Finance Act 1998
In section 36(1) of the Alcoholic Liquor Duties Act 1979 (rate of duty on beer), for “£11.14” there shall be substituted “£11.50”.
This section shall come into force on 1st January 1999.
The Alcoholic Liquor Duties Act 1979 shall be amended as follows.
In Part I of the Table of rates of duty in Schedule 1, in column 2 of the fourth entry (rate of duty per hectolitre on sparkling wine or made-wine of a strength exceeding 5.5 per cent. but less than 8.5 per cent.), for “201.50” there shall be substituted “161.20”.
In section 62(1A)(a) (rate of duty per hectolitre on sparkling cider of a strength exceeding 5.5 per cent.), for “£37.54” there shall be substituted “£45.05”.
This section shall be deemed to have come into force at 6 o'clock in the evening of 17th March 1998.
For Part I of the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (wine and made-wine of a strength not exceeding 22 per cent.) there shall be substituted—
This section shall come into force on 1st January 1999.
In section 62(1A) of the Alcoholic Liquor Duties Act 1979 (rates of duty on cider), for paragraphs (b) and (c) there shall be substituted the following paragraphs—
This section shall come into force on 1st January 1999.
Section 42 of the Alcoholic Liquor Duties Act 1979 (drawback on exportation, shipment as stores etc.) shall cease to have effect.
Subsection (1) above shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.
In section 6 of the Hydrocarbon Oil Duties Act 1979 (excise duty on imported hydrocarbon oil and on oil produced and delivered for home use), in subsection (1)—
for “subsections (2) and” there shall be substituted “subsection”; and
the words from “and delivered” to “above” shall be omitted.
For subsection (2) of that section there shall be substituted the following subsections—
The preceding provisions of this section shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.
In section 6(1A) of the Hydrocarbon Oil Duties Act 1979 (rates of duty on hydrocarbon oil)—
in paragraph (a) (light oil), for “£0.4510” there shall be substituted “£0.4926”;
in paragraph (b) (ultra low sulphur diesel), for “£0.3928” there shall be substituted “£0.4299”; and
in paragraph (c) (heavy oil that is not ultra low sulphur diesel), for “£0.4028” there shall be substituted “£0.4499”.
In section 11(1) of that Act (rebate on heavy oil)—
in paragraph (a) (fuel oil), for “£0.0200” there shall be substituted “£0.0218”; and
in each of paragraphs (b) and (ba) (gas oil which is not ultra low sulphur diesel and ultra low sulphur diesel), for “£0.0258” there shall be substituted “£0.0282”.
In section 13A(1A) of that Act (rebate on unleaded petrol)—
in paragraph (a) (higher octane unleaded petrol), for “£0.0150” there shall be substituted “£0.0050”; and
in paragraph (b) (other unleaded petrol), for “£0.0482” there shall be substituted “£0.0527”.
In section 14(1) of that Act (rebate on light oil for use as furnace fuel), for “£0.0200” there shall be substituted “£0.0218”.
This section shall be deemed to have come into force at 6 o'clock in the evening of 17th March 1998.
In section 1 of the Hydrocarbon Oil Duties Act 1979, for subsection (6) (meaning of “ultra low sulphur diesel”) there shall be substituted the following subsection—
This section shall be deemed to have come into force at 6 o'clock in the evening of 17th March 1998.
In section 20AAA of the Hydrocarbon Oil Duties Act 1979 (charge to duty on mixtures of oils), after subsection (2) there shall be inserted the following subsection—
In subsection (3) of that section, after “subsection (1)” there shall be inserted “or (2A)”.
In section 20AAB of that Act (supplementary provisions about mixing of oils), in subsection (1), after “section 20AAA(1)” there shall be inserted “or (2A)”.
In Schedule 2A to that Act (mixtures of oils to which duty applies), after paragraph 7 there shall be inserted the following—
Subject to paragraph 10 below, duty charged under subsection (2A) of section 20AAA of this Act shall be charged at the rate for heavy oil in force at the time when the mixture is produced.
This section shall be deemed to have come into force at 6 o'clock in the evening of 17th March 1998.
1. Cigarettes An amount equal to 22 per cent. of the retail price plus £77.09 per thousand cigarettes. 2. Cigars £114.79 per kilogram. 3. Hand-rolling tobacco £87.74 per kilogram. 4. Other smoking tobacco and chewing tobacco £50.47 per kilogram.
This section shall come into force on 1st December 1998.
Part of gross gaming yield Rate The first £450,000 2½ per cent. The next £1,000,000 12½ per cent. The next £1,000,000 20 per cent. The next £1,750,000 30 per cent. The remainder 40 per cent.
In section 11(3) of that Act (rate of duty for unregistered gaming), for “33⅓ per cent.” there shall be substituted “40 per cent.” (3) This section has effect in relation to accounting periods beginning on or after 1st April 1998.
(1) (2) (3) (4) Period (in months) for which licence granted Machines that are not gaming machines Gaming machines that are small-prize machines or are five-penny machines without being small-prize machines Other machines £ £ £ 1 30 80 220 2 50 150 425 3 75 220 615 4 95 285 800 5 120 345 970 6 140 400 1,125 7 160 450 1,270 8 185 500 1,405 9 205 540 1,525 10 225 580 1,635 11 240 615 1,730 12 250 645 1,815
This section shall apply in relation to any amusement machine licence for which an application is received by the Commissioners of Customs and Excise after 17th March 1998.
In section 21(3A) of the Betting and Gaming Duties Act 1981 (excepted machines), for paragraphs (b) and (c) there shall be substituted the following paragraphs—
This section has effect in relation to the provision of an amusement machine at any time on or after 1st April 1998.
In section 21(3A) of the Betting and Gaming Duties Act 1981 (excepted machines), after paragraph (c) there shall be inserted ; or
After subsection (3A) of that section there shall be inserted the following subsections—
Accordingly, in section 25 of that Act—
in subsection (4) (no account to be taken of the fact that a machine may be played by more than one person at a time), after “description” there shall be inserted “other than an excepted video machine falling within section 21(3A)(d) above”; and
in subsection (6) (excepted machine not to be treated as a number of machines), for the words “in the case of any machine” onwards there shall be substituted “for the purpose of determining whether a machine is an excepted video machine falling within section 21(3A)(d) above, or in the case of a pinball machine or a machine that is an excepted machine”.
This section has effect in relation to the provision of an amusement machine at any time on or after the day on which this Act is passed.
After section 34 of the Finance Act 1994 (fiscal representatives) there shall be inserted the following section—
In section 34(4) of that Act (effect of appointment of fiscal representative), after “subsection (5)” there shall be inserted “and section 34A”.
Schedule 1 to this Act (which makes provision for reduced rates of vehicle excise duty to be applicable to certain vehicles adapted so as to reduce pollution) shall have effect.
In paragraph 1A(1) of Schedule 2 to the Vehicle Excise and Registration Act 1994 (exemption for vehicles more than 25 years old), for the words “more than 25 years before the beginning of the year in which that time falls” there shall be substituted “before 1st January 1973.”
In section 22(2A) of the Vehicle Excise and Registration Act 1994 (provisions that may be made about nil licences), after paragraph (b) there shall be inserted the following paragraphs—
In subsection (1) of section 35A of the Vehicle Excise and Registration Act 1994 (offence of failing to return void licence)—
in paragraph (a), for the words from “requires” to “the notice” there shall be substituted “contains a relevant requirement”; and
in paragraph (b), for “within that period” there shall be substituted “contained in the notice”.
After subsection (2) of that section there shall be inserted the following subsections—
In section 36 of that Act (additional liability to be imposed on persons convicted of offences under section 35A), for subsection (4) of that section there shall be substituted the following subsections—
After subsection (5) of that section there shall be inserted the following subsection—
The preceding provisions of this section apply to notices sent and orders made on or after the day on which this Act is passed.
Schedule 2 to this Act (assessments for excise duty purposes) shall have effect.
Paragraph 5 of Schedule 4 to the Value Added Tax Act 1994 (disposal of business assets) shall be amended as follows.
In sub-paragraph (2)(a) (exception for gifts of small value), for “is” there shall be substituted “of acquiring or, as the case may be, producing the goods was”.
For the purposes of determining the cost to the donor of acquiring or producing goods of which he has made a gift, where— the donor and his predecessor or, as the case may be, all of his predecessors shall be treated as if they were the same person.
In sub-paragraph (5) (transactions without consideration to be treated as supplies under paragraph 5 only where the supplier is a person entitled to credit for input tax), for “is” there shall be substituted “or any of his predecessors is a person who (disregarding this paragraph) has or will become”.
In relation to any goods or anything comprised in any goods, a person is the predecessor of another for the purposes of this paragraph if— and references in this paragraph to a person’s predecessors include references to the predecessors of his predecessors through any number of transfers.
The preceding provisions of this section apply to any case where the time when the goods are transferred or disposed of or, as the case may be, put to use, used or made available for use is on or after 17th March 1998.
In the Value Added Tax Act 1994 the following section shall be inserted after section 97 (orders, rules and regulations)—
In section 6 of the Value Added Tax Act 1994 (time of supply), after subsection (14) there shall be inserted the following subsection—
This section shall be deemed to have come into force on 17th March 1998.
In subsection (1)(a) of section 36 of the Value Added Tax Act 1994 (bad debts), the words “for a consideration in money” shall be omitted.
In subsection (3) of that section—
in paragraph (a), for “payment by way” there shall be substituted “part”; and
in paragraph (b), for “a payment or payments by way” there shall be substituted “any part” and for “the payment (or the aggregate of the payments)” there shall be substituted “that part”.
After that subsection there shall be inserted the following subsection—
In subsection (5) of that section—
in paragraph (c), for “subsequent payments” there shall be substituted “anything subsequently received”; and
in paragraph (e), for “payment (or further payment) by way” there shall be substituted “part (or further part)”.
In subsection (6) of that section, in paragraphs (b) and (c) for “a payment” there shall in each place be substituted “anything received”.
In subsection (7) of that section, for “part payment” there shall be substituted “receipt of part of the consideration”.
Subsections (1) to (3) above have effect in relation to claims made on or after the day on which this Act is passed.
In section 96(1) of the Value Added Tax Act 1994, in paragraph (b) of the definition of “major interest” (land in Scotland not held on feudal tenure: lessee’s interest must be for a period exceeding 21 years), for “exceeding 21 years” there shall be substituted “of not less than 20 years”.
Income tax shall be charged for the year 1998-99, and for that year—
the lower rate shall be 20 per cent.;
the basic rate shall be 23 per cent.; and
the higher rate shall be 40 per cent.
In subsection (1)(c) of section 259 of the Taxes Act 1988 (additional relief for children in the case of a man with an incapacitated wife), for “man” and “wife” there shall be substituted, respectively, “individual” and “spouse”.
In subsection (4) of that section (woman not entitled to relief in a case where a child is resident with her only while she is married and living with her husband), after “relief under this section” there shall be inserted “by virtue of subsection (1)(a) above”.
In section 261A(3) of that Act (rule in the year of a separation for man who is entitled to relief by virtue of section 259(1)(c)), for “a man” there shall be substituted “an individual”.
This section has effect for the year 1998-99 and subsequent years of assessment and shall be deemed to have had effect for the year 1997-98.
The Taxes Act 1988 shall have effect for the year 1999-00 and subsequent years of assessment with the following amendments—
in section 256(2)(a) of that Act (rate of reliefs given by way of income tax reduction under Chapter I of Part VII), for “15 per cent.” there shall be substituted “10 per cent.”; and
in section 347B(5A)(a) of that Act (rate of relief for qualifying maintenance payments), for “the appropriate percentage” there shall be substituted “10 per cent.”.
For the purposes only of applying section 257C of the Taxes Act 1988 (indexation) for the year 1999-00, the amounts specified for the year 1998-99 in subsections (2) and (3) of section 257A of that Act (married couple’s allowance for persons of 65 or more) shall be taken to have been £4,965 and £5,025, respectively.
Corporation tax shall be charged for the financial year 1998 at the rate of 31 per cent.
For that year—
the small companies' rate shall be 21 per cent.; and
the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fortieth.
Corporation tax shall be charged for the financial year 1999 at the rate of 30 per cent.
For that year—
the small companies' rate shall be 20 per cent.; and
the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fortieth.
After section 59DA of the Taxes Management Act 1970 there shall be inserted—
The Treasury may by regulations make provision for or in connection with the payment to the Board of an amount or amounts determined by or under the regulations in any case where, on or after 25th November 1997 and before 30th June 2002, a company takes any action specified in the regulations which has the effect— in relation to the company of any regulations made under section 59E of the Taxes Management Act 1970.
of delaying the application, or
of delaying or avoiding the full effect,
Any amount determined by or under regulations under this section shall be computed as if it were interest on a sum determined by or under the regulations; and any amount so determined shall be treated for the purposes of the Tax Acts as if it were interest due to the Board.
The action which may be specified in regulations under this section includes—
a change by a company in the date or dates on which any of its accounting periods begin or end; or
a transfer by a company of any property, rights or liabilities to a company which belongs to the same group as that company.
In subsection (4) above “group” means a company which has one or more 51 per cent. subsidiaries together with that or those subsidiaries.
Regulations under this section—
may make different provision in relation to different cases or in relation to companies of different descriptions;
may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.
No company resident in the United Kingdom shall be liable to pay advance corporation tax in respect of any qualifying distribution made on or after 6th April 1999.
For the purposes of the Tax Acts, no distribution made on or after 6th April 1999 shall be treated as giving rise to the making of a franked payment.
No franked investment income which is attributable to a distribution made on or after 6th April 1999 shall be used to frank any distributions of a company.
Section 238(3) of the Taxes Act 1988 shall apply for the purposes of subsection (3) above as it applies for the purposes of Chapter V of Part VI of that Act.
Schedule 3 to this Act (which makes provision for and in connection with the abolition of advance corporation tax) shall have effect.
The Treasury may by regulations make provision for or in connection with enabling unrelieved surplus advance corporation tax to be set against liability to corporation tax on profits charged to corporation tax for accounting periods ending on or after 6th April 1999 (and thus to discharge a corresponding amount of any such liability).
Without prejudice to the generality of subsection (1) above, regulations under this section may make provision—
for or in connection with imposing a limit or limits on the amount of unrelieved surplus advance corporation tax which may be set against liability to corporation tax on profits charged to corporation tax for an accounting period;
for or in connection with the carrying forward of unrelieved surplus advance corporation tax from earlier accounting periods to later accounting periods;
for or in connection with the recovery of corporation tax from companies in prescribed circumstances where any such liability as is mentioned in paragraph (a) above is or has been discharged by the set-off of unrelieved surplus advance corporation tax;
for or in connection with the reduction or extinguishment of unrelieved surplus advance corporation tax;
for or in connection with treating notional amounts of advance corporation tax (“shadow ACT”) as paid by companies in respect of distributions made on or after 6th April 1999;
for or in connection with the determination of amounts of shadow ACT which are treated as paid by companies in respect of distributions made on or after 6th April 1999;
in relation to the treatment of shadow ACT;
in relation to the treatment of companies which have prescribed relationships or connections with each other;
in relation to the treatment of prescribed events, arrangements or transactions involving companies with unrelieved surplus advance corporation tax.
The provision which may be made by regulations under this section includes provision—
for or in connection with treating shadow ACT as reducing any limit or limits on the amount of unrelieved surplus advance corporation tax which may be set against any such liability as is mentioned in subsection (2)(a) above;
for or in connection with the carrying forward of shadow ACT from earlier accounting periods to later accounting periods;
for or in connection with the carrying back of shadow ACT from later accounting periods to earlier accounting periods;
for or in connection with the transfer of shadow ACT between companies;
for or in connection with the reduction or extinguishment of shadow ACT.
The provision which may be made by virtue of subsection (2)(c) above includes provision for or in connection with the recovery of corporation tax from a company which has a prescribed relationship or connection with a company whose liability to corporation tax is or has been discharged by the set-off of unrelieved surplus advance corporation tax.
The provision which may be made by regulations under this section includes provision for or in connection with enabling unrelieved surplus advance corporation tax to be set against liability to a sum chargeable under section 747(4)(a) of the Taxes Act 1988 (controlled foreign companies) as if it were an amount of corporation tax for an accounting period.
In this section “unrelieved surplus advance corporation tax” means the advance corporation tax (if any) which, apart from sub-paragraph (3) of paragraph 11 of Schedule 3 to this Act but otherwise in accordance with that paragraph, would be treated by virtue of section 239(4) of the Taxes Act 1988 as paid in respect of distributions made by a company in the first accounting period of the company to begin on or after 6th April 1999.
The reference in subsection (6) above to an accounting period beginning on or after 6th April 1999 includes a reference to a separate accounting period mentioned in section 245(2) of the Taxes Act 1988 which begins on 6th April 1999.
Regulations under this section— as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.
may make such modifications of any provisions of the Tax Acts, or
may apply such provisions of the Tax Acts,
Regulations under this section which apply any provisions of the Tax Acts may apply those provisions either without modifications or with such modifications as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.
Regulations under this section—
may make different provision for different purposes, cases or circumstances;
may make different provision in relation to companies or accounting periods of different descriptions;
may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.
Regulations under this section may make provision in relation to accounting periods beginning before (as well as accounting periods beginning on or after) the date on which the regulations are made.
In this section—
“modifications” includes amendments, additions and omissions;
“prescribed” means prescribed by regulations made under this section.
Section 90 of the Taxes Management Act 1970 (interest on overdue tax to be paid without deduction of income tax and not to be allowed as a deduction in computing income, profits or losses) shall be amended as follows.
At the beginning there shall be inserted “(1)” and in the subsection (1) so formed—
after “Interest payable under this Part of this Act” there shall be inserted “(a)”; and
after “and” there shall be inserted “(b)”.
At the beginning of the paragraph (b) formed by subsection (2)(b) above (disallowance of relief for interest) there shall be inserted “subject to subsection (2) below,”.
At the end of the section there shall be added—
The amendments made by subsections (3) and (4) above have effect in relation to—
interest on corporation tax for accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment); and
interest on tax assessable in accordance with Schedule 13 or 16 to the Taxes Act 1988 for return periods in accounting periods ending on or after that day.
Section 826 of the Taxes Act 1988 (interest on tax overpaid) shall be amended as follows.
In subsection (5) (interest on overpaid tax to be paid without deduction of income tax and not to be brought into account in computing profits or income)—
after “Interest paid under this section” there shall be inserted “(a)”; and
after “and” there shall be inserted “(b)”.
At the beginning of the paragraph (b) formed by subsection (2)(b) above (interest not to be brought into account in computing profits or income) there shall be inserted “subject to subsection (5A) below,”.
After subsection (5) there shall be inserted—
The amendments made by subsections (3) and (4) above have effect in relation to interest payable by virtue of any paragraph of section 826(1) of the Taxes Act 1988 if the accounting period mentioned in that paragraph is one which ends on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).
Schedule 4 to this Act (which makes further amendments relating to interest payable under the Tax Acts by or to companies) shall have effect.
The Board may enter into arrangements with some or all of the members of a group of companies for one of those members to discharge any liability of each of those members to pay corporation tax for the accounting periods to which the arrangements relate.
Any such arrangements—
may make provision in relation to cases where companies become or cease to be members of a group of companies;
may make provision in relation to the discharge of liability to pay interest or penalties;
may make provision in relation to the discharge of liability to pay any amount treated as corporation tax;
may make provision for or in connection with the termination of the arrangements;
may make such supplementary, incidental, consequential or transitional provision as is necessary or expedient for the purposes of the arrangements.
Any such arrangements—
shall not affect the liability to corporation tax, or to pay corporation tax, of any company to which the arrangements relate; and
shall not affect any other liability of any such company under the Tax Acts.
For the purposes of this section a company and all its 51 per cent. subsidiaries form a group of companies and, if any of those subsidiaries have 51 per cent. subsidiaries, the group of companies includes them and their 51 per cent. subsidiaries, and so on.
The reference in subsection (2)(c) above to any amount treated as corporation tax is a reference—
to any amount due from a company under section 419 of the Taxes Act 1988 (loans to participators etc) as if it were an amount of corporation tax chargeable on the company;
to any sum chargeable on a company under section 747(4)(a) of the Taxes Act 1988 (controlled foreign companies) as if it were an amount of corporation tax.
Section 51B of the Taxes Act 1988 (which enables provision to be made requiring tax on interest on gilt-edged securities to be accounted for periodically) shall cease to have effect.
In consequence of subsection (1) above, in paragraph 3 of Schedule 19AB to that Act (repayment of excessive provisional payments made on self-assessment), in sub-paragraph (1C) (as inserted by Schedule 34 to the Finance Act 1996)—
the word “or” shall be inserted at the end of paragraph (a); and
paragraph (c) and the word “or” immediately preceding it shall be omitted.
The preceding provisions of this section have effect in relation only to payments of interest falling due on or after such day as the Treasury may by order appoint.
The provisions of Schedule 5 to this Act have effect with respect to tax on rents and other receipts from land. Part I contains amendments relating to the charge to tax under Schedule A or Case V of Schedule D on rents and other receipts from land. Part II contains amendments about relief for losses incurred in a Schedule A business or overseas property business, and the relationship between such relief and other reliefs. Part III contains minor and consequential amendments.
So far as relating to income tax, the provisions of Parts I to III of that Schedule have effect for the year 1998-99 and subsequent years of assessment.
So far as relating to corporation tax, the provisions of Parts I to III of that Schedule come into force on 1st April 1998, subject to the transitional provisions in Part IV of the Schedule.
Sections 26 and 27 of the Taxes Act 1988 (deductions from rent: land managed as one estate and maintenance funds for historic buildings) shall cease to have effect—
for income tax purposes, on and after 6th April 2001;
for corporation tax purposes, for accounting periods beginning on or after 1st April 2001.
Section 34 of the Taxes Act 1988 (treatment of premiums, etc. as rent) is amended as follows.
In subsection (1) for “becoming entitled when the lease is granted to” substitute “receiving when the lease is granted”.
In subsection (4)—
in paragraph (a), for the words from “in computing” to “in lieu of rent” substitute “in computing the profits of the Schedule A business of which the sum payable in lieu of rent is by virtue of this subsection to be treated as a receipt”; and
in paragraph (b), for “deemed to become due” substitute “deemed to be received”.
In subsection (5)—
in paragraph (a), for “tax chargeable by virtue of this subsection” substitute “the profits of the Schedule A business of which that sum is by virtue of this subsection to be treated as a receipt”; and
in paragraph (b), for “deemed to become due” substitute “deemed to be received”.
The above amendments have effect in relation to amounts treated as received under section 34 of the Taxes Act 1988 on or after 17th March 1998.
For section 98 of the Taxes Act 1988 (tied premises) substitute—.
In section 156 of the Taxation of Chargeable Gains Act 1992 (replacement of business assets: buildings and land), for subsection (4) substitute—.
The above amendments have effect on and after 17th March 1998, subject to the following transitional provisions. In those provisions—
“before commencement” and “after commencement” mean, respectively, before 17th March 1998 and on or after that date; and
“the new section 98” means the section as substituted by subsection (1) above.
To the extent that receipts or expenses have been taken into account before commencement, they shall not be taken into account again under the new section 98 after commencement.
To the extent that receipts or expenses would under the new section 98 have been brought into account before commencement, and were not so brought into account, they shall be brought into account immediately after commencement.
If any estate, interest or rights in or over land is or are transferred from one person to another, the references in subsections (4) and (5) above to receipts or expenses being taken into account shall be construed as references to their being taken into account in relation to either of those persons.
For the purposes of those subsections an amount is “taken into account” if—
it is brought into account for tax purposes, or
it would have been so brought into account if the person concerned were chargeable to tax.
For the purposes of Case I or II of Schedule D the profits of a trade, profession or vocation must be computed on an accounting basis which gives a true and fair view, subject to any adjustment required or authorised by law in computing profits for those purposes.
This does not—
require a person to comply with the requirements of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 except as to the basis of computation, or
impose any requirements as to audit or disclosure.
This section applies to periods of account beginning after 6th April 1999. A period of account beginning on or before 6th April 1999 which is still current on 7th April 2000 shall be treated for the purposes of this section as having ended on 6th April 1999 and a new period as having begun on 7th April 1999.
This section is subject to the exemption in section 43 below (barristers and advocates in early years of practice).
This section does not affect provisions of the Tax Acts relating to the computation of the profits of Lloyd’s underwriters or companies carrying on life insurance, or otherwise laying down special rules for the computation of the profits of a particular description of business.
The profits of a barrister or advocate in actual practice for a period of account ending not more than seven years after the commencement of such practice may be computed in accordance with this section.
For this purpose barristers and advocates are regarded as commencing in actual practice when they first hold themselves out as available for fee-earning work.
The profits of a barrister or advocate for a period of account to which this section applies may be computed— Once a particular basis has been adopted it must be applied consistently.
on a cash basis, or
by reference to fees earned whose amount has been agreed or in respect of which a fee note has been delivered.
The exemption given by this section ceases if for any period of account an accounting basis is adopted that complies with section 42 above. In that case, that section applies to all subsequent periods of account.
The provisions of Schedule 6 to this Act apply where there is a change, from one period of account to the next of a trade, profession or vocation, of the accounting basis on which profits are computed for tax purposes.
The Schedule only applies if the old basis accords with the law and practice applicable immediately before the change and the new basis accords with the law and practice applicable immediately after the change.
The provisions of the Schedule replace section 104(4) of the Taxes Act 1988 and any rule of law as to the adjustments necessary for tax purposes in those circumstances.
They apply to any change of accounting basis taking effect on or after 6th April 1999.
In sections 42 to 44 above a “period of account” means any period for which accounts of the trade, profession or vocation are drawn up.
In provisions of the Tax Acts relating to the computation of the profits of a trade, profession or vocation references to receipts and expenses are (except where otherwise expressly provided) to any items brought into account as credits or debits in computing such profits. There is no implication that an amount has been actually received or expended.
Except where otherwise expressly provided, the same rules apply in computing losses of a trade, profession or vocation for any purpose of the Tax Acts as apply in computing profits.
In the provisions of the Tax Acts which refer to the subject of the charge under Case I or II of Schedule D as “profits or gains” or “profits and gains” of a trade, profession or vocation— The provisions affected are listed in Schedule 7 to this Act.
for “profits or gains” or “profits and gains”, wherever occurring, substitute “profits”, and
for “arising or accruing”, in reference to such profits or gains, substitute “arising”.
This section applies where—
any article falling within subsection (2) below is given to a charity at any time in the period beginning with the first designation date and ending with 31st December 2000;
the person making the gift (“the donor”) is a person carrying on a trade, profession or vocation; and
that gift is made for the purpose of enabling the article to be used in a designated country or territory either for medical purposes or by an educational establishment in that country or territory.
An article falls within this subsection if—
it is an article manufactured, or of a class or description sold, by the donor in the course of his trade; or
it is an article used by the donor in the course of his trade, profession or vocation which for the purposes of Part II of the Capital Allowances Act 1990 constitutes machinery or plant used by him wholly or partly in the course of that trade, profession or vocation.
Subject to subsections (4) and (5) below, where this section applies in the case of the gift of any article—
no amount shall be required, in consequence of the donor’s disposal of that article from trading stock, to be brought into account for the purposes of the Tax Acts as a trading receipt of the donor; and
subsection (6) of section 24 of the Capital Allowances Act 1990 shall not require the donor to bring into account any disposal value in respect of the article for the purposes of that section.
In any case where— the donor shall in respect of that chargeable period be charged to tax under Case I or Case II of Schedule D or, if he is not chargeable to tax under either of those Cases for that period, under Case VI of Schedule D on an amount equal to the value of that benefit.
relief is given under subsection (3) above in respect of the gift of an article, and
any benefit received in any chargeable period by the donor or any person connected with him is in any way attributable to the making of that gift,
Subsection (3) above shall not apply unless the donor makes a claim for relief under this section; and such a claim—
must be made within the required period; and
must specify the article given and the name of the charity to which it is given.
In subsection (5)(a) above “the required period” means—
in the case of a claim with respect to income tax, the period ending with the first anniversary of the 31st January next following the year of assessment in whose basis period the gift is made; and
in the case of a claim with respect to corporation tax, the period of two years beginning at the end of the accounting period in which the gift is made.
In paragraph (a) of subsection (6) above “basis period” means—
in relation to a year of assessment for which a basis period is given by sections 60 to 63 of the Taxes Act 1988, that basis period; and
in relation to a year of assessment for which no basis period is given by those sections, the year of assessment.
A country or territory is a designated country or territory for the purposes of this section if— and a description specified in such an order may be expressed by reference to the opinion of any person so specified or by reference to the contents from time to time of a document prepared by a person so specified.
it is designated as such by an order made for those purposes by the Treasury; or
it is of a description specified in an order so made;
In this section—
“charity” has the same meaning as in section 506 of the Taxes Act 1988;
“the first designation date” means the date on which the Treasury first makes an order under subsection (8) above; and
“medical purposes” includes medical research and the promotion of health.
Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this section.
This section applies to any gift of a sum of money by an individual to a charity that has given the required notification to the Board if that gift is made—
in the period beginning with the first designation date and ending with 31st December 2000; and
in circumstances giving rise to a reasonable expectation that the sum given will be applied for, or in connection with, one or both of the purposes specified in subsection (2) below.
Those purposes are—
the relief of poverty in any one or more designated countries or territories, and
the advancement of education in any one or more designated countries or territories.
Subject to the following provisions of this section, subsection (2)(g) of section 25 of the Finance Act 1990 (minimum payment for which relief given on gift by an individual) shall have effect in relation to any gift to which this section applies as if for “£250” there were substituted “£100”.
Where— the aggregated gifts shall be treated for the purposes of that section as if they together constituted a single qualifying donation made by that individual to that charity at that time.
a relevant gift of less than £100 is made by an individual to a charity that has given the required notification to the Board,
the aggregate of that gift and any one or more subsequent relevant gifts made by that individual to that charity is £100 or more,
that individual gives an appropriate certificate in relation to that aggregate to that charity, and
the condition specified in paragraph (e) of subsection (2) of section 25 of the Finance Act 1990 (limit on benefit for the donor) would be satisfied if the aggregated gifts constituted a single gift by that individual to that charity made at the time of the making of the last of them to be made,
The gifts aggregated for the purposes of subsection (4) above must not include either—
a relevant gift of £250 or more; or
more than one relevant gift of £100 or more.
The reference in paragraph (c) of subsection (4) above to an appropriate certificate is a reference to a certificate which states—
that each of the gifts being aggregated qualifies as a relevant gift for the purposes of this section;
that if those gifts are treated in accordance with this section as a single qualifying donation made at the time specified in subsection (4) above, the single donation will satisfy the taxation condition; and
that the condition in paragraph (d) of that subsection is satisfied in the case of those gifts taken together.
For the purposes of subsection (6) above the taxation condition in the case of any relevant gift is that, either directly or by deduction from profits or gains brought into charge to tax in the relevant year of assessment, the individual making the gift has paid or will pay to the Board income tax of an amount equal to income tax at the basic rate for the relevant year of assessment on the grossed up amount of that gift.
In this section—
“relevant gift” means a gift to which this section applies which is either— and
a gift of less than £100 which would satisfy those requirements if paragraph (g) of that subsection, or that paragraph together with paragraph (e), were disregarded;
A country or territory is a designated country or territory for the purposes of this section if— and a description specified in such an order may be expressed by reference to the opinion of any person so specified or by reference to the contents from time to time of a document prepared by a person so specified.
it is designated as such by an order made for those purposes by the Treasury; or
it is of a description specified in an order so made;
Expressions used in this section and in section 25 of the Finance Act 1990 have the same meanings in this section as in that section.
In section 135 of the Taxes Act 1988, in each of subsections (2) and (5) (in accordance with which there is a charge to tax when an employee obtains a share option that is exercisable more than seven years after being obtained), for “seven” there shall be substituted “ten”.
Subsection (1) above has effect in relation to rights obtained on or after 6th April 1998.
After section 140 of the Taxes Act 1988 there shall be inserted the following sections—
In section 77(1) of the Finance Act 1988 (application of Chapter about unapproved employee share schemes), after “Subject to” there shall be inserted “section 140A of the Taxes Act 1988 and”.
After subsection (6) of section 79 of that Act (charge for shares in dependent subsidiaries) there shall be inserted the following subsection—
The preceding provisions of this section apply in relation to interests acquired on or after 17th March 1998.
After the section 140C of the Taxes Act 1988 inserted by section 50 above there shall be inserted the following sections—
Before subsection (7) of section 79 of the Finance Act 1988 (charge for shares in dependent subsidiaries) there shall be inserted the following subsection—
The preceding provisions of this section apply in relation to shares acquired on or after 17th March 1998.
After the section 140F of the Taxes Act 1988 inserted by section 51 above there shall be inserted the following section—
section 140G;
After the section 140G of the Taxes Act 1988 inserted by section 52 above there shall be inserted the following section—
The Taxation of Chargeable Gains Act 1992 shall be amended as follows.
After subsection (5) of section 120 (increase of expenditure by reference to tax charged in relation to shares) there shall be inserted the following subsections—
In subsection (7) of that section—
after “(5),” there shall be inserted “, (5A), (5B)”; and
after “138” there shall be inserted “, 140A, 140D”.
After that subsection there shall be inserted the following subsection—
After section 149A there shall be inserted the following section—
This section has effect in relation to disposals on or after 17th March 1998 of interests and shares acquired on or after that date.
In section 134 of the Taxes Act 1988, subsection (5)(c) (which excepts from charge by virtue of that section the remuneration of construction workers who are sub-contractors supplied by agencies) shall cease to have effect.
In section 559 of the Taxes Act 1988 (deductions on account of tax etc. from payments to certain sub-contractors), in subsection (1), for “subsection (2) below” there shall be substituted “the following provisions of this section”; and after subsection (1) there shall be inserted the following subsection—
Subsections (1) and (2) above have effect in relation to—
any payments made on or after 6th April 1998 other than any made in respect of services rendered before that date; and
any payments made before 6th April 1998 in respect of services to be rendered on or after that date.
Subject to subsection (6) below, subsection (2) below applies if—
a construction trade is being carried on by a person (“the sub-contractor”) at the end of the year 1997-98; and
there are receipts of that trade which, but for section 134(5)(c) of the Taxes Act 1988, would have fallen to be treated for the year 1997-98 as the emoluments of an office or employment.
Where this subsection applies, then, subject to subsections (4) and (5) below—
the trade shall be deemed to have been permanently discontinued at the end of the year 1997-98; and
to the extent (if any) that the trade includes activities in addition to the rendering of services falling by virtue of section 55 to be treated as the duties of an office or employment, a new trade shall be deemed to have been set up and commenced on 6th April 1998.
Subsection (4) below applies if—
a construction trade (“the old trade”) is deemed by virtue of subsection (2)(a) above to have been permanently discontinued; and
a construction trade (“the new trade”)—
is deemed by virtue of subsection (2)(b) above to have been set up and commenced; or
(where sub-paragraph (i) above does not apply) is actually set up and commenced in the year 1998-99.
Where this subsection applies then, notwithstanding the deemed discontinuance, the old trade and the new trade shall be treated as the same for the purposes of section 385 of the Taxes Act 1988 (carry-forward of losses against subsequent profits).
An officer of the Board shall not become entitled by virtue of anything in this section to give a direction under paragraph 3(2) of Schedule 20 to the Finance Act 1994 (power to revise assessment so that made on the actual basis) in the case of a person whose trade is deemed under subsection (2) above to cease on 5th April 1998.
Subsection (2) above does not apply if the sub-contractor by notice to an officer of the Board otherwise elects.
An election under subsection (6) above—
if it relates to a trade carried on by an individual, must be included in a return under section 8 of the Taxes Management Act 1970 which is made and delivered in that individual’s case on or before the day on which it is required to be made and delivered under that section; and
if it relates to a trade carried on by persons in partnership, must be included in a return under section 12AA of that Act which is made and delivered in the partners' case, or in the case of any one or more of them, on or before the day specified in relation to that return under subsection (2) or (3) of that section.
In this section “construction trade” means a trade consisting in or including the rendering of services under contracts relating to construction operations (within the meaning of Chapter IV of Part XIII of the Taxes Act 1988).
Where at any time on or after 17th March 1998 and before the day on which this Act is passed any election corresponding to an election under subsection (6) above has been made under a resolution of the House of Commons having effect in accordance with the provisions of the Provisional Collection of Taxes Act 1968, this section has effect, on and after the day on which this Act is passed, as if that election were an election under subsection (6) above.
Schedule 8 to this Act (which makes provision in relation to sub-contractors in the construction industry) shall have effect.