Загальна теорія права

Subject to paragraph 7 below, where a company was benefitting on 2nd July 1997 from a windfall from the flotation of an undertaking whose privatisation involved the imposition of economic regulation, the amount of that windfall shall be taken for the purposes of this Part to be the excess (if any) of the amount specified in sub-paragraph (2)(a) below over the amount specified in sub-paragraph (2)(b) below. Those amounts are the following amounts (determined in accordance with paragraphs 2 to 6 below), that is to say—

Subject to paragraph 4 below, the value in profit-making terms of the disposal made on the occasion of a company’s flotation is the amount produced by multiplying the average annual profit for the company’s initial period by the applicable price-to-earnings ratio. For the purposes of this paragraph the average annual profit for a company’s initial period is the amount produced by the following formula— Where— A is the average annual profit for the company’s initial period; P is the amount, ascertained in accordance with paragraph 5 below, of the total profits for the company’s initial period; and D is the number of days in the company’s initial period. For the purposes of this paragraph the applicable price-to-earnings ratio is 9.

Subject to paragraph 4 below, the value which for privatisation purposes was put on the disposal made on the occasion of a company’s flotation is the amount produced by multiplying the institutional price by the number of shares comprised in the ordinary share capital of the company at the time of its flotation. In this paragraph “the institutional price”, in relation to a company, means the highest fixed price per share at which publicly-owned shares in the company were offered for disposal on the occasion of the company’s flotation. Subject to sub-paragraph (4) below, where publicly-owned shares in a company were offered for disposal in accordance with any arrangements for the payment of the price in two or more instalments, the price per share at which those shares were offered shall be ascertained by aggregating the instalments. Where the arrangements under which any publicly-owned shares in a company were offered for disposal provided for any discount on the payment of the whole or any part of the price for those shares, that discount shall be disregarded for the purposes of this paragraph in determining the price per share at which those shares were offered.

For the purposes of this Schedule, where the disposal percentage in the case of any company was 85 per cent. or less— shall each be taken to be the disposal percentage of the amount which, under paragraph 2 or 3 above, would be the amount of that value but for this paragraph. For the purposes of this paragraph “the disposal percentage”, in relation to any company, means the percentage which expresses (in terms of nominal value) how much of the ordinary share capital of the company at the time of its flotation was represented by the publicly-owned shares in the company offered for disposal on the occasion of the company’s flotation.

For the purposes of paragraph 2 above the amount of the total profits for a company’s initial period is the sum of the amounts falling within sub-paragraph (2) below. Subject to sub-paragraph (3) and paragraph 6(3) below, those amounts are every amount which, for a financial year of the company ending in or at the end of its initial period, is shown in the relevant accounts for that year— Where— the amount shown as that profit in those accounts shall be deemed to be the amount (as ascertained from that information) which would have been so shown if that historical cost accounting method had been used. In this paragraph references, in relation to any financial year of a company, to the relevant accounts are references to any such accounts for that year as have been or are delivered to the registrar under section 242 of the Companies Act 1985 and consist— Subject to sub-paragraph (6) below, references in this paragraph to the amount shown in any accounts as the profit for any financial year are references to the amount of the profit (if any) for that year which is set out in the profit and loss account comprised in those accounts as the item which is, or is the equivalent of, the final item of the statutory format which for that year was used for that profit and loss account. Where any amount shown in any accounts is less than it would have been if no provision or other deduction had been made— this Schedule shall have effect as if the amount shown were the amount it would have been if that provision or deduction had not been made. Nothing in this paragraph shall, in the case of any company— and any power of the Board under that Schedule to make an assessment shall include power to make an assessment on the basis that accounts will be delivered to the registrar showing such amounts as may, to the best of their judgement, be determined by the Board. Subject to sub-paragraph (9) below, this paragraph shall have effect in relation to any time at which the Companies Act 1985 had effect without the amendments made by the Companies Act 1989— In relation to a company formed and registered in Northern Ireland, this paragraph shall have effect as if the references in sub-paragraphs (2) and (4) above to sections 226, 227 and 242 of the Companies Act 1985 were references, respectively, to Articles 234, 235 and 250 of the Companies (Northern Ireland) Order 1986. In this paragraph—

In this Schedule “initial period”, in relation to a company privatised by means of a flotation, means (subject to sub-paragraph (2) below) the period which— Where the initial period of a company privatised by means of a flotation would (but for this sub-paragraph) include any time on or after 1st April 1997, sub-paragraph (1) above shall not apply and the initial period of that company shall be taken, instead, to be the period which— Where— the amount which for that year is shown as mentioned in paragraph 5(2) above shall be included in the sums added together for the purposes of paragraph 5(1) above to the extent only that that amount is attributable, on an apportionment made in accordance with the following provisions of this paragraph, to the part of that year falling within the company’s initial period. Except in a case where sub-paragraph (5) below applies, an apportionment for the purposes of sub-paragraph (3) above shall be made on a time basis according to the respective lengths of— Where the circumstances of a particular case are such that— the apportionment shall be made, instead, on the alternative basis. For the purposes of this paragraph an apportionment in the case of any company of the amount shown for any financial year as a profit for that year is made on the alternative basis where it is made according to how much of that profit accrued in each of the two parts of that financial year that are mentioned in sub-paragraph (4) above.

This paragraph applies where— Where this paragraph applies— In this paragraph “the appropriate fraction” means the following fraction— Where— P is the amount produced by multiplying the number of shares comprised at the end of the relevant day in the ordinary share capital of the predecessor company by the market price on that day of an ordinary share in that company; and S is the amount produced by multiplying the number of shares comprised at the end of the relevant day in the ordinary share capital of the demerged successor by the market price on that day of an ordinary share in the demerged successor. For the purposes of this paragraph references to the market price of shares on any day are references to the sum of— In this paragraph “the relevant day” means the day on which shares in the demerged successor were first listed on the Official List of the Stock Exchange.

In this Schedule “financial year”, in relation to a company, means (subject to sub-paragraph (2) below)— Sub-paragraph (1) above does not apply to a company formed and registered in Northern Ireland; and in relation to such a company, references in this Schedule to a financial year are references to a financial year within the meaning of Part VIII of the Companies (Northern Ireland) Order 1986. In this Schedule references, in relation to a company privatised by means of a flotation, to the shares offered for disposal on the occasion of the company’s flotation are references to the following shares in that company, that is to say— References in this Schedule to an offer for the disposal of shares in a company include references to any offer to transfer or confer an immediate or contingent right to or interest in any such shares, whether or not for a consideration; and (subject to sub-paragraph (5) below) references to the shares that are the subject-matter of such an offer shall be construed accordingly. For the purposes of sub-paragraph (3) above where— shares which (apart from this sub-paragraph) would fall to be treated as the subject-matter of the offer by virtue only of that provision shall be treated as the subject-matter of the offer to the extent only that persons did in fact become entitled to them before 2nd July 1997 as a result of having satisfied the conditions in question. In this Schedule a reference, in relation to any time, to the ordinary share capital of a company is a reference to the following, taken together, that is to say—

The Board may by notice require any company which in their opinion is or may be a chargeable company to deliver to the Board a return complying with this paragraph. A company which has been required under this paragraph to deliver a return to the Board shall do so— A return delivered to the Board under this paragraph must— Those matters are— A return delivered to the Board under this paragraph— Where— that amount shall be taken, except in so far as any other amount is assessed or otherwise determined under the following provisions of this Schedule, to be the amount of windfall tax with which that company is charged. Where— that notice shall have effect on and after the day on which this Act is passed as if it were a notice given on that day in exercise of the power conferred by sub-paragraph (1) above.

If a chargeable company has not, before 1st December 1997, either— that company shall be liable to a penalty of an amount not exceeding the amount of the windfall tax with which it is charged. A company which— shall be liable to the penalties set out in sub-paragraph (3) below. Those penalties are— In sub-paragraph (3) above “the relevant time”, in relation to the delivery of a return, means the time by which that return should under paragraph 1(2) above have been delivered.

The amount of windfall tax with which a chargeable company is charged shall be paid by that company in two instalments as follows— The Board, if requested to do so, shall give a receipt for any windfall tax paid. The application by this Schedule of any enactment referring to the time at which an amount of tax becomes due and payable shall have effect, in relation to an amount of windfall tax, as if it referred to the time by which that amount is required to be paid under this paragraph.

Subject to the following provisions of this Schedule, the amount of windfall tax with which a company is charged may be assessed on that company by the Board. An assessment of the amount of windfall tax with which a company is charged may be made whether or not any amount has been paid by that company in respect of that tax when the assessment is made. Subject to sub-paragraph (4) below, where— the Board shall make an assessment in accordance with the return. The Board shall not be required to make an assessment under sub-paragraph (3) above in the case of a company whose return shows that it is not charged with windfall tax. Where the Board make an assessment under this paragraph in a case in which the assessment is not one which the Board are required to make under sub-paragraph (3) above in accordance with a return, the Board’s assessment shall be made to the best of their judgement.

If the Board discover that any company which— has not been assessed to as much windfall tax as it should have been, they may make an assessment or further assessment of the amount which, in their opinion, is windfall tax with which that company is charged but to which it has not been assessed. Where— that amount may be assessed by the Board, and recovered under this Schedule from the company to which it was repaid, as if it were an amount of windfall tax which that company is liable to pay. Where the amount of any assessment to windfall tax is reduced, the company assessed shall not for the purposes of this paragraph be treated, at any time after the reduction, as having been already assessed to the amount of windfall tax comprised in the reduction.

An assessment shall not be made under this Schedule at any time on or after 1st December 2003. Where an assessment is made under this Schedule, notice of that assessment shall be served on the company assessed. The notice of any assessment under this Schedule must state— After the notice of any assessment under this Schedule has been served on the company assessed— Where notice of any assessment under this Schedule has been served on the company assessed, the amount of the assessment— Liability to pay an instalment of windfall tax does not depend on the making of an assessment; and nothing in the provisions of this Schedule about the making of assessments shall affect the times which are taken for the purposes of this Part to be the times by which companies are required under paragraph 3 above to pay instalments of windfall tax.

If, on a claim made to the Board, it appears to their satisfaction that a company has been assessed to the same amount of windfall tax more than once, the Board shall direct that so much of any assessment made on that company under this Schedule as appears to them to be excessive is to be vacated. A claim under sub-paragraph (1) above— On the giving of a direction under this paragraph with respect to any assessment, that assessment shall be vacated to the extent specified in the direction.

If any company which has paid an amount of windfall tax assessed under this Schedule alleges that it has been, or continues to be, assessed to too much windfall tax by reason of— the company may make a claim for relief under this paragraph in respect of that error or mistake. A claim under this paragraph— On receiving a claim under this paragraph, the Board shall—

An appeal to the Special Commissioners shall lie against each of the following, that is to say— An appeal under sub-paragraph (1) above shall be made by notice to the Board. Subject to the following provisions of this paragraph, a notice of appeal under sub-paragraph (2) above— An appeal under this paragraph may be brought out of time if, on an application made for the purpose by the appellant, the Board are satisfied— and, where the Board are not so satisfied, they shall refer the application to the Special Commissioners, who (if they are so satisfied) may themselves allow the appeal to be brought out of time. The Special Commissioners— Section 55 of the Management Act (postponement of tax to which an appeal relates) shall apply to an appeal under this paragraph against an assessment under this Schedule as it applies to an appeal against an assessment mentioned in subsection (1) of that section but as if, in that section—

Where there is an appeal to the Special Commissioners against an assessment under this Schedule— Where an appeal is brought under paragraph 9 above against a decision of the Board on a claim under paragraph 7 or 8 above, the Special Commissioners shall hear and determine that appeal in accordance with the principles to be followed by the Board in determining claims under that paragraph. On an appeal to the Special Commissioners against a decision of the Board on a claim under paragraph 7 or 8 above, the powers of the Special Commissioners shall include power, if they think fit, to modify or cancel any decision made by the Board on that claim, including one made in favour of the appellant.

Subject to the following provisions of this paragraph, the following provisions of the Management Act shall apply for the purposes of and in relation to appeals to the Special Commissioners under paragraph 9 above as they apply for the purposes of or in relation to appeals to the Special Commissioners under the Tax Acts, that is to say— The Special Commissioners (Jurisdiction and Procedure) Regulations 1994 shall have effect, with the necessary modifications, in relation to appeals to the Special Commissioners under this Schedule as they have effect in relation to appeals to the Special Commissioners under the Tax Acts; but this sub-paragraph shall be without prejudice to the power of the Lord Chancellor, by virtue of sub-paragraph (1) above, to modify those regulations as applied by this sub-paragraph. Subject to paragraph 5 above and the provisions applied by sub-paragraphs (1) and (2) above, the determination of the Special Commissioners on an appeal under this Schedule shall be final and conclusive. Where an appeal has been made to the Special Commissioners against a decision of the Board on a claim under paragraph 8 above, neither the appellant nor the Board shall be entitled, by virtue of anything in sub-paragraph (1) above, to appeal except against so much (if any) of the decision of the Special Commissioners as relates to a point of law arising in connection with the computation in accordance with Schedule 1 to this Act of the amount of the windfall from which any company was benefitting on 2nd July 1997. Section 53 of the Management Act (appeal against the summary determination of a penalty) shall apply in relation to any summary determination of a penalty pursuant to— as it applies in relation to any other such summary determination as is mentioned in that section. Subsections (2B) and (2C) of section 58 of the Management Act (Northern Ireland modifications) shall apply as if the reference to the Taxes Acts included a reference to this Schedule and, accordingly, as if the reference to section 56A of that Act included a reference to that section as applied by this paragraph. In the application for the purposes of this Schedule of— references to proceedings in Northern Ireland shall have effect as references to proceedings on an appeal to the Special Commissioners by a company whose head office or principal place of business is in Northern Ireland. Sections 21 and 22 of the Interpretation Act Northern Ireland) 1954 (rules of court and powers of appellate courts) shall apply as if references in those sections to an enactment included a reference to sub-paragraphs (6) and (7) above.

Where any amount of windfall tax with which a company is charged is not paid before the time by which it is required to be paid under paragraph 3 above, that amount of that tax shall carry interest from that time until payment. Sub-paragraph (1) above applies to an amount whether or not the payment of that amount is postponed under section 55 of the Management Act (as applied by paragraph 9(6) above). Any amount paid by way of windfall tax which is repayable shall carry interest from whichever is the later of— until the time when that amount is repaid. The rate of interest under this paragraph for any period shall be— Where any amount paid by way of windfall tax is repayable to a person who has paid interest under sub-paragraph (1) above, that person shall be entitled to a repayment of so much of that interest as would represent the interest paid on that amount if, after— it is assumed that the amount repayable is to be equated with the most recent payment or payments made to the Board. Interest under sub-paragraph (1) above— and interest paid under sub-paragraph (3) above shall be disregarded in computing income, profits or losses for any such purposes.

For the purposes of this Part, section 20 of the Management Act (power to call for documents of taxpayer and others), together with sections 20B, 20BB and 20D(3) of that Act so far as they relate to section 20, shall be deemed to apply with the modifications set out in sub-paragraph (2) below. Those modifications are as follows— For the purposes of this Part subsection (1) of section 98 of the Management Act (failure to comply with notice) shall apply as if this paragraph were included in the reference in column 1 of the Table in that section to Part III of that Act.

Where a chargeable company fraudulently or negligently delivers an incorrect return in response to a requirement under paragraph 1 above, that company shall be liable to a penalty of an amount not exceeding the understated amount. In sub-paragraph (1) above “the understated amount”, in relation to a return delivered by a chargeable company, means the amount (if any) by which the amount of windfall tax with which that company is charged exceeds the amount set out in the return as the amount with which it is charged. For the purposes of this Part— Section 97(1) of the Management Act (obligation to correct incorrect return) shall apply for the purposes of this paragraph in relation to a return delivered in response to a requirement under paragraph 1 above as it applies for the purposes of section 96 of that Act in relation to such a return as is mentioned in that section.

The provisions of the Management Act which are set out in sub-paragraph (2) below (which all relate to the recovery of tax) shall apply, subject to the modifications set out in sub-paragraph (3) below, in relation to— as they apply in relation to sums charged by way of tax; and, in the case of amounts falling within paragraph (b) or (c) above, those provisions shall so apply as if those amounts were amounts of tax due and payable under an assessment. The provisions applied by sub-paragraph (1) above are— The modifications mentioned in that sub-paragraph are as follows—

Subject to sub-paragraph (3) below, where any amount of windfall tax with which a company is charged is not paid before the end of the period of six months beginning with the time by which it was required to be paid under paragraph 3 above (“the six month period”), any company falling within sub-paragraph (2) below may be assessed (in the name of the chargeable company) to all or any part of the unpaid windfall tax with which the chargeable company is charged. A company falls within this sub-paragraph if it is one or other or both of the following, that is to say— A company shall not be assessed under sub-paragraph (1) above to any amount of windfall tax at any time more than two years after that company first became assessable to that amount under that sub-paragraph. This Schedule shall have effect for the purposes of, and in relation to, an assessment under sub-paragraph (1) above as if the amount to which a company is assessable under this paragraph were an amount of windfall tax with which that company is charged. Where, by virtue of this paragraph, any company (“the group member”) pays any amount of windfall tax with which another company (“the charged company”) is charged—

Where a company which has become liable to a tax-geared penalty subsequently becomes liable to another such penalty, the amount or, as the case may be, maximum amount of the subsequent penalty shall be treated as reduced so that the aggregate of the tax-geared penalties to which the company has become liable does not exceed the greater or greatest of them. In sub-paragraph (1) above “tax-geared penalty” means (subject to sub-paragraph (3) below)— Where a company has become liable to both— the aggregate of those penalties shall be treated as only one tax-geared penalty for the purposes of sub-paragraph (1) above. The provisions of the Management Act set out in sub-paragraph (5) below shall apply, subject to the modifications set out in sub-paragraph (6) below, in relation to penalties under this Schedule as they apply in relation to the penalties mentioned in those provisions. The provisions applied by sub-paragraph (4) above are— The modifications mentioned in that sub-paragraph are— An appeal may be brought against any determination under section 100 of the Management Act of a penalty under this Schedule. Subject to sub-paragraph (9) below, the provisions of this Schedule relating to an appeal against an assessment to windfall tax shall apply (with the necessary modifications) in relation to any appeal under sub-paragraph (7) above. Paragraph 10 above shall not apply to an appeal under sub-paragraph (7) above and the powers of the Special Commissioners on an appeal under that sub-paragraph shall be those set out in section 100B(2)(a) and (b) of the Management Act. Subsection (3) of section 100B of the Management Act (further appeals) shall apply where there has been an appeal under sub-paragraph (7) above as it applies where there has been an appeal under subsection (1) of that section. The liabilities of any person under this Part shall be without prejudice to any criminal liability arising in relation to the same matter.

The provisions of the Management Act which are set out in sub-paragraph (2) below shall apply for the purposes of this Schedule— Those provisions are—

In this Schedule— In this Schedule references to the repayment of an amount of windfall tax include references to making an allowance by way of set-off of an amount of windfall tax against any liability. References in this Schedule to a penalty under this Schedule include references to a penalty under a provision of the Management Act as applied by this Schedule.

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In section 432E of the Taxes Act 1988 (section 432B apportionment: participating funds) paragraph (b) of subsection (6) (which provides for the adjustment of the net amount referable to overseas life assurance business) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 2nd July 1997.

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In section 434A of the Taxes Act 1988 (computation of losses and limitation on relief) subsection (1) (which falls as a result of new section 434(1) to (1B)) shall cease to have effect. This paragraph has effect for accounting periods beginning on or after 2nd July 1997.

In section 436 of the Taxes Act 1988 (pension business: separate charge on profits) in subsection (3), paragraphs (d) and (e) (which make provision, for the purposes of the computation of profits arising from pension business, for group income and non-qualifying distributions to be left out of account) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 2nd July 1997.

Section 438 of the Taxes Act 1988 (pension business: exemption from tax) shall be amended as follows. Subsections (3) and (3AA) (which fall as a result of new section 434(1) to (1B)) shall cease to have effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsection (5) (which falls with the substitution of subsection (4)) shall cease to have effect. Subsections (6) to (7) (which fall with the repeal of subsections (3), (3AA) and (5) and the substitution of subsection (4)) shall cease to have effect. Subsection (9) (which falls with the repeal of subsections (6), (6B) and (6E) and the repeal of section 440B(2)) shall cease to have effect. Sub-paragraphs (2) to (4) above have effect in relation to distributions made on or after 2nd July 1997. Sub-paragraphs (5) and (6) above have effect for accounting periods beginning on or after 2nd July 1997. In determining, for the purposes of subsections (6) to (7) of section 438 of the Taxes Act 1988, the franked investment income of, or foreign income dividends arising to, an insurance company for an accounting period beginning before 2nd July 1997 and ending on or after that date, there shall be left out of account any distributions which are made on or after 2nd July 1997.

In section 439B of the Taxes Act 1988 (life reinsurance business: separate charge on profits) subsection (7) (which falls as a result of new section 434(1) to (1B)) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 2nd July 1997.

Section 440B of the Taxes Act 1988 (modifications where tax charged under Case I of Schedule D) shall be amended as follows. Subsection (1A) (which falls as a result of new section 434(1) to (1B)) shall cease to have effect. Subsection (2) (which falls with the repeal of section 438(6), (6B) and (6E)) shall cease to have effect. Sub-paragraph (2) above has effect in relation to distributions made on or after 2nd July 1997. Sub-paragraph (3) above has effect for accounting periods beginning on or after 2nd July 1997.

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Section 89 of the Finance Act 1989 (policy holders’ share of profits) shall be amended as follows. In subsection (2)— Subsection (8) (meaning of “unrelieved” franked investment income) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 2nd July 1997.

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Section 13 of the Taxes Act 1988 (small companies’ relief) shall be amended as follows. In subsection (7) (profits of a company for an accounting period to include foreign income dividends) the words “and with the addition of foreign income dividends arising to the company” shall cease to have effect. Subsection (8A) (definition of “foreign income dividends”) shall cease to have effect. This paragraph has effect for accounting periods beginning on or after 6th April 1999.

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Sections 246A to 246Y of the Taxes Act 1988 (foreign income dividends) shall cease to have effect. The repeal of sections 246A to 246E and 246G of the Taxes Act 1988 has effect in relation to distributions made on or after 6th April 1999. The repeal of sections 246F, 246H to 246J and 246N to 246Y of the Taxes Act 1988 has effect for accounting periods beginning on or after 6th April 1999. The repeal of sections 246K to 246M of the Taxes Act 1988 has effect for accounting periods of the parent (within the meaning of those sections) beginning on or after 6th April 1999.

In section 247 of the Taxes Act 1988 (dividends etc paid by one member of a group to another) subsections (5A) to (5D) (which relate to foreign income dividends) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

In section 431(2) of the Taxes Act 1988 (interpretation of Chapter I of Part XII) the definition of “foreign income dividends” shall cease to have effect. This paragraph has effect for accounting periods beginning on or after 6th April 1999.

Section 434 of the Taxes Act 1988 (franked investment income etc) shall be amended as follows. Subsections (3B) to (3D) (which relate to foreign income dividends) shall cease to have effect. In subsection (6A), paragraphs (aa) to (ac) (which define expressions used in subsections (3B) to (3D)) shall cease to have effect. This paragraph has effect for accounting periods beginning on or after 6th April 1999.

In section 458 of the Taxes Act 1988 (capital redemption business) in subsection (2) (certain foreign income dividends treated as part of profits in ascertaining loss) the words “and foreign income dividends arising to” shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

In section 468H of the Taxes Act 1988 (interpretation of sections 468I to 468R)— In section 468I of the Taxes Act 1988 (distribution accounts)— In section 468J of the Taxes Act 1988 (dividend distributions)— Section 468K of the Taxes Act 1988 (foreign income distributions) shall cease to have effect. In section 468M of the Taxes Act 1988 (deduction of tax: simple case) in subsection (5) (definition of “eligible income”) paragraph (c) shall cease to have effect. In section 468Q of the Taxes Act 1988 (dividend distribution to corporate unit holder)— Section 468R of the Taxes Act 1988 (foreign income distribution to corporate holder) shall cease to have effect. Sub-paragraphs (1)(a), (5) and (6) above have effect for distribution periods beginning on or after 6th April 1999. Sub-paragraphs (1)(b), (2) to (4) and (7) above have effect for distribution periods the distribution date for which falls on or after 6th April 1999.

Section 490 of the Taxes Act 1988 (companies carrying on a mutual business or not carrying on a business) shall be amended as follows. In subsection (1) (which contains a reference to foreign income dividends) the words “or out of foreign income dividends” shall cease to have effect. In subsection (4) (which contains a reference to foreign income dividends) the words “or foreign income dividends” shall cease to have effect. Subsection (5) (definition of “foreign income dividends”) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

In section 687 of the Taxes Act 1988 (payments under discretionary trusts) in subsection (3), paragraph (aaa) (which concerns any sums treated under section 246D(4) as income of trustees) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

In section 689B of the Taxes Act 1988 (order in which expenses to be set against income) in subsection (2)(b) the words “246D(4) or” shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

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Section 802 of the Taxes Act 1988 (UK insurance companies trading overseas) shall be amended as follows. In subsection (2) (which contains a reference to foreign income dividends) the words “foreign income dividends” shall cease to have effect. Subsection (4) (definition of “foreign income dividends”) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

Schedule 13 to the Taxes Act 1988 shall be amended as follows. In paragraph 1 (duty to make returns), in sub-paragraph (1)— In sub-paragraph (4) of that paragraph— shall cease to have effect. In paragraph 2 (content of returns)— In paragraph 3 (payment of tax)— shall cease to have effect. Paragraphs 3A and 3B (which make provision in relation to international headquarters companies paying foreign income dividends) shall cease to have effect. In paragraph 4 (receipt of franked investment income after payment of advance corporation tax) in sub-paragraph (2) the words “or paid any foreign income dividends” shall cease to have effect. Paragraph 4A (receipt of foreign income dividends after payment of advance corporation tax) shall cease to have effect. Paragraph 6A (claims for set-off in respect of foreign income dividends received by a company) shall cease to have effect. In paragraph 7 (qualifying distributions which are not payments and payments of uncertain nature) in sub-paragraph (3) the words “and no foreign income dividend is paid” shall cease to have effect. Paragraph 9A (manufactured foreign income dividends) shall cease to have effect. Sub-paragraph (2) above has effect for accounting periods beginning on or after 6th April 1999. Sub-paragraphs (3) to (10) above have effect for return periods beginning on or after 6th April 1999. Sub-paragraph (11) above has effect in relation to manufactured dividends which are representative of dividends paid on or after 6th April 1999.

Schedule 23A to the Taxes Act 1988 (manufactured dividends and interest) shall be amended as follows. In paragraph 1(1) (interpretation) the definition of “foreign income dividend” shall cease to have effect. In paragraph 2 (manufactured dividends on UK equities: general) in sub-paragraph (6) the words “Subject to paragraph 2B(2)(b) below” shall cease to have effect. Paragraph 2B (manufactured dividends representative of foreign income dividends) shall cease to have effect. This paragraph has effect in relation to manufactured dividends which are representative of dividends paid on or after 6th April 1999.

In section 88A of the Finance Act 1989 (lower corporation tax rate on certain insurance company profits) in subsection (3)— This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 89 of the Finance Act 1989 (policy holders’ share of profits) shall be amended as follows. In subsection (2), paragraph (c) (which provides for Case I profits to be reduced by the shareholders’ share of any foreign income dividends from investments held in connection with life assurance business) shall cease to have effect. Subsection (2A) (which explains certain expressions used in subsection (2)(c)) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 171 of the Finance Act 1993 (taxation of profits and allowance of losses of Lloyd’s underwriters) shall be amended as follows. Subsection (2A) (which makes provision in relation to foreign income dividends) shall cease to have effect. This paragraph has effect in relation to distributions made on or after 6th April 1999.

Schedule 7 to the Finance Act 1997 shall be amended as follows. Paragraph 2 (distributions treated as FIDs) shall cease to have effect. Paragraphs 4 to 6 (exceptions for stock options, dividends on fixed rate preference shares and pre-sale distributions) shall cease to have effect. Sub-paragraphs (2) and (3) above have effect in relation to distributions made on or after 6th April 1999.

Where, in the case of an accounting period of a company beginning before 6th April 1999 and ending on or after 5th April 1999 (“a transitional period”), there would (apart from this sub-paragraph) be such an excess as is mentioned in section 246F(3) of the Taxes Act 1988, no such excess shall be deemed to have arisen. In their application in relation to foreign income dividends paid in an accounting period of a company beginning before 6th April 1999, sections 246J(5) and 246K(10) of the Taxes Act 1988 shall have effect as if the reference to any subsequent accounting period—

Where a foreign income dividend paid by a company before 6th April 1999— the recipient shall be treated, for all purposes of the Tax Acts, as receiving instead a ... distribution made by a company resident in the United Kingdom of an amount equal to ... the amount of the foreign income dividend.

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