After subsection (5) insert—

“(5A)

Subsection (5)(a) above does not prevent this section from applying if or, as the case may be, to the extent that—

(a)

the property becomes settled property by virtue of the gift,

(b)

by reason of the donor’s spouse (“the relevant beneficiary”) becoming beneficially entitled to an interest in possession in the settled property, the disposal is or, as the case may be, is to any extent an exempt transfer by virtue of section 18 of the 1984 Act in consequence of the operation of section 49 of that Act (treatment of interests in possession),

(c)

at some time after the disposal, but before the death of the donor, the relevant beneficiary’s interest in possession comes to an end, and

(d)

on the occasion on which that interest comes to an end, the relevant beneficiary does not become beneficially entitled to the settled property or to another interest in possession in the settled property.

(5B)

If or, as the case may be, to the extent that this section applies by virtue of subsection (5A) above, it has effect as if the disposal by way of gift had been made immediately after the relevant beneficiary’s interest in possession came to an end.

(5C)

For the purposes of subsections (5A) and (5B) above—

(a)

section 51(1)(b) of the 1984 Act (disposal of interest in possession treated as coming to end of interest) applies as it applies for the purposes of Chapter 2 of Part 3 of that Act; and

(b)

references to any property or to an interest in any property include references to part of any property or interest.”.

In section 6 (excluded property), after subsection (1) insert—

“(1A)

A holding in an authorised unit trust and a share in an open-ended investment company is excluded property if the person beneficially entitled to it is an individual domiciled outside the United Kingdom.”.

In section 48 (settlements: excluded property), after subsection (3) insert—

“(3A)

Where property comprised in a settlement is a holding in an authorised unit trust or a share in an open-ended investment company—

(a)

the property (but not a reversionary interest in the property) is excluded property unless the settlor was domiciled in the United Kingdom at the time the settlement was made, and

(b)

section 6(1A) above applies to a reversionary interest in the property but does not otherwise apply in relation to the property.”.

After the definition of “amount” insert—

““authorised unit trust” means a scheme which is a unit trust scheme for the purposes of section 469 of the Taxes Act 1988 (see subsection (7) of that section) and in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force;”.

After the definition of “mortgage” insert—

““open-ended investment company” means an open-ended investment company within the meaning given by section 236 of the Financial Services and Markets Act 2000 which is incorporated in the United Kingdom;”.

For sub-paragraphs (1) and (2) substitute—

“(1)

This paragraph applies in the following cases.

(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).”.

After that sub-paragraph insert—

“(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.”.

In paragraph 53 (requirement to be registered), after sub-paragraph (3) insert—

“(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.”.

In paragraph 78 (assessments of amounts of levy due), after sub-paragraph (1) insert—

“(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.”.

In paragraph 91 (interpretation etc of Part 7) at the end insert—

“(5)

In relation to cases where, by virtue of regulations under paragraph 41(1)(a)(ii), 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.”.

In paragraph 125(1) (obligation to keep records) for “persons who are, or are required to be, registered” substitute“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)”.

In paragraph 20 (exemption under paragraph 19: averaging periods) for sub-paragraphs (6) to (8) substitute—

“(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.”.

In paragraph 20B (exemption under paragraph 20A: averaging periods) for sub-paragraphs (6) to (8) substitute—

“(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.”.

In Schedule 6A to the Finance Act 1994 (c. 9) (insurance premium tax: premiums liable to tax at higher rate), insert after paragraph 3—

“Insurance provided by divided company

3A

(1)

A premium under a taxable insurance contract relating to a motor car or motor cycle also falls within paragraph 2 above if—

(a)

the insurance to be provided under the contract is provided by a divided company, and

(b)

any division of that company would, if it were a separate company, be a person connected with a supplier of motor cars or motor cycles.

(2)

A premium under a taxable insurance contract relating to relevant goods also falls within paragraph 3 above if—

(a)

the insurance to be provided under the contract is provided by a divided company, and

(b)

any division of that company would, if it were a separate company, be a person connected with a supplier of relevant goods.

(3)

Sub-paragraph (1) or (2) above does not apply if the insurance is provided to the insured free of charge.

(4)

A premium falls within paragraph 2 above by virtue of this paragraph only to the extent that it is attributable to cover for a risk which relates to a motor car or motor cycle supplied by a supplier of motor cars or motor cycles with whom the division in question would, if it were a separate company, be connected.

(5)

A premium falls within paragraph 3 above by virtue of this paragraph only to the extent that it is attributable to cover for a risk which relates to relevant goods supplied by a supplier of relevant goods with whom the division would, if it were a separate company, be connected.

(6)

For the purposes of this paragraph—

(a)

a company is a “divided company” if under the law under which the company is formed, under the company’s constitution or under arrangements entered into by or in relation to the company—

(i)

some or all of the assets of the company are available primarily, or only, to meet particular liabilities of the company, and

(ii)

some or all of the members of the company, and some or all of its creditors, have rights primarily, or only, in relation to particular assets of the company;

(b)

a “division” of such a company means an identifiable part of it (by whatever name known) that carries on distinct business activities and to which particular assets and liabilities of the company are primarily or wholly attributable.

(7)

In this paragraph “provided to the insured free of charge” has the meaning given by sub-paragraph (5) of paragraph 2 or 3 above.

In determining for this purpose whether a divided company by whom insurance is provided is a person falling within sub-paragraph (2) of paragraph 2 or 3 above, the company shall be treated as connected with any person with whom a division of that company would be connected if it were a separate company.

(8)

Other expressions defined for the purposes of paragraph 2 or 3 above have the same meaning in this paragraph.”.