Finance (No. 2) Act 1975

The fraction by which, under section 93(2) of the Finance Act 1972, chargeable gains are to be reduced before they are for the purposes of corporation tax included in the profits of an authorised unit trust or investment trust shall, as from 1st April 1974, be seventy-one one-hundred-and-fourths (instead of the fraction specified in section 10(1)(b) of the Finance Act 1974).

The small companies rate for the financial year 1974 shall be 42 per cent, and for that year the fraction mentioned in section 95(2) of the Finance Act 1972 (marginal relief for small companies) shall be one-sixth.

In section 8 of the Taxes Act (personal relief)—

In section 14 of the Taxes Act (additional relief for widows and others in respect of children) for the references to £180 there shall be substituted references to £280.

In section 18 of the Taxes Act (relief for blind persons)—

After subsection (1) of section 8 of the Taxes Act there shall be inserted the following subsections—

Section 7 of the Taxes Act shall cease to have effect.

In section 5 of the Taxes Act for the words " sections 7 to 21 " there shall be substituted the words " sections 8 to 21 ".

In section 34(3) of the Finance Act 1971 for the reference to section 7 of the Taxes Act there shall be substituted a reference to section 8(1B) of that Act.

In paragraph 3(3) of Schedule 4 to the Finance Act 1971 for the reference to section 7 of the Taxes Act there shall be substituted a reference to section 8(1A) of that Act.

Subject to subsections (9) to (11) below, this section applies to the following share capital, that is to say—

For the purposes of subsection (1)(b) above a class of shares is a relevant class if—

Where a company issues any share capital to which this section applies in a case in which two or more persons are entitled thereto, the following provisions of this section and paragraph 3 of Schedule 8 to this Act shall have effect as if the company had issued to each of those persons separately a part of that share capital proportionate to his interest therein on the due date of issue.

Subject to the following provisions of this section, where a company issues any share capital to which this section applies in a case in which an individual is beneficially entitled to that share capital, that individual shall be treated as having received on the due date of issue income of an amount which, if reduced by an amount equal to income tax thereon at the basic rate for the year of assessment in which that date fell, would be equal to the appropriate amount in cash (as defined in paragraph 1 of Schedule 8 to this Act), and—

Where a company issues any share capital to which this section applies to the personal representatives of a deceased person as such during the administration period, the amount of income which, if the case had been one in which an individual was beneficially entitled to that share capital, that individual would have been treated under subsection (4) above as having received shall be deemed for the purposes of Part XV of the Taxes Act to be part of the aggregate income of the estate of the deceased. The preceding provisions of this subsection shall be construed as if contained in Part XV of the Taxes Act; and in section 432(7) of that Act there shall be added at the end the words " and section 34(5) of the Finance (No. 2) Act 1975 (stock dividends) ".

Where a company issues any share capital to which this section applies to trustees in respect of any shares in the company held by them (or by them and one or more other persons) in a case in which a dividend in cash paid to the trustees in respect of those shares would have been to any extent income to which section 16 of the Finance Act 1973 (charge to additional rate of certain income of discretionary trusts) applies, then— In section 17(3)(b) of the Finance Act 1973 (amounts to be set off in connection with payments under discretionary trusts) after " above " there shall be inserted " or under section 34(6) of the Finance (No. 2) Act 1975 ".

Schedule 8 to this Act shall have effect for supplementing this section, which is there referred to as the principal section.

For the purposes of this section and Schedule 8 to this Act—

This section shall be deemed to have come into force on 6th April 1975, but shall not apply to—

Where, in a case within subsection (4) above, the share capital in question is issued in respect of shares in the company issued before 6th April 1975 which confer on the holder a right to convert or exchange them into or for shares in the company of a different class, this section shall not apply to so much (if any) of any bonus share capital issued by the company after 5th April 1976 in connection with an exercise of that right as would have been issued if that right had been exercised so as to effect the conversion or exchange of the shares on the earliest possible date after 5th April 1975; and subsections (5) and (6) above shall, where applicable, have effect accordingly.

Where any bonus share capital falling within subsection (1)(b) above (whether issued before or after the coming into force of this section) is after 5th April 1975 converted into or exchanged for shares in the company in question of a different class, then—

Where a person incurs expense in or in connection with the provision for any employee, by reason of his employment, of insurance against the cost of medical treatment in circumstances such that section 196(1) of the Taxes Act (benefits in kind to be taken into account) would not, apart from this section, apply to the expense (whether because of the rate of the employee's emoluments or for any other reason), then, irrespective of the rate of those emoluments, Chapter II of Part VIII of the Taxes Act (expenses allowances to directors and others) shall have effect in relation to the expense as if—

Where expense in or in connection with the provision of insurance against the cost of medical treatment is incurred by a person in respect of two or more employees as members of a group or class, then, for the purposes of subsection (1) above and of Chapter II of Part VIII of the Taxes Act in its application (whether or not by virtue of that subsection) to that expense, the expense incurred in respect of any one of those employees shall be taken to be such part of that expense as is just and reasonable.

Notwithstanding anything in this section or Chapter II of Part VIII of the Taxes Act, that Chapter shall not apply in relation to expense incurred wholly in or in connection with the provision for an employee of insurance against the cost of medical treatment outside the United Kingdom the need for which arises while he is outside the United Kingdom for the purpose of performing the duties of his employment.

For the purposes of this section—

This section has effect for the year 1976-77 and subsequent years of assessment.

Subject to subsection (2) below, where a voucher provided for an employee by reason of his employment is received by the employee, then, for the purposes of the Income Tax Acts— For the purposes of this subsection the relevant year of assessment, in relation to a voucher, is the one in which the said expense is- incurred by the person providing the voucher or, if different and later, the one in which the voucher is received by the employee.

Where a voucher provided for an employee by reason of his employment is exchanged by him for goods or services such that, if he had purchased those goods or services for money, the money expended by him would have qualified for relief under section 189 of the Taxes Act (relief for necessary expenses), subsection (1) above shall not apply in relation to that voucher.

Where a voucher provided for an employee by reason of his employment is appropriated to him (whether by attaching it to a card held for him or in any other way), subsection (1) above shall have effect as if the employee had received the voucher at the time when it was so appropriated.

In this section " voucher " does not include a cash voucher within the meaning of section 37 of this Act but, subject to that, means any voucher, stamp or similar document capable of being exchanged (whether singly or together with other such vouchers, stamps or documents, and whether immediately or only after a time) for money, goods or services (or for any combination of two or more of those things).

For the purposes of this section—

This section has effect for the year 1976-77 and subsequent years of assessment.

Where a cash voucher provided for an employee by reason of his employment is received by the employee, then, subject to subsection (5) below, for the purposes of the Income Tax Acts (and in particular section 204(1) of the Taxes Act (pay as you earn))—

Where a cash voucher provided for an employee by reason of his employment is appropriated to him (whether by attaching it to a card held for him or in any other way), subsection (1) above and subsection (5) below shall have effect as if the employee had received the voucher at the time when it was so appropriated.

In this section "cash voucher" (subject to subsection (4) below) means any voucher, stamp or similar document capable of being exchanged (whether singly or together with other such vouchers, stamps or documents, and whether immediately or only after a time) for a sum of money greater than, equal to or not substantially less than the expense incurred in providing the voucher by the person who provides it (whether or not it is also capable of being exchanged for goods or services), except that it does not include—

Where a voucher, stamp or similar document is capable of being exchanged (as aforesaid) for a sum of money substantially less than the expense incurred in providing the voucher by the person who provides it, and the difference or part of the difference represents the cost to that person of providing benefits in connection with sickness, personal injury or death, then in determining whether the voucher, stamp or document is a cash voucher within the meaning of this section the expense incurred by him in providing it shall be treated as reduced by that difference or part.

Subsection (1) above shall not apply to a cash voucher received by an employee if, at the time when the voucher is received, the scheme under which it was issued is a scheme approved by the Board for the purposes of this subsection ; and the Board shall not approve a scheme for those purposes unless satisfied that it is practicable for income tax to be deducted in accordance with regulations under section 204 of the Taxes Act from all payments made in exchange for vouchers issued under the scheme.

Subsection (5)(a), (c) and (d) and subsection (6) of section 36 of this Act shall apply for the purposes of this section (the references in the said subsection (5)(c) and (d) to a voucher being for this purpose read as references to a cash voucher).

Subject to the provisions of this section, where— then, for all the purposes of the Income Tax Acts, the services which the worker renders or is under an obligation to render to the client under that contract shall be treated as if they were the duties of an office or employment held by the worker, and all remuneration receivable under or in consequence of that contract shall be treated as emoluments of that office or employment and shall be assessable to income tax under Schedule E accordingly.

Subsection (1)(b) above includes cases in which the third person is an unincorporated body of which the worker is a member.

Subsection (1) above shall apply whether or not the worker renders or is under an obligation to render the services in question as a partner in a firm or member of an unincorporated body; and where, in any case in which that subsection applies, the worker is a partner in a firm or a member of such a body, remuneration receivable under or in consequence of the relevant contract shall be treated for all the purposes of the Income Tax Acts as income of the worker and not as income of the firm or body.

For the purposes of this section any remuneration which the client pays or provides by reason of the worker being a person who renders or is under an obligation to render the services in question shall be treated as receivable in consequence of the relevant contract.

Subsection (1) above shall not apply—

Where an individual enters into arrangements with another person with a view to the rendering of personal services by the individual, being arrangements such that, if and when he renders any such services as a result of the arrangements, those services will be treated under subsection (1) above as if they were the duties of an office or employment held by him, then for all purposes of the Income Tax Acts any remuneration receivable under or in consequence of the arrangements shall be treated as emoluments of an office or employment held by the individual and shall be assessable to income tax under Schedule E accordingly.

In this section " remuneration ", in relation to an individual, does not include anything in respect of which he would not have been chargeable to tax under Schedule E if it had been receivable in connection with an office or employment held by him but, subject to that, includes every form of payment and all perquisites, benefits and profits whatsoever.

The preceding provisions of this section shall have effect for the year 1976-77 and subsequent years of assessment.

In assessing to income tax under Case I or Case II of Schedule D any profits or gains arising or accruing in the year 1975-76 or any earlier year of assessment from any trade, profession or vocation not permanently discontinued before 6th April 1976, being profits or gains which, if subsections (1) to (8) above had had effect for that year, would have been assessable to tax under Schedule E, the trade, profession or vocation shall be treated for all the purposes of the Income Tax Acts as having been permanently discontinued on 5th April 1976: Provided that where only part of those profits or gains would, if those subsections had had effect for that year, have been assessable to tax under Schedule E, that part shall be treated as arising or accruing from a separate trade, profession or vocation, and only that separate trade, profession or vocation shall be treated under this subsection as having been permanently discontinued as aforesaid.

The provisions of this section apply to any insurance company which carries on or has carried on long term business, and shall have effect for all purposes of the Corporation Tax Acts.

A profit or loss shall not be taken to have arisen in respect of any asset of the company by reason only that—

Subject to subsection (5) below, a profit or loss shall not be taken to arise in respect of any asset of the company by reason only that at any time after the base date the asset was or is exchanged for other assets of the company so as to become or cease to be part of the long term assets.

Subject to subsection (6) below, if an asset of the company which has at any time after 29th April 1975 been exchanged as mentioned in subsection (3) above is— then any income arising in respect of the asset after the relevant exchange, and any profit, gain or loss accruing to the company on a disposal of the asset made after the relevant exchange, shall be treated as if the relevant exchange had not taken place.

Where an insurance company has given a notice under subsection (5) above, subsection (4) above shall, as regards relevant assets disposed of by the company in the relevant period, have effect as if paragraph (b) and the reference to any profit, gain or loss accruing to the company on a disposal made after the relevant exchange were omitted.

If at any time after the base date an insurance company to which this section applies disposed or disposes of an asset which— the asset shall be treated, in a case falling within paragraph (a) above, as if it had been continuously part of the long term assets from the time of its acquisition by the company to the time of the disposal, or, in a case falling within paragraph (b) above, as if it had been continuously not part of the long term assets from the time of its acquisition by the company to the time of its disposal; and if the disposal is one as respects which subsection (4) above applies, this subsection shall apply as if the relevant exchange (within the meaning of that subsection) had not taken place.

Without prejudice to the preceding subsection, if— then, in computing for any purpose of the Corporation Tax Acts the profit, gain or loss (if any) arising on the disposal, the asset shall be deemed to have been acquired by the company on the occasion or latest of the occasions mentioned in paragraph (b) above at a cost equal to the value by reference to which the company was so assessed as regards that occasion.

There shall be made such assessments, reductions of assessments or, on a claim in that behalf, repayments of tax as may in any case be required in order to give effect to subsection (4) or (5) above.

In this section, unless the context otherwise requires, " asset" includes part of an asset and any reference to a disposal of part of an asset includes a reference to a part disposal of an asset within the meaning of section 22(2)(b) of the Finance Act 1965 ; and where a part of an asset is exchanged or disposed of as mentioned in any of subsections (3) to (8) above, that subsection shall have effect as if that part of the asset and the part not exchanged or disposed of were separate assets.

For the purposes of this section—

In relation to any time before 31st August 1974, and in its application to Northern Ireland on or after that date, subsection (2) above shall have effect as if the reference to section 23(3) of the Insurance Companies Act 1974 were a reference to section 7(3) of the Insurance Companies Amendment Act 1973.

In the case of an oil company, as defined in this section, section 177(1) of the Taxes Act (carrying forward of losses) shall have effect subject to the provisions of this section; and in those provisions " the material time " means the end of the year 1972, and references to losses being set off are references to their being set off under the said section 177(1).

Of the losses which the company incurred before the material time in its trade (other than losses excepted by subsection (5) below)—

Subsection (2) (a) above applies to the following trading income, that is to say—

The amounts referred to in subsection (2)(b) above are— and in this subsection " relevant trading income " means trading income arising from the trade in which the losses mentioned in subsection (2) above were incurred, exclusive of trading income to which paragraph (a) of that subsection applies.

There shall be excepted from the operation of subsection (2) above any losses which, if section 13(1) of the Oil Taxation Act 1975 had had effect as regards the chargeable period in which they were incurred, would have been treated as incurred in the separate trade consisting of activities falling within paragraph (a) or (b) of the said section 13(1).

For the purposes of this section a company is an oil company if at the material time it carried on a trade the activities of which, at any time within the period of five years ending with the material time, included the acquisition, in the circumstances mentioned in paragraph (a) or (b) of subsection (7) below, of crude oil or the acquisition, in the circumstances mentioned in paragraph (c) of that subsection, of oil products, in substantial quantities.

The circumstances referred to in subsection (6) above are that—

In relation to a company not resident in the United Kingdom references in this section to activities of a trade carried on by the company are only to activities carried on through a branch or agency in the United Kingdom.

For the purposes of this section—

In this section—

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The following provisions of the Taxes Act, that is to say— section 243(4) (corporation tax: general), section 244(1) (corporation tax: companies trading before financial year 1965), and section 344(2) (corporation tax: building societies), shall each be amended by substituting for the words " one month from the making of the assessment " the words " thirty days from the date of the issue of the notice of assessment".

In paragraph 9 of Schedule 5 to the Taxes Act (machinery for assessment, charge and payment of income tax under Schedule C and, in certain cases, Schedule D), after the word " Ireland " there shall be inserted the words " within thirty days from the date of the issue of the notice of assessment ".

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In section 29(5) of the Taxes Management Act 1970 (notice of assessment), after the words “shall state” there shall be inserted the words “ the date on which it is issued and ”.

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This section and sections 45 and 46 below shall not have effect in relation to tax charged by assessments notice of which was issued before the passing of this Act.

For section 55 of the Taxes Management Act 1970 (recovery of tax not in dispute) there shall be substituted—

Section 55 of the said Act of 1970 as substituted by subsection (1) above shall have effect in relation to tax charged for a year or other period of assessment ending before 6th April 1973 as if for subsection (1)(b) and (c) there were substituted—

Section 56(9) (statement of case for opinion of the High Court) and section 59(6) (election for county court in Northern Ireland) of the said Act of 1970 shall each be amended by substituting for paragraph (b) of the proviso—

In section 48(2) of the said Act of 1970 (application to appeals and other proceedings), for the words “to the omission of section 56(9) below and to any other necessary modifications” there shall be substituted the words “to any necessary modifications, including (except in the case of applications under section 55 below) the omission of section 56(9) below”.

For section 86 of the Taxes Management Act 1970 (interest on overdue tax) there shall be substituted—

Section 86 of the said Act of 1970 as substituted by subsection (1) above shall have effect in relation to tax charged for the year 1972-73 or an earlier year of assessment as if—

Section 87 of the said Act of 1970 (which, in relation to interest on overdue income tax on company distributions, has effect as originally enacted and, in relation to interest on overdue advance corporation tax and overdue income tax on company payments, has effect as substituted by paragraph 10 of Schedule 24 to the Finance Act 1972) shall be amended as follows—

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Section 109 of the said Act of 1970 (which, in relation to tax charged in connection with loans and other payments made and shortfalls occurring before 6th April 1973, has effect as originally enacted and, in relation to tax charged in connection with loans made on or after that date, has effect as substituted by paragraph 13 of Schedule 24 to the Finance Act 1972) shall be amended as follows—

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Subject to the provisions of this section, where— the repayment shall be increased under this section by an amount (in this section referred to as a " repayment supplement") equal to interest on the amount repaid at the rate of 9 per cent, per annum for the period (if any) between the relevant time and the end of the tax month in which the order for the repayment is issued.

In relation to so much (if any) of the last-mentioned period as preceded 6th April 1974, subsection (1) above shall have effect as if the rate of interest there specified were 6 per cent, per annum (instead of the rate there specified or any other rate in force by virtue of subsection (7) below).

Subsections (1) and (2) above—

For the purposes of subsection (1) above— and, subject to subsection (6) below, where a repayment to which subsection (1) above applies is of tax paid in two or more years of assessment, the repayment shall as far as possible be treated for the purposes of this subsection as a repayment of tax paid in a later rather than an earlier year among those years.

For the purposes of subsections (1) and (4) above income tax deducted by virtue of regulations made under section 204 of the Taxes Act (pay as you earn) from a person's emoluments during any year of assessment shall (without prejudice to subsection (6) below) be treated as paid by him for that and no other year of assessment.

Where in consequence of an assessment under Schedule E for any year of assessment there is made by the Board or an inspector a repayment of income tax of not less than £25, being an amount which takes account of tax overpaid or remaining unpaid for one or more earlier years of assessment, then—

Without prejudice to subsection (2) above, the Treasury may by order from time to time increase or decrease the rate of interest by reference to which repayment supplements are calculated under subsection (1) above.

A repayment supplement shall not be payable under this section in respect of a repayment or payment made in consequence of an order or judgment of a court having power to allow interest on the repayment or payment, or in respect of a repayment of a post-war credit within the meaning of the Income Tax (Repayment of Post-War Credits) Act 1959.

A repayment supplement paid to any person under this section shall not be income of that person for any tax purposes.

The powers conferred by this section to make regulations or orders shall be exercisable by statutory instrument, and any regulations or order made under this section shall be subject to annulment in pursuance of a resolution of the House of Commons.

The preceding provisions of this section shall apply in relation to a partnership, or a United Kingdom trust (as defined in section 110(1) of the Finance Act 1972), or, in the case of a United Kingdom estate, the personal representatives of a deceased person as such (within the meaning of section 432(4) of the Taxes Act) as they apply in relation to an individual.

In this section—

This section applies to the following payments made to a company in connection with any accounting period for which the company was resident in the United Kingdom (in this section called " the relevant accounting period "), that is to say—

Subject to the following provisions of this section, where a payment of not less than £100 to which this section applies is (after the passing of this Act) made by the Board or an inspector after the end of the twelve months beginning with the material date, the payment shall be increased under this section by an amount (in this section referred to as a " repayment supplement") equal to interest on the amount paid at the rate of 9 per cent, per annum for each complete tax month contained in the period (if any) beginning with the relevant date and ending at the end of the tax month in which the order for the payment is issued.

In relation to any complete tax month beginning before 6th April 1974 which is contained in the last-mentioned period, subsection (2) above shall have effect as if the rate of interest there specified were 6 per cent, per annum (instead of the rate there specified or any other rate in force by virtue of subsection (6) below).

For the purposes of subsection (2) above— and where a payment to which this section applies is a repayment of corporation tax paid by a company on different dates, the payment shall as far as possible be treated for the purposes of this subsection as a repayment of tax paid on a later rather than an earlier date among those dates.

For the purposes of this section—

Without prejudice to subsection (3) above, the Treasury may, by order in a statutory instrument subject to annulment in pursuance of a resolution of the House of Commons, from time to time increase or decrease the rate of interest by reference to which repayment supplements are calculated under subsection (2) above.

A repayment supplement shall not be payable under this section in respect of a payment made in consequence of an order or judgment of a court having power to allow interest on the payment.

A repayment supplement paid under this section shall be disregarded for all the purposes of corporation tax and income tax.

In this section—

If a person carrying on a trade has on or after the relevant date incurred expenditure in taking, in respect of any sports stadium used by him for the purposes of the trade— then, if an allowance or deduction in respect of the expenditure could not, apart from this section, be made in taxing the trade or computing the profits or gains arising from it, Chapter I of Part III of the Finance Act 1971 shall apply as if the expenditure were capital expenditure incurred on the provision of machinery or plant for the purposes of the trade, and as if the machinery or plant had, in consequence of his incurring the expenditure, belonged to him and had been in use for the purposes of the trade, and as if the disposal value of the machinery or plant were nil.

In this section " sports stadium ", " safety certificate " and " local authority " have the same meaning as in the Safety of Sports Grounds Act 1975, and " the relevant date ", in relation to any sports stadium, means the date on which a designation order under section 1 of that Act comes into operation in respect of that stadium.

This section shall be construed as if contained in Chapter I of Part III of the Finance Act 1971 and shall be deemed to have come into force on the passing of the Safety of Sports Grounds Act 1975.

This subsection does not apply to—

All such adjustments shall be made, whether by repayment of tax, assessment or otherwise, as may be required in consequence of subsection (1) above.

In section 338 of the Taxes Act (exemption of income and gains of certain trade unions if applied for purpose of provident benefits), for the reference to £500 (maximum assurable by way of gross sum) there shall be substituted a reference to £1,000, and for the references to £104 a year (maximum assurable by way of annuity) there shall be substituted references to £208 a year.

This section shall have effect in relation to income or gains which are applied as mentioned in subsection (1) of the said section 338 after 15th April 1975.

In section 332 of the Taxes Act (exemption of income and gains of registered friendly societies other than profits arising from life or endowment business consisting of the assurance of gross sums exceeding £500 or of the granting of annuities of annual amounts exceeding £104), after subsection (3) there shall be added the following subsections—

In section 337(3) of the Taxes Act, in the definition of " tax exempt life or endowment business "—

The preceding provisions of this section shall have effect as regards any year of account of a registered friendly society or branch ending after the passing of this Act (including the whole of any such year of account that ends with 31st December 1975).

The Friendly Societies Act 1974 and the Friendly Societies Act (Northern Ireland) 1970 shall have effect subject to the amendments specified in Schedule 9 to this Act, being amendments arising out of the preceding provisions of this section.

This section has effect in relation to the disposal of an asset where—

For the purposes of Part III of the said Act of 1965 (capital gains)—

Subsection (2) above does not affect the computation of development gains; and any gain computed in accordance with that subsection shall be a chargeable gain only to the extent, if any, to which it exceeds any development gain accruing on the disposal in question.

Subsection (2) above does not affect the computation of development losses except that, where paragraph (b) of that subsection applies to the computation of the chargeable gain or allowable loss accruing on a disposal, no development loss shall accrue on the disposal unless there is an allowable loss as so computed and, if there is such an allowable loss, the amount of the development loss shall not exceed the amount of that allowable loss.

The amounts referred to in subsection (2)(a) above are— and the sums mentioned in paragraph (b)(i) above shall be determined without any reduction under section 33(1)(b) or (2)(b) of the said Act of 1965 or paragraph 18(4) of Schedule 3 to the Finance Act 1974 (replacement of business assets).

The amount referred to in subsection (2) (b) above is the difference between—

Any claim under this section shall be made— and where a claim is made by virtue of subsection (1)(b)(ii) above, then, if and so far as the question in dispute on an appeal against the decision on the claim relates to the matters mentioned in subsection (5)(a) above, the appeal shall be to the Commissioners and Courts mentioned in paragraph 7(2) to (5) of Schedule 4 to the Finance Act 1975 (capital transfer tax appeals) as in the case of an appeal under that paragraph.

This section applies to disposals after 26th March 1974.

Subsection (2) below shall have effect in respect of the disposal of an asset which is property to which section 34 of the Finance Act 1975 (historic houses etc.) applies or might apply, being— if an undertaking in the terms of subsection (2) of the said section 34 (maintenance, preservation and public access) is given by such person as the Treasury think appropriate in the circumstances of the case.

The person making a disposal to which subsection (1) above applies and the person acquiring the property on that disposal shall be treated for all the purposes of Part III of the said Act of 1965 (capital gains) as if the property was acquired from the one making the disposal for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the one making the disposal.

If— the person selling the asset or, as the case may be, the owner of the asset shall be treated for the purposes of Part III of the said Act of 1965 as having sold the asset for a consideration equal to its market value, and in the case of a failure to comply with the undertaking, as having immediately re-acquired it for a consideration equal to its market value.

The period for which an undertaking under subsection (1) above is given shall be until the person entitled to the asset dies or it is disposed of, whether by sale or gift or otherwise; and if the asset subject to the undertaking is disposed of— subsection (3) above shall apply as if the asset had been then sold to an individual.

Where under subsection (3) above a person is treated as having sold any asset for a consideration equal to its market value he shall also be treated as having sold, and immediately reacquired, any asset associated with it for a consideration equal to its market value ; but the Treasury may direct that this subsection shall not have effect in any case in which it appears to them that the entity consisting of the asset and any assets associated with it has not been materially affected.

A gain shall not be a chargeable gain if it accrues on the disposal of any asset with respect to which an undertaking has been given under subsection (1) above or subsection (2) of the said section 34 and the disposal is such as is referred to in subsection (6)(a) of that section (disposal to national institution) or is a disposal to the Board under paragraph 17 of Schedule 4 to the said Act of 1975 (acceptance of property in satisfaction of tax).

References in subsection (4) above to a disposal shall be construed without regard to any provision of Part III of the said Act of 1965 under which an asset is deemed to be disposed of; and for the purposes of subsection (5) above two or more assets are associated with each other if one of them is a building falling within subsection (1)(b) of the said section 34 and the other or others such land or objects as, in relation to that building, fall within subsection (1)(c) or (d) of that section.

In paragraph 13 of Schedule 12 to the Finance Act 1971 (death of person entitled to interest in settled property) and section 119(2) of the Finance Act 1972 (gifts to charities etc.) references to section 31(3) of the Finance Act 1965 shall include references to subsection (1) above.

This section applies to disposals after 12th March 1975.

In sub-paragraph (2) of paragraph 4 of Schedule 10 to the Finance Act 1965 (assets on disposal of which capital gains tax may be paid by instalments) after paragraph (a) there shall be inserted— and in paragraph (b) after the words " any shares or securities of a company " there shall be inserted the words " not falling under paragraph (aa) above and

Subject to the following provisions of this section, where capital gains tax is payable— the tax shall, for the purpose of any interest to be added to each instalment, be treated as carrying interest from the date at which the instalment is payable.

Subsection (2) above does not apply to tax payable in respect of the disposal of shares or securities of a company falling within paragraph (a) of subsection (4) below unless it also falls within paragraph (b) or (c) of that subsection.

The companies referred to in subsection (3) above are—

Subsection (2) above applies only to the extent to which— does not exceed £250,000.

In paragraph 2 of Schedule 10 to the Finance Act 1974 (application of the said paragraph 4 to development gains) after the words " paragraph 4 of Schedule 10 to that Act" there shall be inserted the words " and section 57 of the Finance (No. 2) Act 1975 ".

This section applies to disposals after 26th March 1974.

For the purposes of corporation tax on chargeable gains, shares disposed of by a company shall be identified in accordance with the following provisions where—

Where a company is a member of a group, shares held or acquired by another member of the group shall be treated for the purposes of paragraphs (a) and (b) of subsection (1) above as held or acquired by that company and for the purposes of paragraph (b) any shares acquired by that company from another company which was a member of the group throughout the prescribed period before and after the disposal shall be disregarded.

References in subsection (1) above to a company's disposing, holding and acquiring shares are references to its doing so in the same capacity; and references in that subsection to the holding or acquisition of shares do not include references to the holding or acquisition of shares as trading stock.

The shares disposed of shall be identified—

The shares disposed of shall be identified with available shares acquired before the disposal rather than available shares acquired after the disposal and—

Where available shares could be identified— they shall in each case be identified with the former rather than the latter; and the identification of any available shares with shares disposed of by a company on any occasion shall preclude their identification with shares comprised in a later disposal by that company or in a disposal by another company.

Where a company disposes of shares which have been identified with shares disposed of by another company, the shares disposed of by the first-mentioned company shall be identified with the shares that would, apart from this section, have been comprised in the disposal by the other company or, if those shares have themselves been identified with shares disposed of by a third company, with the shares that would, apart from this section, have been comprised in the disposal by the third company and so on.

Where shares disposed of by one company are identified with shares acquired by another, the sums allowable to the company making the disposal under paragraph 4 of Schedule 6 to the Finance Act 1965 shall be—

This section shall have effect subject to sub-paragraph (1) of paragraph 6 of Schedule 10 to the Finance Act 1971 (identification of shares acquired and disposed of on same day); and sub-paragraph (2) of that paragraph (identification of shares not identified under sub-paragraph (1)) shall have effect subject to this section.

In this section—

Shares shall not be treated for the purpose of this section as being of the same kind unless they are treated as being of the same class by the practice of a recognised stock exchange or would be so treated if dealt with on such a stock exchange.

This section applies to securities as defined in paragraph 5 of Schedule 7 to the Finance Act 1965 (other than specified securities within the meaning of section 41 of the Finance Act 1969) as it applies to shares.

This section applies where the acquisition and disposal mentioned in subsection (1) above are after 14th April 1975.

Where a person who holds gilt-edged securities (the " original holding") acquires securities of the same kind (an " additional holding ") and within the prescribed period after the acquisition disposes of securities of that kind, he shall be treated for the purposes of sub-paragraph (1) of paragraph 9 of Schedule 10 to the Finance Act 1971 (re-acquisition of gilt-edged securities after sale at a loss) as if he had within the prescribed period after the disposal re-acquired the securities disposed of or such quantity of them as does not exceed the original holding or the additional holding, whichever is the less.

Sub-paragraph (2)(a), (b) and (c) of the said paragraph 9 (identification of securities disposed of with securities re-acquired) shall have effect in relation to the acquisition of the additional holding as if it were a re-acquisition of the securities disposed of.

Sub-paragraph (3) of the said paragraph 9 (husband and wife) shall have effect as if the foregoing provisions of this section were included in that paragraph and the acquisition of the additional holding were an acquisition after the disposal.

In the case of companies in the same group the provisions of the said paragraph 9 and of subsections (1) and (2) above shall, with the necessary modifications, apply also where a loss on the disposal accrues to one of them and the acquisition is made by the other.

In the said paragraph 9 and this section references to the acquisition of securities shall not include references to acquisition as trading stock or, in the case of a company which is a member of a group, from another company which is a member of that group throughout the prescribed period before and after the disposal.

In this section— and references to a person's holding, acquiring and disposing of securities are references to his doing so in the same capacity.

This section applies to disposals after 15th April 1975.

A loss on the disposal of an asset shall not be an allowable loss to the extent to which it is attributable to value having passed out of other assets, being shares in or rights over a company which by virtue of the passing of value are treated as disposed of under paragraph 15(2) of Schedule 7 to the Finance Act 1965 (deemed disposal where person in control of company transfers value between different shares or rights).

This section applies to a loss on a disposal on or after 17th June 1975.

The rights of the insurer under any policy of insurance shall hot constitute an asset on the disposal of which a gain may accrue, whether the risks insured relate to property or not; and the rights of the insured under any policy of insurance of the risk of any kind of damage to, or the loss or depreciation of, assets shall constitute an asset on the disposal of which a gain may accrue only to the extent that those rights relate to assets on the disposal of which a gain may accrue or might have accrued.

Subsection (1) above shall be deemed to have come into force on 20th December 1974 but shall not apply in the case of a disposal made before that date.

Where a company issues any share capital to which section 34 of this Act applies in respect of shares in the company held by a person as trustee, and another person is at the time of the issue absolutely entitled thereto as against the trustee or would be so entitled but for being an infant or other person under disability (or two or more other persons are or would be jointly so entitled thereto), then—

This section shall be deemed to have come into force on 6th April 1975.

Schedule 3 to the Taxes Management Act 1970 (rules for assigning proceedings to Commissioners) shall be amended as follows.

For rule 5 there shall be substituted— " 5. An appeal against an assessment under Schedule A or under Schedule D, other than Cases I and II. An appeal against an assessment charging income tax at a rate other than the basic rate on income from which income tax has been deducted (otherwise than under section 204 of the principal Act) or from or on which income tax is treated as having been deducted or paid or income chargeable under Schedule F. An appeal against an assessment to capital gains tax. Proceedings for a penalty under section 100(4) of this Act. If the appellant or other party to the proceedings (not being an inspector or the Board) is carrying on a trade, profession or vocation, then, subject (in the case of an appeal) to the right of election for place of residence, the place in which the trade, profession or vocation is carried on, or in which the head office or principal place of business is situated. If the appellant or other party is employed and does not carry on a trade, profession or vocation, then, subject (in the case of an appeal) to the right of election for place of residence, the place of employment. In any other case, the place where the appellant or other party ordinarily resides."

Rule 6 and the paragraph beginning " Where under rules 3 and 5 " shall each be amended by substituting for the words " resided in the year of assessment to which the proceedings relate " the word " resides ".

If the place given by any of the rules in this Schedule is outside the United Kingdom, the Board may give directions, which may be either general or addressed to a particular occasion, to meet the case.

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Section 50 of that Act (procedure on appeal) shall have effect, and be deemed always to have had effect, as if after subsection (7) there were added as subsection (8)—

Nothing in subsection (2) above shall affect the judgement of any court given in proceedings which were commenced before 29th April 1975.

Subject to subsection (2) below, on such date as the Treasury may by order made by statutory instrument appoint (in this Chapter referred to as the appointed day) Chapter II of Part II of the Finance Act 1971 (sub-contractors in construction industry) and all certificates having effect under section 30 thereof shall cease to have effect except in relation to sums payable under section 29 thereof before that date, and on and after the appointed day the provisions of this Chapter other than this section shall (subject to that exception) have effect instead of that Chapter.

The said provisions shall have effect before the appointed day for the purpose of enabling applications to be made and certificates issued under section 70 of this Act and—

A party to a contract relating to construction operations is a sub-contractor if, under the contract.—

Paragraph (b) of subsection (1) above applies to the following persons, that is to say.—

On making a payment to which this section applies the contractor shall deduct from it a sum equal to 35 per cent, of so much of the payment as is not shown to represent the direct cost to any other person of materials used or to be used in carrying out the construction operations to which the contract under which the payment is made relates; and the sum so deducted shall be paid to the Board and shall be treated for the purposes of income tax or, as the case may be, corporation tax—

Where a sum deducted and paid to the Board under subsection (4) above is more than sufficient to discharge the liability to income tax of the person referred to in paragraph (b) of that subsection in respect of the profits or gains mentioned in that paragraph, so much of the excess as is required to discharge any liability of that person for Class 4 contributions shall be treated as being, for the purposes of the Social Security Act, Class 4 contributions paid in respect of the profits or gains so mentioned.

The Board shall make regulations with respect to the collection and recovery, whether by assessment or otherwise, of sums required to be deducted from any payments under this section and for the giving of receipts by persons receiving the payments to persons making them; and those regulations may include any matters with respect to which regulations may be made under section 204 (pay as you earn) of the Taxes Act.

References in the preferential payments provisions to sums due on account of tax deductions for any period shall be construed as including references to any amounts due from any person in respect of deductions required to be made by him under this section.

Regulations under section 69 of the Finance (No. 2) Act 1975

Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

In this section "Class 4 contributions" means Class 4 contributions within the meaning of the Social Security Act 1975 or, as the case may be, the Social Security (Northern Ireland) Act 1975 ; and " the Social Security Act" means whichever of those Acts is the one under which the contribution in question is payable.

A person is excepted from section 69 of this Act in relation to payments made under a contract if a certificate under this section has been issued to that person and is in force when the payment is made, but—

If the Board are satisfied, on the application of an individual or a company, that— the Board shall issue to that individual or company a certificate excepting that individual or company (or, in a case falling within paragraph (b) above, that individual or company as a partner in the firm specified in the certificate) from section 69 of this Act.

References in paragraphs (a), (b) and (c) of subsection (2) above to an individual, a company or a firm satisfying conditions set out in any Part of Schedule 12 to this Act include, in relation to a condition which may, by virtue of a provision in that Part, Be treated as being satisfied, references to that individual, company or firm being treated as satisfying that condition.

Where it appears to the Board, on an application made under subsection (2) above by a company, that the company— the Board may direct that the conditions set out in Part I of Schedule 12 to this Act or such of them as are specified in the direction shall apply to the directors of the company and, if the company is a close company, to the persons who are the beneficial owners of shares in the company or to such of those directors or persons as are so specified as if each of them were an applicant for a certificate under this section.

The Board may at any time cancel a certificate which has been issued to a person and is in force under this section if it appears to them that— and may by notice in writing require that person to deliver the certificate to the Board within the time specified in the notice.

A person aggrieved by the refusal of an application for a certificate under this section may, by notice in writing given to the Board within thirty days after the refusal, appeal to the General Commissioners or, if he so elects in the notice, to the Special Commissioners; and the jurisdiction of the Commissioners on such an appeal shall include jurisdiction to review any relevant decision taken by the Board in the exercise of their functions under this section other than a decision that an individual, a company or a firm is or is not to be treated as satisfying a condition set out in any Part of Schedule 12 to this Act.

The Board may make regulations— and any such regulations may make different provision for different circumstances.

Regulations under subsection (7) above shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

If any person, for the purpose of obtaining a certificate under this section— he shall be liable on summary conviction to a fine not exceeding £5,000.

A person to whom a certificate is issued under this section or a voucher is given as required by regulations under subsection (Dig) above shall take all reasonable steps to ensure its safety; and any person who, without lawful authority or lawful excuse— shall be liable on summary conviction to a fine not exceeding £5,000.

Notwithstanding any enactment prescribing the period within which summary proceedings may be commenced, proceedings for an offence under subsection (9) or (10) above may be commenced at any time within three years from the commission of the offence.

In section 98 of the Taxes Management Act 1970 (penalty for failure to furnish information etc.) there shall be added—

The following provisions of this section shall have effect for the interpretation of this Chapter.

" Authorised insurer " means a person or body of persons lawfully carrying on in Great Britain insurance business of any class relevant for the purposes of Part I of the Insurance Companies Act 1974 or in Northern Ireland insurance business of any class relevant for the purposes of the Insurance Companies Act (Northern Ireland) 1968.

" Development corporation " has the same meaning as in the New Towns Act 1965 or the New Towns (Scotland) Act 1968, " housing association " has the same meaning as in the Housing Act 1957, the Housing (Scotland) Act 1966 or section 12 of the Housing and Local Government (Miscellaneous Provisions) Act (Northern Ireland) 1946, "housing trust" has the same meaning as in the Housing Act 1957, " housing society " has the same meaning as in Part I of the Housing Act 1964, and " new town commission " has the same meaning as in the New Towns Act (Northern Ireland) 1965.

"Director" has the same meaning as in Chapter II of Part VIII of the Taxes Act.

References to the making of payments under a contract relating to construction operations include references to the lending of money in circumstances in which the lending of the money has the effect of discharging any obligation under the contract.

" The preferential payments provisions " means section 30 of the Finance Act 1952, section 287 of the Companies Act (Northern Ireland) 1960 and section 1(1) of the Preferential Payments (Bankruptcies and Arrangements) Act (Northern Ireland) 1964.

References to relevant public liability in respect of the business of an individual, a firm or a company carrying out any description of construction operations are references to any liability— but not to a liability in respect of which the individual, firm or company is required to maintain insurance under the Employers' Liability (Compulsory Insurance) Act 1969 or Part VI of the Road Traffic Act 1972 or (in Northern Ireland) under Part V of the Road Traffic Act (Northern Ireland) 1970 or Part III of the Employers' Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972.

" Construction operations" means operations of any description specified in Part I of Schedule 13 to this Act, not being operations of any description specified in Part II of that Schedule; and references to construction operations shall be taken—

The Treasury may by order made by statutory instrument—

An order under this section shall not have effect unless a draft thereof has been laid before and approved by the House of Commons.