains as if the asset were acquired by company B for a consideration of such amount as would secure that neither a gain nor a loss would accrue to company A on the disposal.
(1A) The conditions referred to in subsection (1)(b) above are—
(a) that company A is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately before that time, and
(b) that company B is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately after that time.
For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.”

.
(3) In subsection (2)—
(a) in paragraph (a), for “a member of a group of companies" substitute “ company B ”, and
(b) in the closing words, for “a member of a group of companies" substitute “ company A ”.
(4) In subsection (3) for “the company first mentioned in that subsection" substitute “ company A ”.
(5) After subsection (5) add—

“(6) Subsection (1) above applies notwithstanding any provision in this Act fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition.
But where it is assumed for any purpose that a member of a group of companies has sold or acquired an asset, it shall be assumed also that it was not a sale or acquisition to which this section applies.”

.
(6) The above amendments, and the main amendments so far as they apply for the purposes of section 171, have effect in relation to disposals on or after 1st April 2000.

Transfer of United Kingdom branch or agency
3 (1) Section 172 of the Taxation of Chargeable Gains Act 1992 (transfer of United Kingdom branch or agency) shall cease to have effect.
1992 c. 12.
(2) The above amendment has effect in relation to disposals on or after 1st April 2000.

De-grouping charge
4 (1) Section 179 of the Taxation of Chargeable Gains Act 1992 (company ceasing to be member of group) is amended as follows.
1992 c. 12.
(2) For subsection (1) substitute—

“(1) This section applies where—
(a) a company (“company A”) acquires an asset from another company (“company B”) at a time when company B is a member of a group,
(b) the conditions in subsection (1A) below are met, and
(c) company A ceases to be a member of that group within the period of six years after the time of the acquisition.
References in this section 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 in consequence of another member of the group ceasing to exist.
(1A) The conditions referred to in subsection (1)(b) above are—
(a) that company A is resident in the United Kingdom at the time it acquires the asset, or the asset is a chargeable asset in relation to that company immediately after that time, and
(b) that company B is resident in the United Kingdom at the time of that acquisition, or the asset is a chargeable asset in relation to that company immediately before that time.
For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.”

.
(3) In subsection (2A)—
(a) in paragraph (a)—
(i) after “a company" insert “ (“company A”) ”, and
(ii) after “another company" insert “ (“company B”) ”,
(b) in paragraph (b) for “that company’s" substitute “ company A’s ”,
(c) in paragraph (c) for “the company that made the acquisition" substitute “ company A ”, and
(d) in the closing words for “the company’s" substitute “ company A’s ”.
(4) In subsections (2B) (three times), (2C), (2D), (3) (three times), (4) (twice), (10)(c) and (13) for “the chargeable company" substitute “ company A ”.
(5) Subsections (11) and (12) (which are superseded by the provision made by paragraph 9 below) shall cease to have effect.
(6) The amendments made by sub-paragraphs (2) to (4) above, and the main amendments so far as they apply for the purposes of section 179, have effect in relation to assets acquired on or after 1st April 2000.
(7) The amendments made by sub-paragraph (5) above have effect in relation to gains accruing on or after 1st April 2000.

Reconstruction or amalgamation involving transfer of business
5 (1) Section 139 of the Taxation of Chargeable Gains Act 1992 (reconstruction or amalgamation involving transfer of business) is amended as follows.
1992 c. 12.
(2) In subsection (1) (transfer of business on basis of no gain and no loss) for paragraph (b) (requirement that both companies are resident in the United Kingdom) substitute—

“(b) the conditions in subsection (1A) below are met in relation to the assets included in the transfer, and”

.
(3) After subsection (1) insert—

“(1A) The conditions referred to in subsection (1)(b) above are—
(a) that the company acquiring the assets is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time, and
(b) that the company from which the assets are acquired is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately before that time.
For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.”

.
(4) The above amendments have effect in relation to disposals made on or after 1st April 2000.

Deemed disposal on non-resident ceasing to carry on trade in United Kingdom through branch or agency
6 (1) Section 25 of the Taxation of Chargeable Gains Act 1992 (non-residents: deemed disposals) is amended as follows.
1992 c. 12.
(2) After subsection (3) insert—

“(3A) Subsection (3) above shall not apply if—
(a) the person ceasing to carry on the trade is a company, and
(b) the trade is transferred to another company in circumstances in which section 139 or 171 applies in relation to the assets transferred.”

.
(3) Subsection (4) shall cease to have effect.
(4) The amendment in sub-paragraph (2) above has effect in relation to cases where section 139 or, as the case may be, section 171 has effect as amended by this Schedule.
(5) The amendment in sub-paragraph (3) above has effect in relation to cases where section 139 has effect as amended by this Schedule.

Restriction on set-off of pre-entry losses
7 (1) In Schedule 7A to the Taxation of Chargeable Gains Act 1992 (restriction on set-off of pre-entry losses), paragraph 1 (application and construction of Schedule) is amended as follows.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 7(2)-(5) repealed (with effect in accordance with Sch. 11 paras. 11, 12 of the amending Act) by Finance Act 2011 (c. 11), Sch. 11 para. 10(c)
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) The above amendments, and the main amendments so far as they apply for the purposes of Schedule 7A, have effect in relation to the amount to be included in respect of chargeable gains in a company’s total profits for any accounting period ending on or after 21st March 2000.
(7) Any question whether a company was, in relation to times before 21st March 2000, a member of a group shall be determined by reference to the position under the Taxation of Chargeable Gains Act 1992 as it stood before the main amendments.
1992 c. 12.
(8) Any question whether a company was, in relation to times before 6th April 1992, a member of a group shall be determined by reference to the position under the Capital Gains Tax Act 1979.
1979 c. 14.
(9) Where—
(a) immediately before the time when the main amendments have effect in relation to a company in accordance with sub-paragraph (6), the company was not a member of a group of companies for the purposes of section 170 of the Taxation of Chargeable Gains Act 1992 (as it stood before the main amendments), and
(b) immediately after that time, the company is a member of a group of companies for the purposes of that section (as amended by the main amendments),
Schedule 7A to that Act shall not have effect in relation to any losses accruing to the company before that time or any chargeable assets (within the meaning of paragraph 1(3A) of that Schedule) held by it immediately before that time.

Restrictions on setting losses against pre-entry gains
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 8 repealed (with effect in accordance with s. 70(6)-(11) of the amending Act) by Finance Act 2006 (c. 25), Sch. 26 Pt. 3(9)

Recovery of unpaid tax
9 (1) For sections 190 and 191 of the Taxation of Chargeable Gains Act 1992 substitute—

“190 Tax recoverable from another group company or controlling director.
(1) This section applies where—
(a) a chargeable gain has accrued to a company (“the taxpayer company”),
(b) the condition in subsection (2) below is met, and
(c) the whole or part of the corporation tax assessed on the company for the accounting period in which the gain accrued (“the relevant accounting period”) is unpaid at the end of the period of six months after it became payable.
(2) The condition referred to in subsection (1)(b) above is—
(a) that the taxpayer company is resident in the United Kingdom at the time when the gain accrued, or
(b) that the gain forms part of the taxpayer company’s chargeable profits for corporation tax purposes by virtue of section 10(3).
(3) The following persons may, by notice under this section, be required to pay the unpaid tax—
(a) if the taxpayer company was a member of a group at the time when the gain accrued—
(i) a company which was at that time the principal company of the group, and
(ii) any other company which in any part of the period of twelve months ending with that time was a member of that group and owned the asset disposed of, or any part of it, or where that asset is an interest or right in or over another asset, owned either asset or any part of either asset; and
(b) if the gain forms part of the chargeable profits of the taxpayer company for corporation tax purposes by virtue of section 10(3), any person who is, or during the period of twelve months ending with the time when the gain accrued was, a controlling director of the taxpayer company or of a company which has, or within that period had, control over the taxpayer company.
(4) The Board may serve a notice on a person within subsection (3) above requiring him, within 30 days of the service of the notice, to pay—
(a) the amount which remains unpaid of the corporation tax assessed on the taxpayer company for the relevant accounting period, or
(b) if less, an amount equal to corporation tax on the amount of the chargeable gain at the rate in force when the gain accrued.
(5) The notice must state—
(a) the amount of corporation tax assessed on the taxpayer company for the relevant accounting period that remains unpaid,
(b) the date when it first became payable, and
(c) the amount required to be paid by the person on whom the notice is served.
(6) The notice has effect—
(a) for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and
(b) for the purposes of appeals,
as if it were a notice of assessment and that amount were an amount of tax due from that person.
(7) Any notice under this section must be served before the end of the period of three years beginning with the date on which the liability of the taxpayer company to corporation tax for the relevant accounting period is finally determined.
(8) Where the unpaid tax is charged in consequence of a determination under paragraph 36 or 37 of Schedule 18 to the Finance Act 1998 (determination where no return delivered or return incomplete), the date mentioned in subsection (7) above shall be taken to be the date on which the determination was made.
1988 c. 36.
(9) Where the unpaid tax is charged in a self-assessment, including a self-assessment that supersedes a determination (see paragraph 40 of Schedule 18 to the Finance Act 1998), the date mentioned in subsection (7) above shall be taken to be the latest of—
(a) the last date on which notice of enquiry may be given into the return containing the self-assessment;
(b) if notice of enquiry is given, 30 days after the enquiry is completed;
(c) if more than one notice of enquiry is given, 30 days after the last notice of completion;
(d) if after such an enquiry the Inland Revenue amend the return, 30 days after notice of the amendment is issued;
(e) if an appeal is brought against such an amendment, 30 days after the appeal is finally determined.
(10) If the unpaid tax is charged in a discovery assessment, the date mentioned in subsection (7) above shall be taken to be—
(a) where there is no appeal against the assessment, the date when the tax becomes due and payable;
(b) where there is such an appeal, the date on which the appeal is finally determined.
(11) A person who has paid an amount in pursuance of a notice under this section may recover that amount from the taxpayer company.
(12) A payment in pursuance of a notice under this section is not allowed as a deduction in computing any income, profits or losses for any tax purposes.
(13) In this section—
“director”, in relation to a company, has the meaning given by section 168(8) of the Taxes Act (read with subsection (9) of that section) and includes any person falling within section 417(5) of that Act (read with subsection (6) of that section);
“controlling director”, in relation to a company, means a director of the company who has control of it (construing control in accordance with section 416 of the Taxes Act);
“group" and “principal company" have the meaning which would be given by section 170 if in that section for references to 75 per cent. subsidiaries there were substituted references to 51 per cent. subsidiaries.”

.
(2) In section 87A(3) of the Taxes Management Act 1970 (date from which interest runs in the case of an assessment of a company’s tax on another person)—
(a) after “In relation to corporation tax assessed" insert “ or treated as assessed ”, and
(b) after “139(7)" insert “ or 190 ”.
1970 c. 9.
(3) The above amendments, and the main amendments so far as they apply for the purposes of section 190 (as substituted by sub-paragraph (1) above), have effect in relation to gains accruing on or after 1st April 2000.
(4) Any question whether a company was a member of a group during the period of twelve months ending when such a gain accrued shall be determined in accordance with section 170 as amended by the main amendments.

Replacement of business assets by members of group
10 (1) Section 175 of the Taxation of Chargeable Gains Act 1992 is amended as follows.
1992 c. 12.
(2) In subsection (1) after “all the trades" insert “ to which this section applies ”.
(3) After subsection (1) insert—

“(1A) The trades to which this section applies are—
(a) any trade carried on by a company that is resident in the United Kingdom, and
(b) any trade carried on in the United Kingdom through a branch or agency by a company not so resident.”

.
(4) In subsection (2A), after paragraph (b) insert—

“(ba) the conditions in subsection (2AA) below are met, and”

.
(5) After subsection (2A) insert—

“(2AA) The conditions referred to in subsection (2A)(ba) above are—
(a) that the company making the disposal is resident in the United Kingdom at the time of the disposal, or the assets are chargeable assets in relation to that company immediately before that time, and
(b) that the acquiring company is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time.
For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.”

.
(6) For subsection (3) substitute—

“(3) Section 154(2) applies where the company making the claim is a member of a group of companies—
(a) as if all members of the group for the time being carrying on a trade to which this section applies were the same person, and
(b) in accordance with subsection (1) above, as if all those trades were the same trade;
so that the gain accrues to the member of the group holding the asset concerned on the occurrence of the event mentioned in section 154(2).”

.
(7) The above amendments, and the main amendments so far as they apply for the purposes of section 175, have effect in relation to cases in which—
(a) either the disposal or acquisition is on or after 1st April 2000, or
(b) both the disposal and acquisition are on or after that date.
(8) In a case falling within paragraph (a) of sub-paragraph (7) above, any question whether a company was, at the time of the acquisition or disposal corresponding to the disposal or acquisition referred to in that paragraph, a member of a group shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as amended by the main amendments.

Transfers of assets within a group: trading stock
11 (1) For section 173 of the Taxation of Chargeable Gains Act 1992 substitute—

“173 Transfers within a group: trading stock.
(1) Where—
(a) a company (“company A”) acquires an asset as trading stock of a trade to which this section applies,
(b) the acquisition is from a company (“company B”) that at the time of the acquisition is a member of the same group of companies, and
(c) the asset did not form part of the trading stock of any such trade carried on by company B,
company A is treated for the purposes of section 161 as having acquired the asset otherwise than as trading stock and immediately appropriated it for the purposes of the trade as trading stock.
(2) Where—
(a) a company (“company C”) disposes of an asset forming part of the trading stock of a trade to which this section applies carried on by that company,
(b) the disposal is to another company (“company D”) that at the time of the disposal is a member of the same group of companies, and
(c) the asset is acquired by company D otherwise than as trading stock of any such trade carried on by it,
company C is treated for the purposes of section 161 as having appropriated the asset immediately before the disposal for some purpose other than the purpose of use as trading stock.
(3) The trades to which this section applies are—
(a) any trade carried on by a company resident in the United Kingdom, and
(b) any trade carried on in the United Kingdom through a branch or agency by a company not so resident.”

.
(2) The above amendment, and the main amendments so far as they apply for the purposes of section 173 (as substituted by sub-paragraph (1) above), have effect in relation to acquisitions and disposals on or after 1st April 2000.

Restriction of losses by reference to capital allowances
12 (1) In section 41 of the Taxation of Chargeable Gains Act 1992, after subsection (7) add—

“(8) Where there is a disposal of an asset acquired in circumstances in which—
(a) section 140A applies, or
(b) section 171 applies or would apply but for subsection (2) of that section,
this section has effect in relation to capital allowances made to the person from which it was acquired (so far as not taken into account in relation to a disposal of the asset by that person), and so on as respects previous transfers of the asset in such circumstances.
This does not affect the consideration for which an asset is deemed under section 140A or 171 to be acquired.”

.
(2) The above amendment has effect in relation to cases where the disposal first referred to in section 41(8) (as inserted by sub-paragraph (1) above) is on or after 1st April 2000.

Assets held on 6th April 1965: disposal outside group
13 (1) Section 174 of the Taxation of Chargeable Gains Act 1992 is amended as follows.
1992 c. 12.
(2) In subsection (4) for “at a time when both were members of the group" substitute “ in a transfer to which section 171(1) applied ”.
(3) Subsection (5) shall cease to have effect.
(4) The above amendments, and the main amendments so far as they apply for the purposes of section 174, have effect in relation to acquisitions on or after 1st April 2000.
(5) Any question whether a company was, in relation to times before 1st April 2000, a member of a group shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as it stood before the main amendments.

Part II Minor and consequential amendments

Section 97 of the Inheritance Tax Act 1984
14 The main amendments have effect for the purposes of section 97 of the Inheritance Tax Act 1984 (transfer of asset within a group of companies) in relation to disposals on or after 1st April 2000.
1984 c. 51.

Section 132 of the Finance Act 1988
15 (1) In section 132 of the Finance Act 1988 (recovery of tax from another group company or controlling director), in subsection (6), in the definition of “group", the words “references to residence in the United Kingdom were omitted and" shall cease to have effect.
(2) The above amendment, and the main amendments so far as they apply for the purposes of section 132, have effect in relation to cases in which the migrating company ceases to be resident in the United Kingdom on or after 1st April 2000.
(3) Any question whether a company was a member of a group during the period of twelve months ending when the migrating company ceased to be so resident shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as amended by the main amendments.
1988 c. 39.

Section 14 of the Taxation of Chargeable Gains Act 1992
16 (1) Section 14 of the Taxation of Chargeable Gains Act 1992 (non-resident groups of companies) is amended as follows.
(2) For subsection (2) substitute—

“(2) The following provisions—
(a) section 41(8),
(b) section 171 (except subsections (1)(b) and (1A)),
(c) section 173 (with the omission of the words “to which this section applies" in subsections (1)(a) and (2)(a) and “such" in subsections (1)(c) and (2)(c) and with the omission of subsection (3)),
(d) section 174(4) (with the substitution of “ at a time when both were members of the group" for “in a transfer to which section 171(1) applied”), and
(e) section 175(1) (with the omission of the words “to which this section applies”),
shall apply in relation to non-resident companies which are members of a non-resident group of companies as they apply in relation to companies which are members of a group of companies.”

(3) In subsection (3), for “Sections 178 to 180" substitute “ Section 179 (except subsections (1)(b) and (1A)) ”.
(4) In subsection (4)(b), the words “without subsections (2)(a), (9) and (12) to (14)" shall cease to have effect.
(5) The above amendments, and the main amendments so far as they apply for the purposes of section 14, have effect in cases in which section 41, 171, 173, 174(4), 175(1) or 179, as the case may be, have effect as amended by this Schedule.

Section 31A of the Taxation of Chargeable Gains Act 1992
17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 17 repealed (with effect in accordance with Sch. 9 para. 6 of the amending Act) by Finance Act 2011 (c. 11), Sch. 9 para. 5(c)
1992 c. 12.

Section 106 of the Taxation of Chargeable Gains Act 1992
18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 18 repealed (with effect in accordance with s. 72 of the amending Act) by Finance Act 2006 (c. 25), Sch. 26 Pt. 3(9)

Section 116 of the Taxation of Chargeable Gains Act 1992
19 (1) In section 116 of the Taxation of Chargeable Gains Act 1992 (reorganisations, conversions and reconstructions), in subsection (11) for “171(1) or 172" substitute “ or 171(1) ”.
1992 c. 12.
(2) The above amendment has effect in accordance with paragraph 3(2).

Section 117A of the Taxation of Chargeable Gains Act 1992
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 20 repealed (with effect as mentioned in Sch. 40 Pt. 3(10) Note 2 of the repealing Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(10) Note 2

Section 117B of the Taxation of Chargeable Gains Act 1992
21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 21 repealed (with effect as mentioned in Sch. 40 Pt. 3(10) Note 2 of the repealing Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(10) Note 2

Section 138A of the Taxation of Chargeable Gains Act 1992
22 The main amendments have effect for the purposes of section 138A of the Taxation of Chargeable Gains Act 1992 (use of earn-out rights for exchange of securities) in relation to rights conferred on or after 1st April 2000.

Section 140 of the Taxation of Chargeable Gains Act 1992
23 (1) In section 140 of the Taxation of Chargeable Gains Act 1992 (postponement of charge on transfer of assets to non-resident company), in subsection (6)(b) for “apart from section 170(2)(a) and (9)" substitute “ if subsections (1)(b) and (1A) of that section and section 170(9) were disregarded ”.
(2) The above amendment has effect in relation to disposals on or after 1st April 2000.

Section 176 of the Taxation of Chargeable Gains Act 1992
24 (1) In section 176 of the Taxation of Chargeable Gains Act 1992 (depreciatory transactions within a group), in subsection (7), paragraph (c) and the word “and" immediately preceding it shall cease to have effect.
(2) The above amendment, and the main amendments so far as they apply for the purposes of section 176, have effect in relation to cases in which the depreciatory transaction (within the meaning of that section) is on or after 1st April 2000.

Section 177 of the Taxation of Chargeable Gains Act 1992
25 (1) In section 177 of the Taxation of Chargeable Gains Act 1992 (dividend stripping), in subsection (2) for “171 or 172" substitute “ or 171 ”.
(2) The above amendment, and the main amendments so far as they apply for the purposes of section 177, have effect in relation to disposals on or after 1st April 2000.

Section 178 of the Taxation of Chargeable Gains Act 1992
26 Section 178 of the Taxation of Chargeable Gains Act 1992 (which is spent) shall cease to have effect.

Section 180 of the Taxation of Chargeable Gains Act 1992
27 Section 180 of the Taxation of Chargeable Gains Act 1992 (which is spent) shall cease to have effect.

Section 181 of the Taxation of Chargeable Gains Act 1992
28 (1) In section 181 of the Taxation of Chargeable Gains Act 1992 (exemption from de-grouping charge in the case of certain mergers)—
(a) in subsection (1), for “neither section 178 nor section 179 shall" substitute “ section 179 shall not ”; and
(b) subsection (5) shall cease to have effect.
(2) The amendment made by sub-paragraph (1)(b) above, and the main amendments so far as they apply for the purposes of section 181, have effect in relation to cases in which the company ceases to be a member of a group on or after 1st April 2000.

Section 192 of the Taxation of Chargeable Gains Act 1992
29 In section 192 of the Taxation of Chargeable Gains Act 1992 (tax exempt distributions), in subsection (3) for “neither section 178 nor 179 shall" substitute “ section 179 shall not ”.
1992 c. 12.

Section 211 of the Taxation of Chargeable Gains Act 1992
30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 30 repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 27 Pt. 2(9)

Section 216 of the Taxation of Chargeable Gains Act 1992
31 The main amendments have effect for the purposes of section 216 of the Taxation of Chargeable Gains Act 1992 (assets transferred from building society to company) in relation to transfers on or after 1st April 2000.

Section 217C of the Taxation of Chargeable Gains Act 1992
32 (1) In section 217C of the Taxation of Chargeable Gains Act 1992 (disposal of assets by incorporated friendly society), for subsection (2) substitute—

“(2) If the disposal by the incorporated society is in the circumstances mentioned in subsection (8) of section 41, the disposal to which section 217A(3) applies shall for the purposes of that subsection be taken to have been a previous transfer of the asset in such circumstances.”

.
(2) The above amendment has effect in relation to cases in which the disposal by the incorporated society is on or after 1st April 2000.

Section 228 of the Taxation of Chargeable Gains Act 1992
33 The main amendments have effect for the purposes of section 228 of the Taxation of Chargeable Gains Act 1992 (conditions for roll-over relief: supplementary) in relation to disposals on or after 1st April 2000.

Section 253 of the Taxation of Chargeable Gains Act 1992
34 The main amendments have effect for the purposes of section 253 of the Taxation of Chargeable Gains Act 1992 (relief for loans to traders)—
(a) in relation to loans made on or after 1st April 2000;
(b) in relation to guarantees given on or after that date.
1992 c. 12.

Section 276 of the Taxation of Chargeable Gains Act 1992
35 (1) In section 276 of the Taxation of Chargeable Gains Act 1992 (application of the 1992 Act to the territorial sea and the continental shelf), for subsection (8) substitute—

“(8) The provisions specified in subsection (9) below shall apply in relation to a disposal of exploration or exploitation rights or exploration or exploitation assets if (and only if) the disposal is—
(a) by a company resident in a territory outside the United Kingdom to a company resident in the same territory,
(b) by a company resident in the United Kingdom to another company which is so resident, or
(c) by a company which is not resident in the United Kingdom to another company which is resident there.
(9) Those provisions are—
(a) section 41(8),
(b) section 171 (except subsections (1)(b) and (1A)),
(c) section 173 (with the omission of the words “to which this section applies" in subsections (1)(a) and (2)(a) and “such" in subsections (1)(c) and (2)(c) and with the omission of subsection (3)),
(d) section 174(4) (with the substitution of “at a time when both were members of the group" for “in a transfer to which section 171(1) applied”),
(e) section 179 (except subsections (1)(b) and (1A)), and
(f) section 181.
(10) The provisions specified in subsection (9) above shall apply in accordance with subsection (8) above with the following modifications—
(a) for the purposes of paragraph (a) of subsection (9) above, section 41(8) applies as if section 170 applied, for the purposes of section 171, with the omission of subsection (9), and
(b) for the purposes of paragraphs (b) to (f) of subsection (9) above, the provisions specified in those paragraphs apply as if in section 170 subsection (9) were omitted.”

(2) The above amendment has effect in cases in which section 41, 171, 173, 174(4), 179 or 181, as the case may be, has effect as amended by this Schedule.

Schedule A1 to the Taxation of Chargeable Gains Act 1992
36 The main amendments have effect for the purposes of paragraph 11 of Schedule A1 to the Taxation of Chargeable Gains Act 1992 (rules for application of taper relief) in relation to any determination whether, at any time on or after 1st April 2000, a company is a 51 per cent subsidiary of another company.

Schedule 2 to the Taxation of Chargeable Gains Act 1992
37 The main amendments have effect for the purposes of paragraph 5 of Schedule 2 to the Taxation of Chargeable Gains Act 1992 (disposals of assets held on 6th April 1965) in relation to any determination whether, at any time on or after 1st April 2000, a company is a member, or the principal company, of a group of companies.
1992 c. 12.

Schedule 3 to the Taxation of Chargeable Gains Act 1992
38 The main amendments have effect for the purposes of paragraphs 8 and 9 of Schedule 3 to the Taxation of Chargeable Gains Act 1992 (disposals of assets held on 31st March 1982: supplementary provisions) in relation to any determination whether, at any time on or after 1st April 2000, a company is a member, or the principal company, of a group of companies.

Schedule 7B to the Taxation of Chargeable Gains Act 1992
39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 39 repealed (with effect in relation to periods of account (whenever beginning) which end on or after 31.12.2006) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), reg. 1, Sch. Pt. 1

Schedule 7C to the Taxation of Chargeable Gains Act 1992
40 The main amendments have effect for the purposes of Schedule 7C to the Taxation of Chargeable Gains Act 1992 (which is inserted by virtue of section 48 of this Act).

Section 136 of the Finance Act 1993
41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 paras. 41-43 repealed (with effect as mentioned in Sch. 40 Pt. 3(10) Note 2 of the repealing Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(10) Note 2

Section 136A of the Finance Act 1993
42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 paras. 41-43 repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(10) Note 2 of the repealing Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(10) Note 2

Schedule 17 to the Finance Act 1993
43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 paras. 41-43 repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(10) Note 2 of the repealing Act) by 2002 c. 23, s. 41, Sch. 40, Pt. 3(10) Note 2

Schedule 9 to the Finance Act 1996
44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 29 para. 44 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

Schedule 15 to the Finance Act 1996
45 (1) In Schedule 15 to the Finance Act 1996 (loan relationships: savings and transitional provisions), in paragraph 8(2) for “171(1) or 172" substitute “ or 171(1) ”.
(2) The above amendment has effect in accordance with paragraph 3(2) above.

Part III Transitional provisions
46 (1) For the purposes of this paragraph—
(a) references to a company which was a member of an old group are references to it being, immediately before the time when the main amendments have effect in accordance with the preceding provisions of this Schedule, a member of a group for the purposes of section 170 of the Taxation of Chargeable Gains Act 1992 (as it stood before the main amendments), and
1992 c. 12.
(b) references to a company which is a member of a new group are references to it being, immediately after that time, a member of a group for the purposes of that section (as amended by the main amendments).
(2) Where the same two or more companies were members of an old group and are members of a new group, those groups shall be regarded as the same group for the purposes of the provisions amended by this Schedule in relation to which the main amendments have effect.
(3) Sub-paragraph (2) above applies irrespective of whether the new group includes companies which were not members of the old group.
(4) Sub-paragraph (5) below applies in relation to a company which—
(a) was a member of an old group, but
(b) is not a member of a new group by reason only that—
(i) the principal company of the old group is not the principal company of the new group, and
(ii) the company in question is not an effective 51 per cent subsidiary of the principal company of the new group.
(5) For the purposes of the provisions amended by this Schedule in relation to which the main amendments have effect, section 170(3)(b) of the Taxation of Chargeable Gains Act 1992 shall not apply in relation to the company for so long as it remains an effective 51 per cent subsidiary of the company which was the principal company of the old group.
(6) Expressions used in this paragraph and in section 170 of the Taxation of Chargeable Gains Act 1992 shall be construed for the purposes of this paragraph in accordance with that section.
1992 c. 12.

47 De-grouping charge: deferral until company leaves new group
(1) This paragraph has effect for the purposes of section 179 of the Taxation of Chargeable Gains Act 1992 as that section has effect in relation to assets acquired before 1st April 2000 (“old section 179”).
(2) Where—
(a) a company would (apart from this paragraph) fall to be regarded for the purposes of old section 179 as ceasing to be a member of an old group at any time, but
(b) immediately before that time, it is also a member of a new group for the purposes of new section 179,
the company shall not be regarded for the purposes of old section 179 as ceasing to be a member of the old group unless or until it also ceases to be a member of the new group for the purposes of new section 179.
(3) Sub-paragraph (2) above does not prevent the company from being or becoming a member of another old group at any time.
(4) Where a company ceases to be a member of a new group on any occasion, it shall not by virtue of sub-paragraph (2) above be treated for the purposes of old section 179 as if it had on that occasion ceased to be a member of the same old group more than once.
(5) For the purposes of this paragraph—
(a) references to a company being a member of an old group are references to its being, for the purposes of old section 179, a member of a group of companies within the meaning given by old section 170;
(b) references to a company being a member of a new group are references to its being, for the purposes of new section 179, a member of a group of companies within the meaning given by new section 170; and
(c) references to a company ceasing to be a member of an old group or a new group shall be construed in accordance with paragraph (a) or (b) above, as the case may be.
(6) Where, for the purposes of sub-paragraph (2)(b) above, a company is not a member of a new group by reason only that—
(a) the principal company of the old group is not the principal company of the new group, and
(b) the company in question is not an effective 51 per cent subsidiary of the principal company of the new group,
subsection (3)(b) of new section 170 shall not apply in relation to the company for the purposes of this paragraph for so long as it remains an effective 51 per cent subsidiary of the company which was the principal company of the old group.
(7) In this paragraph—
(a) “new section 179” means section 179 of the Taxation of Chargeable Gains Act 1992 (c. 12) as it has effect in relation to assets acquired on or after 1st April 2000;
(b) “new section 170” means section 170 of that Act, as amended by the main amendments;
(c) “old section 170” means section 170 of the Taxation of Chargeable Gains Act 1992, as it stands before the main amendments.
(8) Expressions used in this paragraph and in section 170 of the Taxation of Chargeable Gains Act 1992 shall be construed in accordance with that section.
Sch. 29 para. 47 added (retrospectively) by 2001 c. 9, s. 79

SCHEDULE 30 Double taxation relief
Section 103.

Power to make treaty provision for matching credit for tax spared in foreign country
1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 1 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Matching credit for tax spared below immediate overseas subsidiary: treaty relief
2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 2 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Matching credit for tax spared below immediate overseas subsidiary: unilateral relief
3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 3 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Relief for persons resident outside the UK who have branches or agencies in the UK
4 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 4(1)-(12) repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 4(13)(14) repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1
(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No double relief etc.
5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 paras. 5-9 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Limits on credit: minimisation of the foreign tax
6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign tax on amounts underlying non-trading credits
7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction of relief for underlying tax
8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Computation of underlying tax: the relevant profits
9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends paid between related companies but not covered by arrangements
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 10 repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

Restriction of relief for underlying tax: dividends paid between related companies
11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 11 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Dividends paid out of transferred profits
12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 12 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Separate streaming of dividend so far as representing an ADP dividend of a CFC
13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 13 omitted (with effect in accordance with Sch. 16 para. 6 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 16 para. 5(f) (with Sch. 16 paras. 78)

UK insurance companies trading overseas: repeal of section 802
14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 14 repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

Underlying tax: foreign taxation of group as a single entity
15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 paras. 15-17 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Life assurance companies with overseas branches etc: restriction of credit
16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of foreign tax to different categories of insurance business
17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of expenses etc in a computation under Case I of Schedule D
18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 18 repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

Interpretation of sections 804A to 804E
19 (1) After section 804E of the Taxes Act 1988 insert—

“804F Interpretation of sections 804A to 804E.
Expressions used in sections 804A to 804E and in Chapter I of Part XII have the same meaning in those sections as in that Chapter.”

(2) The section inserted by sub-paragraph (1)—
(a) so far as relating to sections 804A and 804B, has effect in relation to accounting periods beginning on or after 1st April 2000; and
(b) so far as relating to sections 804C to 804E, has effect in relation to periods of account beginning on or after 1st April 2000.

Time limits for claims for credit relief
20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 20 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Foreign dividends: onshore pooling and utilisation of certain unrelieved foreign tax
21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 21 omitted (with effect in accordance with Sch. 14 para. 31 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 14 para. 30(b)

Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere
22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 22 omitted (with effect in accordance with Sch. 14 para. 31 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 14 para. 30(b)

Unrelieved foreign tax: profits of overseas branch or agency
23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 paras. 23-25 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Foreign tax on amounts underlying non-trading credits
24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Royalties: special relationship
25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Postponement of capital allowances to obtain double taxation relief
26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 26 repealed (31.1.2013) by Statute Law (Repeals) Act 2013 (c. 2), s. 3(2), Sch. 1 Pt. 10 Group 1

Time limits where reduction under s.811 rendered excessive or insufficient
27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 27 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Mutual agreement procedure
28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 28 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

Restriction of interest on repayment of tax resulting from carry back of relievable tax
29 (1) Amend section 826 of the Taxes Act 1988 as follows.
(2) After subsection (7B) insert—

“(7BB) Subject to subsection (7BC) below, in any case where—
(a) within the meaning of section 806D, any relievable underlying tax or relievable withholding tax arises in an accounting period of a company (“the later period”),
(b) pursuant to a claim under section 806G, the whole or any part of that tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an earlier accounting period (“the earlier period”), and
(c) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period,
then, in determining the amount of interest (if any) payable under this section on the repayment referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of the claim under section 806G, except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (7D) below).
(7BC) Where, in a case falling within subsection (7A)(a) and (b) above—
(a) as a result of the claim under section 393A(1), an amount or increased amount of eligible unrelieved foreign tax arises for the purposes of section 806A(1), and
(b) pursuant to a claim under section 806G, the whole or any part of an amount of relievable underlying tax or relievable withholding tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an accounting period before the earlier period,
then subsection (7BB) above shall have effect in relation to the claim under section 806G as if the reference in the words after paragraph (c) to the later period within the meaning of that subsection were a reference to the period which, in relation to the claim under section 393A(1), would be the later period for the purposes of subsection (7A) above.”

(3) In subsection (7D) (date on which corporation tax is due and payable for the purposes of certain provisions) after “(7B)" insert “ , (7BB) ”.
(4) In subsection (7E) (which, for the purposes of certain provisions, restricts the power in section 59A of the Taxes Management Act 1970 to alter the date on which corporation tax is due and payable) after “(7B),", in both places where it occurs, insert “ (7BB), ”.
1970 c. 9.

Time limits where deduction under s.278 of the 1992 Act rendered excessive or insufficient
30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 30 para. 30 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 10 Pt. 1 (with Sch. 9 paras. 1-9, 22)

SCHEDULE 31 Controlled foreign companies
Section 104.

Introductory
1 Amend Chapter IV of Part XVII of the Taxes Act 1988 as follows.

Conditions for company to be controlled foreign company
2 (1) Amend section 747 as follows.
(2) After subsection (1) insert—

“(1A) A company which would not, apart from this subsection, fall to be regarded as controlled by persons resident in the United Kingdom shall be taken for the purposes of this Chapter to be so controlled if—
(a) there are two persons who, taken together, control the company;
(b) one of those persons is resident in the United Kingdom and is a person in whose case the 40 per cent test in section 755D(3) is satisfied; and
(c) the other is a person in whose case the 40 per cent test in section 755D(4) is satisfied.”

Designer rate tax provisions: deemed lower level of taxation
3 After section 750 insert—

“750A Deemed lower level of taxation: designer rate tax provisions.
(1) Where—
(a) in any accounting period a company is to be regarded by virtue of any of subsections (1) to (4) of section 749 as resident in a particular territory outside the United Kingdom, and
(b) within the meaning of section 750(1), the local tax in respect of the profits arising to the company in that accounting period is equal to or greater than three-quarters of the corresponding United Kingdom tax on those profits, but
(c) that local tax is determined under designer rate tax provisions,
the company shall be taken for the purposes of this Chapter to be subject to a lower level of taxation in that territory in that accounting period.
(2) In subsection (1) above “designer rate tax provisions” means provisions—
(a) which appear to the Board to be designed to enable companies to exercise significant control over the amount of tax which they pay; and
(b) which are specified in regulations made by the Board.
(3) Regulations under subsection (2) above—
(a) may make different provision for different cases or with respect to different territories; and
(b) may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.
(4) The first regulations under subsection (2) above may make provision having effect in relation to accounting periods beginning not more than fifteen months before the date on which the regulations are made.”

“Control" and the two “40 per cent" tests
4 (1) After section 755C insert—

“755D “Control" and the two “40 per cent" tests.
(1) For the purposes of this Chapter “control", in relation to a company, means the power of a person to secure—
(a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
(b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with his wishes.
(2) Where two or more persons, taken together, have the power mentioned in subsection (1) above, they shall be taken for the purposes of this Chapter to control the company.
(3) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing at least 40 per cent of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.
(4) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing—
(a) at least 40 per cent, but
(b) not more than 55 per cent,
of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.
(5) For the purposes of this Chapter any question—
(a) whether a company is controlled by a person, or by two or more persons taken together, or
(b) whether, in the case of any company, the applicable 40 per cent test is satisfied in the case of each of two persons who, taken together, control the company,
shall be determined after attributing to each of the persons all the rights and powers mentioned in subsection (6) below that are not already attributed to that person for the purposes of subsections (1) to (4) above.
(6) The rights and powers referred to in subsection (5) above are—
(a) rights and powers which the person is entitled to acquire at a future date or which he will, at a future date, become entitled to acquire;
(b) rights and powers of other persons, to the extent that they are rights or powers falling within subsection (7) below;
(c) if the person is resident in the United Kingdom, rights and powers of any person who is resident in the United Kingdom and connected with the person; and
(d) if the person is resident in the United Kingdom, rights and powers which for the purposes of subsection (5) above would be attributed to a person who is resident in the United Kingdom and connected with the person (a “UK connected person”) if the UK connected person were himself the person.
(7) Rights and powers fall within this subsection to the extent that they—
(a) are required, or may be required, to be exercised in any one or more of the following ways, that is to say—
(i) on behalf of the person;
(ii) under the direction of the person; or
(iii) for the benefit of the person; and
(b) are not confined, in a case where a loan has been made by one person to another, to rights and powers conferred in relation to property of the borrower by the terms of any security relating to the loan.
(8) In subsections (6)(b) to (d) and (7) above, the references to a person’s rights and powers include references to any rights or powers which he either—
(a) is entitled to acquire at a future date, or
(b) will, at a future date, become entitled to acquire.
(9) In paragraph (d) of subsection (6) above, the reference to rights and powers which would be attributed to a UK connected person if he were the person includes a reference to rights and powers which, by applying that paragraph wherever one person resident in the United Kingdom is connected with another person, would be so attributed to him through a number of persons each of whom is resident in the United Kingdom and connected with at least one of the others.
(10) In determining for the purposes of this section whether one person is connected with another in relation to a company, subsection (7) of section 839 shall be disregarded.
(11) References in this section—
(a) to rights and powers of a person, or
(b) to rights and powers which a person is or will become entitled to acquire,
include references to rights or powers which are exercisable by that person, or (when acquired by that person) will be exercisable, only jointly with one or more other persons.”

(2) In consequence of sub-paragraph (1), in section 756(3) (application of provisions of Part XI)—
(a) omit paragraph (a); and
(b) omit the words following paragraph (b).

Exempt activities: wholesale, distributive, financial or service business
5 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 6 as follows.
(2) In sub-paragraph (2)(b) (company mainly engaged in wholesale, distributive or financial business: percentage of gross trading receipts from connected persons etc)—
(a) for “or financial" substitute “ financial or service ”; and
(b) for the words from “connected" to the end substitute “ persons falling within sub-paragraph (2A) below. ”
(3) After sub-paragraph (2) insert—

“(2A) Those persons are—
(a) persons who are connected or associated with the company;
(b) persons who have a 25 per cent assessable interest in the company in the case of the accounting period in question; and
(c) if the company is a controlled foreign company in that accounting period by virtue of subsection (1A) of section 747, persons who are connected or associated with either or both of the two persons mentioned in that subsection.”

Local holding companies
6 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 6 as follows.
(2) In sub-paragraph (3) (local holding companies) after “90 per cent of its gross income during the accounting period in question" insert “ is received by it in the territory in which it is resident and ”.

Other holding companies
7 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 6 as follows.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 31 para. 7(2)-(7) omitted (with effect in accordance with Sch. 16 para. 12 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 16 para. 11(b) (with Sch. 16 paras. 13-20)
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) In sub-paragraph (5) (interpretation of sub-paragraphs (3) to (4B)) after “a reference to a trading company" insert

“to which sub-paragraph (5ZA) or (5ZB) below applies.
(5ZA) This sub-paragraph applies to a trading company”

.
(9) After sub-paragraph (5ZA) insert—

“(5ZB) This sub-paragraph applies to a trading company if—
(a) it is a controlled foreign company by virtue of subsection (1A) of section 747; and
(b) the person who satisfies the requirement in paragraph (b) of that subsection in relation to the company also controls the holding company or superior holding company.”

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 31 para. 7(10)(11) omitted (with effect in accordance with Sch. 16 para. 12 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 16 para. 11(b) (with Sch. 16 paras. 13-20)
(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Businesses to which requirement as to derivation of receipts applies
8 (1) In Part II of Schedule 25 (exempt activities) amend paragraph 11 as follows.
(2) In sub-paragraph (1) (meaning of “wholesale, distributive or financial business” for purposes of paragraph 6(2)(b))—
(a) in the opening words, for “or financial" substitute “ financial or service ”;
(b) omit the word “and" immediately preceding paragraph (g); and
(c) at the end of paragraph (g) add

“; and
(h) the provision of services not falling within any of the preceding paragraphs.”

Commencement
9 (1) Paragraph 2 has effect on and after 21st March 2000.
(2) Paragraph 3 has effect in relation to any accounting period of a company resident outside the United Kingdom which begins on or after 6th October 1999.
(3) Paragraph 4 has effect—
(a) for the purpose of determining whether at any time on or after 21st March 2000 a company resident outside the United Kingdom is to be regarded for the purposes of Chapter IV of Part XVII of the Taxes Act 1988 as controlled by persons resident in the United Kingdom; and
(b) for any accounting period of a company resident outside the United Kingdom which begins on or after 21st March 2000.
(4) Paragraphs 5 to 8 have effect in relation to any accounting period of a controlled foreign company which begins on or after 21st March 2000.
(5) In this paragraph “accounting period” and “controlled foreign company” have the same meaning as they have in Chapter IV of Part XVII of the Taxes Act 1988.

SCHEDULE 32 Stamp duty on seven year leases: transitional provisions
Section 116(2).

Introductory
1 In this Schedule—
“additional duty”, in relation to an instrument, means additional stamp duty chargeable on the instrument as a result of section 116;
“the appropriate amount of duty”, in relation to an instrument, means the stamp duty that would have been chargeable on the instrument if section 116 had been in force when it was executed; and
“the commencement date” means 28th March 2000.

Instruments to which this Schedule applies
2 The instruments to which this Schedule applies are—
(a) leases of land for a term of seven years, and
(b) agreements for leases of land for a term of seven years,
executed on or after 1st October 1999 and before the commencement date.

Instruments which remain duly stamped
3 An instrument to which this Schedule applies which is stamped with the appropriate amount of duty is duly stamped, whenever it was executed.

Instruments which cease to be duly stamped
4 (1) An instrument to which this Schedule applies which—
(a) immediately before the commencement date was duly stamped, but
(b) was stamped with less than the appropriate amount of duty,
ceases to be duly stamped on the commencement date.
(2) Sub-paragraph (1) applies even if the instrument has been stamped in accordance with section 12(5) of the Stamp Act 1891 with a stamp denoting that it is duly stamped.
1891 c. 39.
(3) If an instrument ceases to be duly stamped on the commencement date as a result of sub-paragraph (1)—
(a) section 12(6) of the Stamp Act 1891 (adjudicated instruments admissible in evidence) does not apply to it at any time when it is not duly stamped, and
1891 c. 39.
(b) section 14(1) of that Act (receipt in evidence of insufficiently stamped instruments if unpaid duty paid to court) does not apply to it at any time when it is not duly stamped, unless the unpaid duty and any interest or penalty is paid in accordance with that subsection.

Stamping following earlier adjudication
5 Section 12A(1) of the Stamp Act 1891 (adjudicated instruments not to be stamped other than in accordance with adjudication decision) does not prevent an instrument to which this Schedule applies which is stamped with less than the appropriate amount of duty from being stamped with additional duty.

Use of instruments in evidence, etc.
6 Section 14(4) of the Stamp Act 1891 (instruments not to be used unless duly stamped in accordance with law in force when executed) applies in relation to an instrument to which this Schedule applies as if, as respects any time on or after the commencement date, the reference to the law in force at the time when it was executed were to the law in force on the commencement date.

Adjudication, interest and penalties
7 (1) This paragraph applies for the purpose of applying sections 12 to 13B and 15 to 15B of the Stamp Act 1891 (adjudication by Commissioners and interest and penalties on late stamping) in relation to any additional duty chargeable on an instrument to which this Schedule applies.
(2) Those sections continue to apply without modification as respects any other stamp duty chargeable on the instrument.
(3) Those sections have effect as respects the additional duty as if—
(a) the additional duty were the only stamp duty chargeable on the instrument;
(b) the instrument had been executed on the commencement date; and
(c) in the case of an instrument executed outside the United Kingdom and first received in the United Kingdom before the commencement date, the instrument had been first received in the United Kingdom on the commencement date.
(4) Accordingly, those sections apply as respects additional duty as if—
(a) references to duty were to additional duty;
(b) references to stamping were to stamping with additional duty;
(c) references to an instrument’s being stamped were to its being stamped with additional duty;
(d) references to an instrument’s being duly stamped were to its being stamped with all the additional duty chargeable on it;
(e) references to an instrument’s being unstamped were to its not being stamped with any additional duty;
(f) references to an instrument’s being insufficiently stamped were to its being stamped with insufficient additional duty;
(g) references to adjudication, or an appeal, under any of those sections were to adjudication or an appeal under the section in question as it has effect as respects additional duty; and
(h) references to the maximum penalty were to the maximum penalty as respects additional duty.

SCHEDULE 33 Power to vary stamp duties
Section 117.

Power of Treasury to make provision by regulations
1 (1) The Treasury may if they consider it expedient in the public interest make provision by regulations for the variation of an existing stamp duty.
(2) The power conferred by this paragraph includes, in particular, power to alter the descriptions of document in respect of which an existing stamp duty, or an existing rate or amount of duty, is chargeable.
(3) The power to make regulations under this paragraph is exercisable by statutory instrument.

Power only to be used for cases involving land or shares etc.
2 (1) The power conferred by paragraph 1 does not include power—
(a) to vary the amount chargeable by way of stamp duty on an excepted instrument, or
(b) to cause stamp duty to become chargeable on an excepted instrument.
(2) For the purposes of this paragraph—
(a) an “excepted instrument" is any document that is not a relevant property instrument, and
(b) a “relevant property instrument" is a document that (whether or not it also relates to any other transaction) relates to a transaction that to any extent involves—
(i) land, stock or marketable securities, or
(ii) any estate or interest in land, stock or marketable securities.

Power not to be used to vary rates or thresholds
3 The power conferred by paragraph 1 does not, except as mentioned in paragraph 1(2), include power to vary—
(a) the rate, or rates, of an existingad valorem stamp duty,
(b) the amount of an existing fixed stamp duty,
(c) any threshold specified in paragraph 4 of Schedule 13 to the Finance Act 1999 (rate bands for conveyance or transfer on sale), or
1999 c. 16.
(d) any threshold specified in paragraph 11 or 12 of that Schedule (duty on leases) in respect of rent or the term of a lease.

Approval of regulations by House of Commons
4 (1) An instrument containing regulations under paragraph 1 shall be laid before the House of Commons after being made.
(2) If the regulations are not approved by the House of Commons before the end of the period of 28 days beginning with the day on which they are made, they shall cease to have effect at the end of that period if they have not already ceased to have effect under sub-paragraph (3).
(3) If on any day during that period of 28 days the House of Commons, in proceedings on a motion that (or to the effect that) the regulations be approved, comes to a decision rejecting the regulations, they shall cease to have effect at the end of that day.
(4) Where regulations cease to have effect under sub-paragraph (2) or (3), their ceasing to have effect is without prejudice to anything done in reliance on them.
(5) In reckoning any such period of 28 days take no account of any time during which—
(a) Parliament is prorogued or dissolved, or
(b) the House of Commons is adjourned for more than four days.

Claim for repayment if regulations not approved
5 (1) Where regulations cease to have effect under paragraph 4(2) or (3), any amount paid by way of stamp duty, or interest or penalty on late stamping, that would not have been payable but for the regulations shall, on a claim, be repaid by the Commissioners.
(2) Section 110 of the Finance Act 1999 (interest on repayment of duty overpaid etc.) applies to a repayment under this paragraph of any amount paid by way of stamp duty or penalty on late stamping.
In the case of a repayment under this paragraph, the relevant time for the purposes of that section is 30 days after the day on which the instrument in question was executed or, if later, the date on which the payment of duty or penalty was made.
1999 c. 16.
(3) A claim for repayment must be made within two years after the date of the instrument in question or, if it is not dated, within two years after its execution.
(4) No repayment shall be made on a claim until the instrument in question has been produced to the Commissioners for such cancelling of stamps, and such stamping to denote the making of the repayment or the producing of the instrument under this paragraph, as the Commissioners consider appropriate.
(5) Any repayment shall, subject to any regulations under sub-paragraph (6)(d), be made to such person as the Commissioners consider appropriate.
(6) The Commissioners may make provision by regulations—
(a) for varying the time limit having effect under sub-paragraph (3);
(b) for varying or repealing the condition having effect under sub-paragraph (4);
(c) as to any other conditions that must be met before repayment is made;
(d) as to the person to whom repayment is to be made.
(7) Regulations under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

Use in evidence, etc. of instruments affected by regulations ceasing to have effect
6 (1) Where regulations cease to have effect under paragraph 4(2) or (3), the following provisions apply to an instrument that—
(a) was executed at a time when the regulations were in force, and
(b) was at that time chargeable with any amount of stamp duty with which it would not have been chargeable apart from the regulations.
(2) If the instrument was stamped while the regulations were in force, nothing done in pursuance of paragraph 5 (repayment of duty etc.) prevents it being treated for any purpose as duly stamped in accordance with the law in force at the time when it was executed.
(3) If the instrument was not stamped while the regulations were in force, the law in force at the time when it was executed shall be deemed to have been what the law would have been apart from the regulations.

Temporary effect of regulations
7 (1) Regulations under paragraph 1 shall not apply in relation to instruments executed after the end of—
(a) the period of 18 months beginning with the day on which the regulations were made, or
(b) such shorter period as may be specified in the regulations.
(2) This does not affect the power to make further provision by regulations under paragraph 1 to the same or similar effect.

Power to make transitional etc. provision
8 Any power to make regulations under this Schedule includes power to make such transitional, supplementary and incidental provision as appears to the authority making the regulations to be necessary or expedient.

Interpretation
9 (1) In relation to a bearer instrument (as defined in paragraph 3 of Schedule 15 to the Finance Act 1999), references in this Schedule to the execution of the instrument shall be read as references to its issue.
Sch. 33 para. 9(1) repealed (with effect as mentioned in Sch. 40 Pt. III Note 4 of the amending Act) by 2000 c. 17, s. 156, Sch. 40 Pt. III
1999 c. 16.
(2) This Schedule shall be construed as one with the Stamp Act 1891.
1891 c. 39.

SCHEDULE 34 Abolition of stamp duty on instruments relating to intellectual property: supplementary provisions
Section 129.

Introduction
1 In this Schedule “intellectual property” has the same meaning as in section 129(1).

Stamp duty reduced in certain other cases
2 (1) This paragraph applies where—
(a) stamp duty under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) is chargeable on an instrument, and
(b) part of the property concerned consists of intellectual property.
(2) In such a case—
(a) the consideration in respect of which duty would otherwise be charged shall be apportioned, on such basis as is just and reasonable, as between the part of the property which consists of intellectual property and the part which does not, and
(b) the instrument shall be charged only in respect of the consideration attributed to such of the property as is not intellectual property.
(3) This paragraph applies to instruments executed on or after 28th March 2000.

Apportionment of consideration for stamp duty purposes
3 (1) Where part of the property referred to in section 58(1) of the Stamp Act 1891 (consideration to be apportioned between different instruments as parties think fit) consists of intellectual property, that provision shall have effect as if “the parties think fit" read “is just and reasonable".
1891 c. 39.
(2) Where—
(a) part of the property referred to in section 58(2) of the Stamp Act 1891 (property contracted to be purchased by two or more persons etc.) consists of intellectual property, and
(b) both or (as the case may be) all the relevant persons are connected with one another,
that provision shall have effect as if the words from “for distinct parts of the consideration" to the end of the subsection read “, the consideration is to be apportioned in such manner as is just and reasonable, so that a distinct consideration for each separate part or parcel is set forth in the conveyance relating thereto, and such conveyance is to be charged withad valorem duty in respect of such distinct consideration.".
(3) In a case where sub-paragraph (1) or (2) applies and the consideration is apportioned in a manner that is not just and reasonable, the enactments relating to stamp duty shall have effect as if—
(a) the consideration had been apportioned in a manner that is just and reasonable, and
(b) the amount of any distinct consideration set forth in any conveyance relating to a separate part or parcel of property were such amount as is found by a just and reasonable apportionment (and not the amount actually set forth).
(4) For the purposes of sub-paragraph (2)—
(a) a person is a relevant person if he is a person by or for whom the property is contracted to be purchased;
(b) the question whether persons are connected with one another shall be determined in accordance with section 1122 of the Corporation Tax Act 2010.
Words in Sch. 34 para. 3(4)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 318 (with Sch. 2)
(5) In sub-paragraph (3) “the enactments relating to stamp duty” means the Stamp Act 1891 and any enactment amending or which is to be construed as one with that Act.
(6) This paragraph applies to instruments executed on or after 28th March 2000.

Certification of instruments for stamp duty purposes
4 (1) Intellectual property shall be disregarded for the purposes of paragraph 6 of Schedule 13 to the Finance Act 1999 (certification of instrument as not forming part of transaction or series of transactions exceeding specified amount).
1999 c. 16.
(2) Any statement as mentioned in paragraph 6(1) of that Schedule shall be construed as leaving out of account any matter which is to be so disregarded.
(3) This paragraph applies to instruments executed on or after 28th March 2000.

Acquisition under statute
5 (1) Section 12 of the Finance Act 1895 (property vested by Act or purchased under statutory powers) does not require any person who is authorised to purchase any property as mentioned in that section on or after 28th March 2000 to include any intellectual property in the instrument of conveyance required by that section to be produced to the Commissioners.
1895 c. 16.
(2) If the property consists wholly of intellectual property no instrument of conveyance need be produced to the Commissioners under that section.
(3) This paragraph applies where the Act mentioned in that section, and by virtue of which property is vested or a person is authorised to purchase property, is passed on or after 28th March 2000.

SCHEDULE 35 Value added tax: charge at reduced rate
Section 135.

1
Schedule A1 to the Value Added Tax Act 1994 (charge at reduced rate) has effect with the following amendments.
1994 c. 23.

2
(1) Paragraph 1(1) (supplies benefiting from the reduced rate) is amended as follows.
(2) After paragraph (a) insert—

“(aa) supplies of services of installing List A energy-saving materials in residential accommodation or in a building intended for use solely for a relevant charitable purpose;
(ab) supplies of List A energy-saving materials by a person who installs those materials in residential accommodation or a building intended for use solely for a relevant charitable purpose;”

.
(3) In each of paragraphs (b) and (c), before “energy-saving materials" insert “ List B ”.
(4) After paragraph (c) insert—

“(d) supplies to a qualifying person of services of connecting, or reconnecting, a mains gas supply to the qualifying person’s sole or main residence;
(e) supplies of goods made to a qualifying person by a person connecting, or reconnecting, a mains gas supply to the qualifying person’s sole or main residence, being goods whose installation is necessary for the connection, or reconnection, of the mains gas supply;
(f) supplies to a qualifying person of services of installing, maintaining or repairing a central heating system in the qualifying person’s sole or main residence;
(g) supplies of goods made to a qualifying person by a person installing, maintaining or repairing a central heating system in the qualifying person’s sole or main residence, being goods whose installation is necessary for the installation, maintenance or repair of the central heating system;
(h) supplies consisting in the leasing of goods that form the whole or part of a central heating system installed in the sole or main residence of a qualifying person;
(i) supplies of goods that form the whole or part of a central heating system installed in a qualifying person’s sole or main residence and that, immediately before being supplied, were goods leased under arrangements such that the consideration for the supplies consisting in the leasing of the goods was, in whole or in part, funded by a grant made under a relevant scheme;
(j) supplies to a qualifying person of services of installing qualifying security goods in the qualifying person’s sole or main residence; and
(k) supplies of qualifying security goods made to a qualifying person by a person who installs those goods in the qualifying person’s sole or main residence.”

3
For paragraph 1(1A) (supplies benefit from reduced rate only if funded by grants) substitute—

“(1A) A supply to which any of paragraphs (b) to (k) of sub-paragraph (1) above applies is a supply falling within this paragraph only to the extent that the consideration for it—
(a) is, or is to be, funded by a grant made under a relevant scheme; or
(b) in the case of a supply to which paragraph (i) of that sub-paragraph applies—
(i) is, or is to be, funded by such a grant, or
(ii) is a payment becoming due only by reason of the termination (whether by the passage of time or otherwise) of the leasing of the goods in question.”

4
In paragraph 1(1B) (interpretation of sub-paragraph (1A))—
(a) for “sub-paragraph (1)(b) or (c)" substitute “ any of paragraphs (b) to (k) of sub-paragraph (1) ”, and
(b) for “neither of those sub-paragraphs" substitute “ none of those paragraphs ”.

5
In paragraph 5(3)(c), for “disability working allowance" substitute “ disabled person’s tax credit ”.

6
In paragraph 5(3)(d), for “family credit" substitute “ working families’ tax credit ”.

7
In paragraph 5 (interpretation), after sub-paragraph (3) insert—

“(3A) For the purposes of paragraph 1(1)(aa) and (ab) above “residential accommodation” means—
(a) a building, or part of a building, that consists of a dwelling or a number of dwellings;
(b) a building, or part of a building, used for a relevant residential purpose;
(c) a caravan used as a place of permanent habitation; or
(d) a houseboat.
(3B) For the purposes of paragraph 1(1)(aa) and (ab) above “use for a relevant charitable purpose” means use by a charity in either or both of the following ways, namely—
(a) otherwise than in the course or furtherance of a business;
(b) as a village hall or similarly in providing social or recreational facilities for a local community.”

8
(1) Paragraph 5(4) (meaning of “energy-saving materials”) is amended as follows.
(2) For “For the purposes of paragraph 1(1)(b) and (c) above “energy-saving materials" means" substitute “ For the purposes of paragraph 1(1)(aa) and (ab) above “List A energy-saving materials" means ”.
(3) In paragraph (c), after “central heating system controls" insert “ (including thermostatic radiator valves) ”.
(4) After paragraph (d) insert—

“(e) solar panels;”

.
(5) After paragraph (e) (which is inserted by sub-paragraph (4) above) insert—

“(f) wind turbines;
(g) water turbines.”

9
In paragraph 5, after sub-paragraph (4) insert—

“(4A) For the purposes of paragraph 1(1)(b) and (c) above “List B energy-saving materials” means any of the following—
(a) gas-fired room heaters that are fitted with thermostatic controls;
(b) electric storage heaters;
(c) closed solid fuel fire cassettes;
(d) electric dual immersion water heaters with foam-insulated hot water tanks;
(e) gas-fired boilers;
(f) oil-fired boilers;
(g) radiators.
(4B) For the purposes of paragraph 1(1)(j) and (k) above, “qualifying security goods” means any of the following—
(a) locks or bolts for windows;
(b) locks, bolts or security chains for doors;
(c) spy holes;
(d) smoke alarms.”

10
In paragraph 5(5) (meaning of “relevant scheme”), for “paragraph 1(1A) and (1B)" substitute “ paragraph 1 ”.
Sch. 35 repealed (11.5.2001 with effect in accordance with s. 99(7) of the amending Act) by 2001 c. 9, ss. 99(7), 110, Sch. 33 Pt. 3(1) Note 2

SCHEDULE 36 New Schedule 3A to the Value Added Tax Act 1994
Section 136(8).

The Schedule inserted after Schedule 3 to the Value Added Tax Act 1994 is as follows:

“Schedule 3A Registration in respect of disposals of assets for which a VAT repayment is claimed

Liability to be registered
1 (1) A person who is not registered under this Act, and is not liable to be registered under Schedule 1, 2 or 3, becomes liable to be registered under this Schedule at any time—
(a) if he makes relevant supplies; or
(b) if there are reasonable grounds for believing that he will make such supplies in the period of 30 days then beginning.
(2) A person shall be treated as having become liable to be registered under this Schedule at any time when he would have become so liable under sub-paragraph (1) above but for any registration which is subsequently cancelled under paragraph 6(2) below, paragraph 13(3) of Schedule 1, paragraph 6(2) of Schedule 2 or paragraph 6(3) of Schedule 3.
(3) A person shall not cease to be liable to be registered under this Schedule except in accordance with paragraph 2 below.
2 A person who has become liable to be registered under this Schedule shall cease to be so liable at any time if the Commissioners are satisfied that he has ceased to make relevant supplies.

Notification of liability and registration
3 (1) A person who becomes liable to be registered by virtue of paragraph 1(1)(a) above shall notify the Commissioners of the liability before the end of the period of 30 days beginning with the day on which the liability arises.
(2) The Commissioners shall register any such person (whether or not he so notifies them) with effect from the beginning of the day on which the liability arises.
4 (1) A person who becomes liable to be registered by virtue of paragraph 1(1)(b) above shall notify the Commissioners of the liability before the end of the period by reference to which the liability arises.
(2) The Commissioners shall register any such person (whether or not he so notifies them) with effect from the beginning of the period by reference to which the liability arises.

Notification of end of liability
5 (1) Subject to sub-paragraph (2) below, a person registered under paragraph 3 or 4 above who ceases to make or have the intention of making relevant supplies shall notify the Commissioners of that fact within 30 days of the day on which he does so.
(2) Sub-paragraph (1) above does not apply if the person would, when he so ceases, be otherwise liable or entitled to be registered under this Act if his registration and any enactment preventing a person from being liable to be registered under different provisions at the same time were disregarded.

Cancellation of registration
6 (1) Subject to sub-paragraph (3) below, where the Commissioners are satisfied that a registered person has ceased to be liable to be registered under this Schedule, they may cancel his registration with effect from the day on which he so ceased or from such later date as may be agreed between them and him.
(2) Where the Commissioners are satisfied that on the day on which a registered person was registered he was not registrable, they may cancel his registration with effect from that day.
(3) The Commissioners shall not under sub-paragraph (1) above cancel a person’s registration with effect from any time unless they are satisfied that it is not a time when that person would be subject to a requirement, or entitled, to be registered under this Act.
(4) In determining for the purposes of sub-paragraph (3) above whether a person would be subject to a requirement, or entitled, to be registered at any time, so much of any provision of this Act as prevents a person from becoming liable or entitled to be registered when he is already registered or when he is so liable under any other provision shall be disregarded.

Exemption from registration
7 (1) Notwithstanding the preceding provisions of this Schedule, where a person who makes or intends to make relevant supplies satisfies the Commissioners that any such supply is zero-rated or would be zero-rated if he were a taxable person, they may, if he so requests and they think fit, exempt him from registration under this Schedule.
(2) Where there is a material change in the nature of the supplies made by a person exempted under this paragraph from registration under this Schedule, he shall notify the Commissioners of the change—
(a) within 30 days of the date on which the change occurred; or
(b) if no particular date is identifiable as the day on which it occurred, within 30 days of the end of the quarter in which it occurred.
(3) Where there is a material alteration in any quarter in the proportion of relevant supplies of such a person that are zero-rated, he shall notify the Commissioners of the alteration within 30 days of the end of the quarter.
(4) If it appears to the Commissioners that a request under sub-paragraph (1) above should no longer have been acted upon on or after any day, or has been withdrawn on any day, they shall register the person who made the request with effect from that day.

Supplementary
8 Any notification required under this Schedule shall be made in such form and shall contain such particulars as the Commissioners may by regulations prescribe.
9 (1) For the purposes of this Schedule a supply of goods is a relevant supply where—
(a) the supply is a taxable supply;
(b) the goods are assets of the business in the course or furtherance of which they are supplied; and
(c) the person by whom they are supplied, or a predecessor of his, has received or claimed, or is intending to claim, a repayment of VAT on the supply to him, or the importation by him, of the goods or of anything comprised in them.
(2) In relation to any goods, a person is the predecessor of another for the purposes of this paragraph if—
(a) that other person is a person to whom he has transferred assets of his business by a transfer of that business, or part of it, as a going concern;
(b) those assets consisted of or included those goods; and
(c) the transfer of the assets is one falling by virtue of an order under section 5(3) (or under an enactment re-enacted in section 5(3)) to be treated as neither a supply of goods nor a supply of services;
and the reference in this paragraph to a person’s predecessor includes references to the predecessors of his predecessor through any number of transfers.
(3) The reference in this paragraph to a repayment of VAT is a reference to such a repayment under a scheme embodied in regulations made under section 39.”

1994 c. 23.

SCHEDULE 37 Landfill tax: new Part VIII of Schedule 5 to the Finance Act 1996
Section 142.

“Part VIII Secondary liability: controllers of landfill sites

Meaning of controller
48 (1) For the purposes of this Part of this Schedule a person is the controller of the whole, or a part, of a landfill site at a given time if he determines, or is entitled to determine, what disposals of material, if any, may be made—
(a) at every part of the site at that time, or
(b) at that part of the site at that time,
as the case may be.
(2) But a person who, because he is an employee or agent of another, determines or is entitled to determine what disposals may be made at a landfill site or any part of a landfill site is not the controller of that site or, as the case may be, that part of that site.
(3) Where a person is the controller of the whole or a part of a landfill site, that site or, as the case may be, that part of the site is referred to in this Part of this Schedule as being under his control.
(4) Any reference in this Part of this Schedule to a controller (without more) is a reference to a controller of the whole or a part of a landfill site.

Secondary liability
49 (1) Where—
(a) a taxable disposal is made at a landfill site,
(b) at the time when that disposal is made a person is the operator of the landfill site by virtue of section 67(a), (c) or (e) of this Act, and
(c) at that time a person other than the operator mentioned in paragraph (b) above is the controller of the whole or a part of the landfill site,
the controller shall be liable to pay to the Commissioners an amount of the landfill tax chargeable on the disposal.
(2) The amount which the controller is liable to pay shall be determined in accordance with the following provisions of this paragraph.
(3) In a case where the whole of the landfill site is under the control of the controller, he shall be liable to pay the whole of the landfill tax chargeable.
(4) In a case where a part of the landfill site is under the control of the controller, he shall be liable to pay an amount of the landfill tax calculated in accordance with sub-paragraphs (5) and (6) below.
(5) The amount of landfill tax which the controller is liable to pay is the amount which would have been chargeable had a separate taxable disposal consisting of the amount of material referred to in sub-paragraph (6) below been made at the time of the disposal mentioned in sub-paragraph (1)(a) above.
(6) That amount of material is the amount by weight of the material comprised in the disposal mentioned in sub-paragraph (1)(a) above which was disposed of on the part of the landfill site under the control of the controller.
(7) If the amount mentioned in sub-paragraph (6) above is nil, the controller shall have no liability under sub-paragraph (1) above in relation to landfill tax chargeable on the disposal.
(8) For the purposes of sub-paragraph (1)(b) and (c) above—
(a) section 61 of this Act, and
(b) any regulations made under section 62 of this Act,
shall not apply for determining the time when the disposal in question is made.

Operator entitled to credit
50 (1) This paragraph applies where—
(a) the operator of a landfill site is liable to pay landfill tax on a taxable disposal by reference to a particular accounting period,
(b) a controller of the whole or a part of that site is (apart from this paragraph) liable under paragraph 49 above to pay an amount of that tax, and
(c) for the accounting period in question the operator is entitled to credit under regulations made under section 51 of this Act.
(2) The amount of the tax which the controller is (apart from this sub-paragraph) liable to pay shall be reduced by the amount calculated in accordance with the following formula—
A x CG
where—
A is the amount of tax mentioned in sub-paragraph (1)(b) above;
C is the amount of credit mentioned in sub-paragraph (1)(c) above; and
G is the operator’s gross tax liability for the accounting period in question.
(3) For the purposes of sub-paragraph (2) above, the operator’s gross tax liability for the accounting period in question is the gross amount of landfill tax—
(a) which is chargeable on disposals made at all landfill sites of which he is the operator, and
(b) for which he is required to account by reference to that accounting period.
(4) In sub-paragraph (3) above, the gross amount of landfill tax means the amount of tax before any credit or any other adjustment is taken into account in the period in question.
(5) If the amount calculated in accordance with the formula in sub-paragraph (2) above is greater than the amount of tax mentioned in sub-paragraph (1)(b) above, the amount of the tax which the controller is liable to pay shall be reduced to nil.

Payment of secondary liability
51 (1) This paragraph applies where a controller is liable under paragraph 49 above (after taking account of any reduction under paragraph 50 above) to pay an amount of landfill tax (“the relevant amount”).
(2) The controller is required to pay the relevant amount to the Commissioners only if—
(a) a notice containing the required information is served on him, or
(b) other reasonable steps are taken with a view to bringing the required information to his attention,
before the end of the period of two years beginning with the day immediately following the relevant accounting day.
(3) The relevant accounting day is the last day of the accounting period by reference to which the landfill site operator liable to pay the landfill tax in question is required to account for that tax.
(4) If the controller is required to pay the relevant amount by virtue of this paragraph, the amount shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day.
(5) The notification day is—
(a) in a case where notice is served on a controller as mentioned in sub-paragraph (2)(a) above, the day on which the notice is served, or
(b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (2)(b) above, the day on which the last of those steps is taken.
(6) For the purposes of sub-paragraph (2) above the required information is the relevant amount and, if that amount is one reduced in accordance with paragraph 50 above, also—
(a) the amount of the controller’s liability under paragraph 49 above apart from the reduction,
(b) the amount of credit to which the operator is entitled, and
(c) the operator’s gross tax liability.

Assessments
52 (1) Where an amount of landfill tax is—
(a) assessed under section 50 of this Act, and
(b) notified to a licensed operator,
the Commissioners may also determine that a controller of the whole or a part of any landfill site operated by the licensed operator shall be liable to pay so much of the amount assessed as they consider just and equitable.
(2) A controller is required to pay an amount determined under sub-paragraph (1) above only if—
(a) a notice stating the amount is served on him, or
(b) other reasonable steps are taken with a view to bringing the amount of the liability to his attention,
before the expiry of the period of two years beginning with the day immediately following the assessment day.
(3) The assessment day is the day on which the assessment in question is notified to the licensed operator.
(4) If a controller is required to pay an amount by virtue of this paragraph, it shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day.
(5) The notification day is—
(a) in a case where notice is served on a controller as mentioned in sub-paragraph (2)(a) above, the day on which the notice is served, or
(b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (2)(b) above, the day on which the last of those steps is taken.
(6) For the purposes of this paragraph a licensed operator is a person who is the operator of a landfill site by virtue of section 67(a), (c) or (e) of this Act.

Assessment withdrawn or reduced
53 (1) Where—
(a) a controller is liable to pay an amount determined under paragraph 52 above, and
(b) the assessment notified to the licensed operator is withdrawn or reduced,
the Commissioners may determine that the controller’s liability is to be cancelled or to be reduced to such an amount as they consider just and equitable.
(2) Sub-paragraphs (3) to (5) below apply where the Commissioners make a determination under sub-paragraph (1) above that the controller’s liability is to be reduced (but not cancelled).
(3) In such a case they shall—
(a) serve the controller with notice stating the amount of the reduced liability, or
(b) take other reasonable steps with a view to bringing the reduced amount to the controller’s attention.
(4) If the controller has already been served with notice of the amount determined under paragraph 52 above, or if other steps have already been taken to bring that amount to his attention—
(a) the Commissioners shall serve the notice mentioned in sub-paragraph (3)(a) above, or take the steps mentioned in sub-paragraph (3)(b) above, before the end of the period of thirty days beginning with the day immediately following that on which they make the determination under sub-paragraph (1) above, and
(b) the reduced amount shall be payable, or treated as having been payable, on or before the day on which the amount referred to in sub-paragraph (1)(a) above would have been payable apart from this paragraph.
(5) In a case where the controller has not been served with notice of the amount determined under paragraph 52 above, or no other steps have been taken to bring that amount to his attention, he shall be liable to pay the reduced amount only if—
(a) the notice mentioned in sub-paragraph (3)(a) above is served, or
(b) the other steps mentioned in sub-paragraph (3)(b) above are taken,
before the expiry of the period of two years beginning with the day immediately following that on which the Commissioners make the determination under sub-paragraph (1) above.
(6) Sub-paragraph (7) below applies where—
(a) the Commissioners make a determination under sub-paragraph (1) above that the controller’s liability is to be cancelled, and
(b) the controller has already been served with notice of the amount determined under paragraph 52 above, or other steps have already been taken to bring that amount to his attention.
(7) In such a case the Commissioners shall—
(a) serve the controller with notice stating that the liability has been cancelled, or
(b) take other reasonable steps with a view to bringing the cancellation to the controller’s attention,
before the end of the period of thirty days beginning with the day immediately following that on which they make the determination that the liability is to be cancelled.

Adjustments
54 (1) This paragraph applies in any case where the liability of a licensed operator to pay landfill tax is adjusted otherwise than by—
(a) his being entitled to credit under regulations made under section 51 of this Act,
(b) his being notified of an amount assessed under section 50 of this Act, or
(c) the withdrawal or reduction of an assessment under section 50 of this Act which was notified to him.
(2) In such a case the Commissioners may determine that a controller of the whole or any part of a landfill site operated by the licensed operator—
(a) shall be liable to pay to the Commissioners such an amount as they consider just and equitable, or
(b) shall be entitled to an allowance of such an amount as they consider just and equitable.
(3) A controller is required to pay an amount determined under sub-paragraph (2)(a) above only if—
(a) a notice stating the amount is served on him, or
(b) other reasonable steps are taken with a view to bringing the amount of the liability to his attention,
before the end of the period of two years beginning with the day immediately following the relevant accounting day.
(4) The relevant accounting day is the last day of the accounting period of the operator within which the adjustment in question was taken into account.
(5) If a controller is required to pay an amount by virtue of sub-paragraph (3) above, it shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day.
(6) The notification day is—
(a) in a case where notice is served on a controller as mentioned in sub-paragraph (3)(a) above, the day on which the notice is served, or
(b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (3)(b) above, the day on which the last of those steps is taken.
(7) The Commissioners may determine in what manner a controller is to benefit from an allowance determined under sub-paragraph (2)(b) above.
(8) For the purposes of this paragraph a licensed operator is a person who is the operator of a landfill site by virtue of section 67(a), (c) or (e) of this Act.

Amounts payable to be treated as tax
55 An amount which a controller is required to pay under paragraph 52, 53 or 54(2)(a) above or under paragraph 58 below shall be deemed to be an amount of tax due from him and shall be recoverable accordingly.

Controller not carrying out taxable activity
56 A controller is not to be treated for the purposes of this Act as carrying out a taxable activity by reason only of any liability under this Part of this Schedule.

Joint and several liability
57 (1) In any case where the condition in sub-paragraph (4), (5) or (6) below is satisfied, the controller and the operator shall be jointly and severally liable for the principal liability.
(2) But the amount which may be recovered from the controller in consequence of such liability shall not exceed the amount of the secondary liability.
(3) For the purposes of this paragraph—
(a) the principal liability is the amount referred to in sub-paragraph (4)(a), (5)(a) or (6)(a) below, as the case may be, and
(b) the secondary liability is the amount referred to in sub-paragraph (4)(b), (5)(b) or (6)(b) below, as the case may be.
(4) The condition in this sub-paragraph is satisfied if—
(a) the operator of a landfill site is liable under section 41 of this Act for landfill tax, and
(b) a controller is liable under paragraph 49 above, after taking account of any reduction under paragraph 50 above, to pay an amount of that tax.
(5) The condition in this sub-paragraph is satisfied if—
(a) the operator of a landfill site is notified of the amount of an assessment made under section 50 of this Act, and
(b) in consequence of a determination made under paragraph 52 above by the Commissioners in connection with the assessment, a controller is liable to pay an amount (after taking account of any reduction under paragraph 53 above).
(6) The condition in this sub-paragraph is satisfied if—
(a) the liability of the operator of a landfill site to pay landfill tax is adjusted in such a way that paragraph 54 above applies, and
(b) in consequence of a determination made under paragraph 54(2)(a) above by the Commissioners in connection with the adjustment, a controller is liable to pay an amount.

Interest payable by a controller
58 (1) This paragraph applies where—
(a) the operator of a landfill site and the controller of the whole or a part of that site are by virtue of paragraph 57 above jointly and severally liable for an amount, and
(b) that amount carries interest by virtue of any provision of this Schedule.
(2) The controller and the operator shall be jointly and severally liable to pay the interest.
(3) But the amount which may be recovered from the controller in consequence of such liability shall not exceed the amount calculated in accordance with the following formula—
(I-[A+B])xSP
where—
I is the total amount of interest in question;
A is the amount of interest carried for the period which—
(a) begins with the first day of the period for which interest is carried, and
(b) ends with the day on which the controller becomes liable to pay the secondary liability;
B is the amount of interest carried for any day falling after that on which the secondary liability is met in full;
S is the amount of the secondary liability;
P is the amount of the principal liability.
In this paragraph secondary liability and principal liability have the same meaning as in paragraph 57 above.
(4) The controller is liable for an amount of interest only if—
(a) a notice stating the amount is served on him, or
(b) other reasonable steps are taken with a view to bringing the amount of the liability to his attention,
before the end of the period of two years beginning with the day immediately following the final day.
(5) The final day is the last day of the period for which the interest in question is carried.
(6) If the controller is required to pay an amount in accordance with this paragraph, it shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day.
(7) The notification day is—
(a) in a case where notice is served on a controller as mentioned in sub-paragraph (4)(a) above, the day on which the notice is served, or
(b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (4)(b) above, the day on which the last of those steps is taken.
(8) Where by virtue of sub-paragraph (2) above a controller is liable to pay interest which arises under paragraph 27 above, paragraph 28 above shall apply in relation to that interest as it applies to interest which a person is liable under paragraph 27 above to pay.

Reviews
59 Section 54 of this Act shall apply to a decision of the Commissioners under this Part of this Schedule—
(a) that a person is a controller,
(b) that a person is liable under this Part of this Schedule to pay any amount (including a penalty under paragraph 60 below),
(c) that a person is not entitled under this Part of this Schedule to an allowance, or
(d) as to the amount of any liability or any allowance under this Part of this Schedule,
as it applies to the other decisions of the Commissioners specified in subsection (1) of that section.

Notice that person is, or is no longer, a controller
60 (1) This paragraph applies where—
(a) on the date when this paragraph comes into force, a person is a controller of the whole or a part of a landfill site, or
(b) after that date, a person becomes or ceases to be a controller of the whole or a part of a landfill site.
(2) The controller, and the operator of the landfill site in question, shall be under a duty to secure that notice which complies with the requirements of sub-paragraph (3) below appropriate to the case in question is given to the Commissioners.
(3) The requirements of this sub-paragraph are that the notice—
(a) states that a person is, has become or has ceased to be a controller,
(b) identifies that person and the site under his control or formerly under his control,
(c) states the date when he became or ceased to be the controller, and
(d) is given within the period of thirty days beginning with the day immediately following—
(i) the day when this paragraph comes into force, in a case falling within sub-paragraph (1)(a) above, or
(ii) the day when the person in question becomes or ceases to be the controller, in a case falling within sub-paragraph (1)(b) above.
(4) If a person fails to comply with sub-paragraph (2) above, he is liable to a penalty of £250.
(5) Paragraph 25 above applies to a penalty under sub-paragraph (4) above as it applies to a penalty under Part V of this Schedule.

Extension of time limits where notice not served
61 (1) This paragraph applies where—
(a) a person is liable under paragraph 49 above to pay an amount of landfill tax or liable under paragraph 58 above to pay interest, or
(b) the Commissioners are entitled under paragraph 52, 53 or 54 above to determine an amount which a person is liable to pay.
(2) The reference to two years in paragraph 51(2), 52(2), 53(5), 54(3) or 58(4) above (as the case may be) shall be treated as a reference to twenty years if the requirement of paragraph 60(2) above to give notice to the Commissioners in relation to the person mentioned in sub-paragraph (1) above being or becoming a controller has not been complied with.”

SCHEDULE 38 Regulations for providing incentives for electronic communications
Section 143(1).

Introduction
1 (1) Regulations may be made in accordance with this Schedule for providing incentives to use electronic communications—
(a) for the purposes mentioned in section 132(1) of the Finance Act 1999 (power to provide for use of electronic communications for delivery of information and making of payments), or
1999 c. 16.
(b) for any other communications with the tax authorities or in connection with taxation matters.
(2) The power to make regulations under this Schedule is conferred—
(a) on the Commissioners of Inland Revenue in relation to matters which are under their care and management, and
(b) on the Commissioners of Customs and Excise in relation to matters which are under their care and management.

Kinds of incentive
2 (1) The incentives shall be of such description as may be provided for in the regulations.
(2) They may, in particular, take the form of—
(a) discounts;
(b) the allowing of additional time to comply with any obligations under tax legislation (including obligations relating to the payment of tax or other amounts); or
(c) the facility to deliver information or make payments at more convenient intervals.

Conditions of entitlement
3 (1) The regulations may make provision as to the conditions of entitlement to an incentive.
(2) They may, in particular, make entitlement conditional—
(a) on the use of electronic communications for all communications or payments (or all communications and payments of a specified description) with, to or from the tax authority concerned, and
(b) on the use of specified means of electronic communication or payment acceptable to the tax authority concerned.
(3) The regulations may make provision for an appeal against a decision that the conditions of entitlement are not met.

Withdrawal of entitlement
4 (1) The regulations may make provision for the withdrawal of an incentive in specified circumstances.
(2) If they do, they may make provision—
(a) for giving notice of the withdrawal,
(b) for an appeal, and
(c) for the recovery of an amount not exceeding the value of the incentive.
(3) The regulations may provide that specified enactments relating to assessments, reviews, appeals and recovery of tax are to apply, with such adaptations as may be specified, in relation to the withdrawal of an incentive.
Word in Sch. 38 para. 4(3) inserted (1.4.2009) by The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56), art. 1(2), Sch. 1 para. 295(2)

Power to authorise provision by directions
5 The regulations may authorise the making of any such provision as is mentioned in paragraph 3 or 4 by means of a specific or general direction given by the Commissioners of Inland Revenue or the Commissioners of Customs and Excise.

Power to provide for penalties
6 (1) The regulations may provide for contravention of, or failure to comply with, a specified provision of any such regulations to attract a penalty of a specified amount not exceeding £1,000.
(2) If they do, they may provide that specified enactments relating to penalties imposed in relation to any taxation matter (including enactments relating to assessments, review and appeals) are to apply, with or without modifications, in relation to penalties under the regulations.

General supplementary provisions
7 (1) Power to make provision by regulations under this Schedule includes power—
(a) to make different provision for different cases; and
(b) to make such incidental, supplemental, consequential and transitional provision in connection with any provision contained in any such regulations as the persons exercising the power think fit.
(2) The power to make regulations under this Schedule is exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

Interpretation
8 (1) In this Schedule—
“discount” includes payment;
“electronic communications” includes any communications by means of an electronic communications service;
“legislation” means any enactment, EU legislation or subordinate legislation;
“payment” includes a repayment;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978;
“taxation matter” means any of the matters under the care and management of the Commissioners of Inland Revenue or the Commissioners of Customs and Excise;
“tax authorities” means—
(a) the Commissioners of Inland Revenue or the Commissioners of Customs and Excise,
(b) any officer of either body of Commissioners; or
(c) any other person who for the purposes of electronic communications is acting under the authority of either body of Commissioners;
“tax legislation” means legislation relating to any taxation matter.
Words in Sch. 38 para. 8 substituted (25.7.2003 for specified purposes, 29.12.2003 for remaining purposes) by Communications Act 2003 (c. 21), s. 411(2), Sch. 17 para. 160 (with Sch. 18); S.I. 2003/1900, arts. 1(2), 2(1), Sch. 1 (with art. 3) (as amended by S.I. 2003/3142, art. 1(3)) S.I. 2003/3142, art. 3(2)
Word in Act substituted (22.4.2011) by The Treaty of Lisbon (Changes in Terminology) Order 2011 (S.I. 2011/1043), arts. 2, 3, 6 (with arts. 3(2)(3), 4(2), 6(4)(5))
1978 c. 30.
(2) References in this Schedule to the delivery of information have the same meaning as in section 132 of the Finance Act 1999.
1999 c. 16.

SCHEDULE 39 New Schedule 1AA to the Taxes Management Act 1970
Section 149(2).

The Schedule inserted after Schedule 1 to the Taxes Management Act 1970 is as follows:

“Schedule 1AA Orders for production of documents

Introduction
1 The provisions of this Schedule supplement section 20BA.

Authorised officer of the Board
2 (1) In section 20BA(1) an “authorised officer of the Board” means an officer of the Board authorised by the Board for the purposes of that section.
(2) The Board may make provision by regulations as to—
(a) the procedures for approving in any particular case the decision to apply for an order under that section, and
(b) the descriptions of officer by whom such approval may be given.

Notice of application for order
3 (1) A person is entitled—
(a) to notice of the intention to apply for an order against him under section 20BA, and
(b) to appear and be heard at the hearing of the application,
unless the appropriate judicial authority is satisfied that this would seriously prejudice the investigation of the offence.
(2) The Board may make provision by regulations as to the notice to be given, the contents of the notice and the manner of giving it.

Obligations of person given notice of application
4 (1) A person who has been given notice of intention to apply for an order under section 20BA(4) shall not—
(a) conceal, destroy, alter or dispose of any document to which the application relates, or
(b) disclose to any other person information or any other matter likely to prejudice the investigation of the offence to which the application relates.
This is subject to the following qualifications.
(2) Sub-paragraph (1)(a) does not prevent anything being done—
(a) with the leave of the appropriate judicial authority,
(b) with the written permission of an officer of the Board,
(c) after the application has been dismissed or abandoned, or
(d) after any order made on the application has been complied with.
(3) Sub-paragraph (1)(b) does not prevent a professional legal adviser from disclosing any information or other matter—
(a) to, or to a representative of, a client of his in connection with the giving by the adviser of legal advice to the client; or
(b) to any person—
(i) in contemplation of, or in connection with, legal proceedings; and
(ii) for the purpose of those proceedings.
This sub-paragraph does not apply in relation to any information or other matter which is disclosed with a view to furthering a criminal purpose.
(4) A person who fails to comply with the obligation in sub-paragraph (1)(a) or (b) above may be dealt with as if he had failed to comply with an order under section 20BA.

Exception of items subject to legal privilege
5 (1) Section 20BA does not apply to items subject to legal privilege.
(2) For this purpose “items subject to legal privilege” means—
(a) communications between a professional legal adviser and his client or any person representing his client made in connection with the giving of legal advice to the client;
(b) communications between a professional legal adviser and his client or any person representing his client or between such an adviser or his client or any such representative and any other person made in connection with or in contemplation of legal proceedings and for the purposes of such proceedings; and
(c) items enclosed with or referred to in such communications and made—
(i) in connection with the giving of legal advice; or
(ii) in connection with or in contemplation of legal proceedings and for the purposes of such proceedings,
when they are in the possession of a person who is entitled to possession of them.
(3) Items held with the intention of furthering a criminal purpose are not subject to legal privilege.

Resolution of disputes as to legal privilege
6 (1) The Board may make provision by regulations for the resolution of disputes as to whether a document, or part of a document, is an item subject to legal privilege.
(2) The regulations may, in particular, make provision as to—
(a) the custody of the document whilst its status is being decided;
(b) the appointment of an independent, legally qualified person to decide the matter;
(c) the procedures to be followed; and
(d) who is to meet the costs of the proceedings.

Complying with an order
7 (1) The Board may make provision by regulations as to how a person is to comply with an order under section 20BA.
(2) The regulations may, in particular, make provision as to—
(a) the officer of the Board to whom the documents are to be produced,
(b) the address to which the documents are to be taken or sent, and
(c) the circumstances in which sending the documents by post complies with the order.
(3) Where an order under section 20BA applies to a document in electronic or magnetic form, the order shall be taken to require the person to deliver the information recorded in the document in a form in which it is visible and legible.

Procedure where documents are delivered
8 (1) The provisions of section 20CC(3) to (9) apply in relation to a document delivered to an officer of the Board in accordance with an order under section 20BA as they apply to a thing removed by an officer of the Board as mentioned in subsection (1) of section 20CC.
(2) In section 20CC(9) as applied by sub-paragraph (1) above the reference to the warrant concerned shall be read as a reference to the order concerned.

Sanction for failure to comply with order
9 (1) If a person fails to comply with an order made under section 20BA, he may be dealt with as if he had committed a contempt of the court.
(2) For this purpose “the court” means—
(a) in relation to an order made by a Circuit judge, the Crown Court;
(b) in relation to an order made by a sheriff, a sheriff court;
(c) in relation to an order made by a county court judge, a county court in Northern Ireland.

Notice of order etc.
10 The Board may make provision by regulations as to the circumstances in which notice of an order under section 20BA, or of an application for such an order, is to be treated as having been given.

General provisions about regulations
11 Regulations under this Schedule—
(a) may contain such incidental, supplementary and transitional provision as appears to the Board to be appropriate, and
(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.”

.
1970 c. 9.

SCHEDULE 40 Repeals
Section 156.

Part I Excise duties

(1) Hydrocarbon oils
Chapter	Short title	Extent of repeal
1979 c. 5.	The Hydrocarbon Oil Duties Act 1979.	In section 13(1) the words from “; and the Commissioners" to the end.
		Section 13A(1B), (1C) and (2).
		In Schedule 1, paragraph 2(1)(b) and the word “or" immediately preceding it, and paragraph 2(4).
		In Schedule 2A—
		(a) paragraph 8(4);
		(b) in paragraph 11(1), the definitions of “leaded" and “unleaded" petrol.
1997 c. 16.	The Finance Act 1997.	Section 7(3) and (9)(e).
		In Schedule 6, paragraph 6(2).
1. The repeals in section 13A of and Schedule 2A to the Hydrocarbon Oil Duties Act 1979 and section 7 of the Finance Act 1997 come into force on the day appointed under section 5(6) of this Act.
2. The repeals in section 13 of the Hydrocarbon Oil Duties Act 1979 and Schedule 6 to the Finance Act 1997 have effect in accordance with section 8 of this Act.
3. The repeals in Schedule 1 to the Hydrocarbon Oil Duties Act 1979 have effect in relation to the use of rebated heavy oil as fuel on or after 1st May 2000.

(2) Tobacco
Chapter	Short title	Extent of repeal
1979 c. 7.	The Tobacco Products Duty Act 1979.	Section 7(1)(c)(i).
(3) Amusement machine licence duty
Chapter	Short title	Extent of repeal
1981 c. 63.	The Betting and Gaming Duties Act 1981.	In section 25(1B)(b), the words “, other than one consisting only in a blank surface onto which light is projected".
		In section 25(7), the word “or” at the end of paragraph (c).
These repeals have effect in accordance with paragraph 7 of Schedule 2 to this Act.
(4) Air passenger duty
Chapter	Short title	Extent of repeal
1994 c. 9.	The Finance Act 1994.	In section 31, subsections (1), (2) and (6).
		In section 43, in subsection (2), the words “Subject to subsection (3) below" and subsection (3).
1997 c. 16.	The Finance Act 1997.	Section 9.
1. The repeals in the Finance Act 1994 have effect in accordance with section 19(6) of this Act.
2. The repeal in the Finance Act 1997 has effect in accordance with section 18(8) of this Act.
Sch. 40 Pt. I(1) in force in accordance with Sch. 40 Pt. I(1) Notes 1-3

Part II Income tax, corporation tax and capital gains tax

(1) Giving to charity
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 202, in subsection (6), the words “must not be paid by the employee under a covenant", and subsection (7).
		In section 339, subsections (2), (3), (3A), (3F), (6), (7) and (8) and, in subsection (9), the words “in subsections (1) to (4) above includes".
		In section 347A, subsections (2)(b), (7) and (8).
		In section 505(6), the words “and, for this purpose, all covenanted payments to charity (within the meaning of section 347A(7)) shall be treated as a single item".
1989 c. 26.	The Finance Act 1989.	Section 59.
1990 c. 29.	The Finance Act 1990.	In section 25, in subsection (2), paragraphs (c) and (g) and, in subsection (12), paragraphs (b) and (e) and the word “and" immediately preceding paragraph (e).
1998 c. 36.	The Finance Act 1998.	In section 48, subsections (3), (6) and (7).
1. The repeals in section 202 of the Taxes Act 1988 have effect in accordance with section 38(7) of this Act.
2. The repeals in section 339 of the Taxes Act 1988 have effect in accordance with section 40(11) of this Act.
3. The repeals in sections 347A and 505 of the Taxes Act 1988 and the repeal of section 59 of the Finance Act 1989 have effect in accordance with section 41(9) of this Act.
4. The repeals in section 25 of the Finance Act 1990 have effect in accordance with section 39(10) of this Act.

(2) Benefits in kinds: deregulatory amendments
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 155(2).
		Section 160(1C).
		Section 161(1A) and (1B).
1994 c. 9.	The Finance Act 1994.	Section 88(5).
These repeals have effect in accordance with section 57(2) of this Act.

(3) Cars available for private use
Chapter	Short title	Extent of repeal
1996 c. 8.	The Finance Act 1996.	In Schedule 20, paragraph 40.
1999 c. 16.	The Finance Act 1999.	Section 47.
These repeals have effect in accordance with section 59 of this Act.

(4) Occupational and personal pension schemes
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 611(3), the words “retirement benefits" in both places where they occur.
		Section 630(3).
		Section 633(2).
		In section 638(4), the words “the aggregate of", paragraph (b) and the word “and" immediately preceding it.
		Section 641.
		Section 642.
		In section 645(3), the word “and" immediately preceding paragraph (c).
		Section 646(7).
		Section 660A(7).
1996 c. 8.	The Finance Act 1996.	In Schedule 21, paragraph 18.
1. The repeal of section 633(2) of the Taxes Act 1988 has effect in accordance with paragraph 9 of Schedule 13 to this Act.
2. The repeals in section 638(4) of that Act have effect in relation to contributions paid in the year 2001-02 and subsequent years of assessment.
3. The repeals of section 641 of that Act and paragraph 18 of Schedule 21 to the Finance Act 1996 have effect in accordance with paragraph 17 of Schedule 13 to this Act.
4. The repeal of section 642 of the Taxes Act 1988 has effect in accordance with paragraph 19 of Schedule 13 to this Act.
5. The repeal of section 646(7) of that Act has effect for the year 2001-02 and subsequent years of assessment.
6. The repeal of section 660A(7) of that Act has effect for the year 2001-02 and subsequent years of assessment.

(5) Enterprise investment scheme and venture capital trusts
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 293(6)(b) and the word “and" immediately preceding it.
		Section 299B(7).
		In section 312(1), the definition of “the seven year period".
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In Schedule 5B, in paragraph 19(1)—
		(a) the definition of “the five year period";
		(b) the definition of “the seven year period".
1994 c. 9.	The Finance Act 1994.	In Schedule 15, paragraph 10(c).
1. The repeal in section 293(6) of the Taxes Act 1988 has effect in accordance with paragraph 12 of Schedule 17 to this Act.
2. The repeal in the Finance Act 1994 has effect in accordance with paragraph 13(2) of that Schedule.
3. The repeal in section 299B of the Taxes Act 1988 has effect in accordance with paragraph 14 of that Schedule.
4. The other repeals have effect in accordance with paragraph 8 of that Schedule.

(6) Taper relief for business assets
Chapter	Short title	Extent of repeal
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In Schedule A1, in paragraph 22(1), the definitions of “full-time working officer or employee" and “qualifying office or employment".
These repeals have effect in accordance with section 67(7) of this Act.

(7) Meaning of “research and development"
Chapter	Short title	Extent of repeal
1990 c. 1.	The Capital Allowances Act 1990.	Section 136.
		In section 139(1)(d)—
		(a) in the opening words, the words “or a class of trades";
		(b) in sub-paragraphs (i) and (ii), the words “or, as the case may be, of trades of that class".
		Section 139(3).
These repeals have effect in accordance with section 68(2) of this Act.

(8) Capital allowances
Chapter	Short title	Extent of repeal
1990 c. 1.	The Capital Allowances Act 1990.	In section 41, in subsection (1), paragraphs (b) and (c) and the word “or" at the end of paragraph (a) and, in subsection (4), paragraph (a) and, in paragraph (b), the words from “or within (1)(b) or (c)" to “subsection (1)(c)" and the words “or subsection (1)(b) and (c)".
		Section 53(1)(bb).
1994 c. 9.	The Finance Act 1994.	In section 118, subsections (1) to (5) and (7) to (9).
1. The repeals in section 41 of the Capital Allowances Act 1990 have effect in accordance with section 74(1) of this Act.
2. The repeal in section 53 of that Act has effect in accordance with section 75(6)(a) of this Act.
3. The repeals in section 118 of the Finance Act 1994 have effect in accordance with section 73(2) of this Act.

(9) Contributions to local enterprise agencies, etc.
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 79(11), the words “and before 1st April 2000".
		In section 79A—
		(a) in subsection (5)(b), the references to the Scottish Development Agency and the Highlands and Islands Development Board;
		(b) in subsection (7), the words “and before 1st April 2000".
1994 c. 9.	The Finance Act 1994.	Section 145(1).

(10) Capital gains tax: gifts and trusts
Chapter	Short title	Extent of repeal
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In Schedule 10, paragraph 14(42).
1996 c. 8.	The Finance Act 1996.	In Schedule 38, paragraph 10(2)(c) and (f).
1. The repeal in Schedule 10 to the Taxation of Chargeable Gains Act 1992 has effect in accordance with section 92(5) of this Act.
2. The repeals in Schedule 38 to the Finance Act 1996 have effect in relation to disposals made on or after 9th November 1999.

(11) Groups and group relief
Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In section 87A(3), the word “or" preceding “paragraph 75A(2)".
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 402(4), the words from “if the share in the consortium" to “is nil or".
		In section 413—
		(a) in subsection (5), the words from the beginning to “Kingdom; and", paragraph (c) and the word “or" immediately preceding it;
		(b) subsections (8) and (9).
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 170(8), the words “, or subsections (7) to (9),".
		In section 228(10)(b), the words “to (9)".
1992 c. 48.	The Finance (No.2) Act 1992.	In Schedule 6, paragraph 3.
1998 c. 36.	The Finance Act 1998.	Section 81.
1. The repeal in section 87A(3) of the Taxes Management Act 1970 has effect in accordance with section 98(2) of this Act.
2. The repeal in section 402(4) of the Taxes Act 1988, the repeal of section 413(8) and (9) of that Act, the repeals in the Taxation of Chargeable Gains Act 1992 and the repeal of section 81 of the Finance Act 1998 have effect in accordance with section 100(5) of this Act.
3. The repeals in section 413(5) of the Taxes Act 1988 and the repeal in Schedule 6 to the Finance (No.2) Act 1992 have effect in accordance with paragraph 6 of Schedule 27 to this Act.

(12) Groups of companies: chargeable gains
Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In section 87A(3), the words “or 179(11)".
1988 c. 39.	The Finance Act 1988.	In section 132(6), in the definition of group, the words “references to residence in the United Kingdom were omitted and".
1992 c. 12.	The Taxation of Chargeable Gains Act 1992.	In section 14(4)(b), the words “without subsections (2)(a), (9) and (12) to (14)".
		Section 25(4).
		In section 30(2)(b), the words “178 or".
		In section 31(7)(b), the words “178 or".
		In section 35(3)(d)(i), the words “172,".
		In section 170—
		(a) subsection (2)(a);
		(b) in subsection (9)(b), the words “(although resident in the United Kingdom)".
		Section 172.
		Section 174(1) to (3) and (5).
		In section 176(7), paragraph (c) and the word “and" immediately preceding it.
		Section 178.
		Section 179(11) and (12).
		Section 180.
		Section 181(5).
		In section 192(4), the words “178 or".
		In section 197(2)(b), the words “178(3) or".
		In section 211—
		(a) in subsection (2), the words “Subject to subsection (3) below" and paragraph (b) and the word “or" immediately following it;
		(b) subsection (3).
		In section 216(2)(b), (3) and (4), the words “178 or".
		In Schedule 4—
		(a) in paragraph 4(2), the words “178(3), 179(3)";
		(b) paragraph 4(3);
		(c) paragraph 9(1)(a).
		In Schedule 7B, paragraph 7.
1992 c. 48.	The Finance (No.2) Act 1992.	Section 25(1).
1993 c. 34.	The Finance Act 1993.	Section 90.
1.The repeal in the Finance Act 1988 has effect in accordance with paragraph 15 of Schedule 29 to this Act.
2.The repeal in section 14 of the Taxation of Chargeable Gains Act 1992 has effect in accordance with paragraph 16 of that Schedule.
3.The repeal in section 25 of that Act has effect in accordance with paragraph 6(5) of that Schedule.
4. The repeals in section 170 of that Act have effect in accordance with paragraph 1 of that Schedule.
5. The repeal of section 172 of that Act, and the repeals in section 35 of and Schedule 7B to that Act, have effect in accordance with paragraph 3 of Schedule 29 to this Act.
6. In section 174 of that Act—
(a) the repeal of subsections (1) to (3) has effect in accordance with paragraph 12 of that Schedule; and
(b) the repeal of subsection (5) has effect in accordance with paragraph 13 of that Schedule.
7. The repeals in section 176 of that Act have effect in accordance with paragraph 24 of that Schedule.
8. The repeals in section 87A(3) of the Taxes Management Act 1970 and in section 179 of the Taxation of Chargeable Gains Act 1992 have effect in accordance with paragraph 4(7) of that Schedule.
9. The repeal in section 181 of the Taxation of Chargeable Gains Act 1992 has effect in accordance with paragraph 28 of that Schedule.
10.The repeals in section 211 of that Act, and the repeal of section 90 of the Finance Act 1993, have effect in accordance with paragraph 30 of that Schedule.
11. The repeal in section 25 of the Finance (No.2) Act 1992 has effect in accordance with paragraph 4(6) of that Schedule.

(13) Double taxation relief
Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In section 42(7)(a), the words “,810".
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 750(3)(b), the words “other than section 810".
		In section 788(5), in the second sentence, paragraph (b) and the word “and" preceding it.
		Section 794(2)(c).
		Section 799(3)(b).
		Section 800.
		Section 802.
		Section 810.
		In Schedule 19AC, in paragraph 13, sub-paragraph (1) and, in sub-paragraph (2), the subsection (3) which is treated as inserted into section 794 of the Act.
1989 c. 26.	The Finance Act 1989.	In section 82(1)(a), the words “or foreign tax”.
Sch. 40 Pt. II(13) partly in force at 1.4.2000 see Sch. 30 para. 1
These repeals have effect in accordance with Schedule 30 to this Act.

(14) Controlled foreign companies
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 756(3), paragraph (a) and the words following paragraph (b).
		In Schedule 25, in paragraph 11(1), the word “and” immediately preceding paragraph (g).
These repeals have effect in accordance with paragraph 9 of Schedule 31 to this Act.

(15) International matters
Chapter	Short title	Extent of repeal
1993 c. 34.	The Finance Act 1993.	In section 149, in subsections (4) and (5), the words “the asset or contract was held, or the liability was owed, by the company solely for trading purposes and".
		Section 164(6) and (7).
These repeals have effect in accordance with section 106(17) of this Act.

(16) Insurance
Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 431(2), the definition of “investment reserve".
		In Schedule 19AC, paragraph 7(3)(c).
1993 c. 34.	The Finance Act 1993.	Section 177.
1994 c. 9.	The Finance Act 1994.	Section 224.
1. The repeals in the Taxes Act 1988 have effect in accordance with section 109(10) of this Act.
2. The other repeals have effect in accordance with section 107(12)(c) of this Act.

(17) Payments under deduction of tax
Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In columns 1 and 2 of the Table in section 98—
		(a) the words “regulations under section 118D, 118F, 118G, 118H or 118I"; and
		(b) the words “regulations under section 124(3)".
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In Part IV, Chapter VIIA.
		Section 124.
		In section 348(3), the words “or to any payment which is a relevant payment for the purposes of Chapter VIIA of Part IV".
		In section 349—
		(a) in subsection (1), the words “or to any payment which is a relevant payment for the purposes of Chapter VIIA of Part IV";
		(b) in subsection (3), paragraph (e).
		Section 468M(4)(b).
		Section 482(11)(a).
		In section 582A(1), the words “and section 118B(4)".
		Section 841A.
		In Schedule 23A—
		(a) in paragraph 1(1), in the definition of “overseas securities", paragraph (b) and the word “and" preceding it;
		(b) in paragraph 1(1), in the definition of “UK securities", the words “quoted Eurobonds (as defined by section 124) held in a recognised clearing system or";
		(c) paragraph 4(8).
1989 c. 26.	The Finance Act 1989.	In section 178(2)(m), the reference to section 118F of the Taxes Act 1988.
1996 c. 8.	The Finance Act 1996.	In Schedule 7, paragraph 28.
		Schedule 29.
		In Schedule 38, paragraph 6(2)(a) and (3).
1997 c. 58.	The Finance (No.2) Act 1997.	Section 38.
1. The repeal of Chapter VIIA of Part IV of the Taxes Act 1988, and related repeals, have effect in accordance with section 111(6)(a) of this Act.
2. The repeal of section 124 of that Act, and related appeals, have effect in accordance with section 111(6)(b) of this Act.
.3. The repeal of section 482(11)(a) of that Act has effect in accordance with section 111(6)(c) of this Act.

(18) Tax treatment of expenditure on production or acquisition of films
Chapter	Short title	Extent of repeal
1992 c. 48.	The Finance (No.2) Act 1992.	In section 43(3), paragraph (b) and the word “or” preceding it.
This repeal has effect in accordance with section 113(6) of this Act.

Part III Stamp duty and stamp duty reserve tax

Chapter	Short title	Extent of repeal
1949 c. 15 (N.I.).	The Finance Act (Northern Ireland) 1949.	Section 8.
1977 c. 37.	The Patents Act 1977.	Section 126.
1986 c. 41.	The Finance Act 1986.	In sections 67(9), 70(9), 95(1) and 97(1), the words “and is resident in the United Kingdom” and “and is so resident”.
1993 c. 34.	The Finance Act 1993.	In section 204(3), the word “first" (in each place where it occurs).
1994 c. 26.	The Trade Marks Act 1994.	Section 61.
2000 c. 17.	The Finance Act 2000.	Section 133.
		Section 134.
		In Schedule 33, paragraph 9(1).
The repeals in the Patents Act 1977 and the Trade Marks Act 1994 have effect in accordance with section 129(5) of this Act.
2. The repeals in the Finance Act 1986 have effect in accordance with section 134(5) of this Act.
3. The repeals of sections 133 and 134 of this Act have effect—
(a) so far as relating to stamp duty on bearer instruments, in accordance with section 107 of the Finance Act 1990;
(b) so far as relating to stamp duty on instruments other than bearer instruments, in accordance with section 108 of that Act; and
(c) so far as relating to stamp duty reserve tax, in accordance with section 110 of that Act.
4. The repeal in Schedule 33 to this Act has effect in accordance with section 107 of the Finance Act 1990.

Part IV Value Added Tax
Chapter	Short title	Extent of repeal
1994 c. 23.	The Value Added Tax Act 1994.	In Schedule A1, in paragraph 1(1), the word “and” at the end of paragraph (b).

Part V Information powers
Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In section 17, subsections (4B) and (4C).
		In section 18, subsections (3) and (3AA).
1988 c. 1.	The Income and Corporation Taxes Act 1988.	Section 482A.
These repeals have effect in relation to amounts paid, credited or received on or after 6th April 2001.