Finance Act 1996
In section 5 of the Alcoholic Liquor Duties Act 1979 (spirits), for “£20.60” there shall be substituted “£19.78”.
This section shall be deemed to have come into force at 6 o'clock in the evening of 28th November 1995.
In the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (wine and made-wine)—
in Part I of the Table for “200.64”, where it appears as the rate for wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent., there shall be substituted “187.24”; and
in Part II of that Table (wine or made-wine of a strength exceeding 22 per cent.), for “20.60” there shall be substituted “19.78”.
Paragraph (a) of subsection (1) above shall be deemed to have come into force on 1st January 1996 and paragraph (b) shall be deemed to have come into force at 6 o'clock in the evening of 28th November 1995.
In subsection (1) of section 62 of the Alcoholic Liquor Duties Act 1979 (cider), for “rate of £23.78 per hectolitre” there shall be substituted “rates shown in subsection (1A) below.”
After that subsection there shall be inserted the following subsection—
This section shall come into force on 1st October 1996.
In section 6(1) of the Hydrocarbon Oil Duties Act 1979, for “£0.3614” (duty on light oil) and “£0.3132” (duty on heavy oil) there shall be substituted “£0.3912” and “£0.3430”, respectively.
In section 8(3) of that Act (duty on road fuel gas), for “£0.3314” there shall be substituted “£0.2817”.
In section 11(1) of that Act (rebate on heavy oil), for “£0.0166” (fuel oil) and “£0.0214” (gas oil) there shall be substituted “£0.0181” and “£0.0233”, respectively.
In subsection (1) of section 13A of that Act (rebate on unleaded petrol), for “the rate of £0.0482 a litre” there shall be substituted “the rate specified in subsection (1A) below”; and after that subsection there shall be inserted the following subsections—
In subsection (2) of that section (meaning of “unleaded”), for the words from “or, if” onwards there shall be substituted “; and petrol is “leaded” for the purposes of this section if it is not unleaded.”
In section 14(1) of that Act (rebate on light oil for use as furnace fuel), for “£0.0166” there shall be substituted “£0.0181”.
Subsections (1) to (3) and (6) above shall be deemed to have come into force at 6 o'clock in the evening of 28th November 1995; and subsection (4) above shall come into force on 15th May 1996.
The Hydrocarbon Oil Duties Act 1979 shall be amended as mentioned in subsections (2) to (5) below.
In section 11(1) (rebate on heavy oil), for “and 13” there shall be substituted “13, 13AA and 13AB”.
In section 12(2) (restriction on use of rebated heavy oil for road vehicles), after “allowed” there shall be inserted “(whether under section 11(1) above or 13AA(1) below)”.
After section 13 there shall be inserted the following sections—
In section 24 (control of use of duty-free and rebated oil)—
in subsection (1), after “section 13A” there shall be inserted “section 13AA”; and
in subsection (2), after “section 12” there shall be inserted “or section 13AA”.
This section shall have effect in relation to cases where kerosene is— on or after such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.
used as fuel, or
taken into a fuel supply,
The Hydrocarbon Oil Duties Act 1979 shall be amended as mentioned in subsections (2) to (4) below.
In section 20 (contaminated or accidentally mixed oil), after subsection (3) there shall be inserted the following subsection—
After section 20A there shall be inserted the following sections—
After Schedule 2 there shall be inserted the Schedule set out in Schedule 1 to this Act.
This section and Schedule 1 to this Act shall have effect in relation to— and “the appointed day” here means such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.
the production on or after the appointed day of a mixture which is leaded or unleaded petrol; and
the supply on or after the appointed day of a mixture of heavy oils;
After section 24 of the Hydrocarbon Oil Duties Act 1979 (control of use of duty free and rebated oil) there shall be inserted the following section—
In section 24(1) of that Act (purposes for which regulations may be made), for “or section 19A above” there shall be inserted “, section 19A or section 24A of this Act”.
The following provisions of the Hydrocarbon Oil Duties Act 1979 are hereby repealed—
section 18 (fuel for ships in home waters), and
in subsection (1) of section 19 (fuel used in fishing boats, etc.), paragraph (a) and the words from “by the owner” to “be”.
This section shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.
1. Cigarettes An amount equal to 20 per cent. of the retail price plus £62.52 per thousand cigarettes. 2. Cigars £91.52 per kilogram. 3. Hand-rolling tobacco £85.94 per kilogram. 4. Other smoking tobacco and chewing tobacco £40.24 per kilogram.
This section shall be deemed to have come into force at 6 o'clock in the evening of 28th November 1995.
In section 1(2) of the Betting and Gaming Duties Act 1981 (rate of general betting duty), for “7.75 per cent.” there shall be substituted “6.75 per cent.”
This section shall apply in relation to bets made on or after 1st March 1996.
In section 7(1) of the Betting and Gaming Duties Act 1981 (rate of pool betting duty), for “32.50 per cent” there shall be substituted—
in relation to bets the stake money on which has been or is paid on or after 3rd December 1995 and before the first Sunday to follow the day on which this Act is passed, “27.50 per cent.”; and
in relation to bets the stake money on which is paid on or after that first Sunday, “26.50 per cent.”
In subsection (1) of section 21 of the Betting and Gaming Duties Act 1981 (requirement for amusement machine licence with respect to premises), at the end there shall be inserted “or the machine”.
In subsection (2) of that section (licences to be known as amusement machine licences), at the end there shall be inserted “and, if it is granted with respect to a machine, rather than with respect to premises, as a special amusement machine licence.”
After subsection (3) of that section there shall be inserted the following subsections—
In section 24(4) of that Act (provision of unlicensed machines), at the end there shall be inserted “or the machines”.
Sub-paragraphs (4) and (5) above shall have effect where— as if an amusement machine licence had been granted in respect of those premises for that winter period.
Regulations may provide for this Schedule to have effect in relation to special amusement machine licences with such exceptions, adaptations and modifications as may be prescribed. Without prejudice to the generality of sub-paragraphs (1) and (2) above, regulations may include provision requiring— as may be determined by directions given, in accordance with the regulations, by the Commissioners.
In section 31 of the Finance Act 1994 (air passenger duty: exceptions for certain passengers) after subsection (4) there shall be inserted—
In section 32 of that Act (change of circumstances after ticket issued etc.)—
in subsection (1) (which provides that that section applies where a person’s agreement for carriage is evidenced by a ticket) for the words “This section applies” there shall be substituted the words “Subsections (2) and (3) below apply”;
after subsection (3) there shall be added—
In Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty), in paragraph 1(2) (the general rate), for “£135” there shall be substituted “£140”.
Subsection (1) above applies in relation to licences taken out after 28th November 1995.
In Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty), in paragraph 2(1)(a) (rate for motorcycles with low cylinder capacity), after “150 cubic centimetres” there shall be inserted “or the motorcycle is an electrically propelled vehicle”.
In paragraph 4F of that Schedule (electrically propelled vehicles are special concessionary vehicles)—
in sub-paragraph (1), after “electrically propelled vehicle” there shall be inserted “other than a motorcycle (within the meaning of Part II of this Schedule)”; and
sub-paragraph (2) shall be omitted.
In section 62 of that Act (definitions), after subsection (1) there shall be inserted the following subsection—
Subsections (1) to (3) above apply in relation to licences taken out after 28th November 1995.
In Schedule 2 to that Act (exemptions), after paragraph 2 there shall be inserted the following paragraph—
In Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty), after paragraph 4E there shall be inserted the following paragraph—
In paragraph 3 of that Schedule (buses), in sub-paragraph (2)(b) (vehicles which are not buses), after “excepted vehicle” there shall be inserted “or a special concessionary vehicle”.
In paragraph 4(2) of that Schedule (meaning of “special vehicle”), for “and is” there shall be substituted “which is not a special concessionary vehicle and which is”.
A vehicle is not a recovery vehicle if it is a special concessionary vehicle.
and which is not a special concessionary vehicle.
In paragraph 7(2) of that Schedule (meaning of “haulage vehicle”), after “Part IV,” there shall be inserted “IVA,”.
In paragraph 16 of that Schedule (application of Part VIII of the Schedule), in sub-paragraph (1)(a), after “Part II, IV,” there shall be inserted “IVA,”.
This section applies in relation to licences taken out after 28th November 1995.
Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty) shall be amended in accordance with subsections (2) to (8) below.
In paragraph 4(2) (meaning of “special vehicle”), immediately before paragraph (c) there shall be inserted the following paragraph—.
A vehicle falls within this sub-paragraph if— A vehicle falls within this sub-paragraph if—
In paragraph 9(2) (rigid goods vehicles which are subject to basic goods vehicle rate), after paragraph (b) there shall be inserted and.
In paragraph 10(1) (trailer supplement), after “exceeding 12,000 kilograms” there shall be inserted “, which does not fall within paragraph 9(2)(b) or (c)”.
In paragraph 11(2) (tractive units which are subject to basic goods vehicle rate), after paragraph (b) there shall be inserted and.
In paragraph 16(1) (cases where Part VIII of Schedule 1 does not apply), paragraph (b), and the word “or” immediately preceding it, shall be omitted.
After paragraph 18 there shall be inserted the following paragraph—
In section 7 of the Vehicle Excise and Registration Act 1994 (issue of licences), in subsection (2) (declarations and particulars in relation to goods vehicles)—
after “goods vehicle” there shall be inserted “or a special vehicle”; and
after “goods vehicles” there shall be inserted “or, as the case may be, special vehicles”.
After subsection (7) of that section there shall be inserted the following subsection—
Subject to subsection (13) below, subsections (1) to (8) above apply in relation to licences taken out after 28th November 1995.
Subsection (13) below applies where a vehicle licence is taken out—
on or before 28th November 1995, and
at the rate applicable (at the time it is taken out) under Schedule 1 to the Vehicle Excise and Registration Act 1994.
While the licence is in force duty shall not, by virtue of this section, become chargeable under section 15 of that Act (vehicle used in manner attracting higher rate).
Subsections (9) and (10) above apply in relation to applications made after 28th November 1995.
Paragraph 15 of Schedule 1 to that Act (which is unnecessary) shall be omitted.
In Schedule 2 to the Vehicle Excise and Registration Act 1994 (exempt vehicles), immediately before paragraph 2 there shall be inserted the following paragraph—
In Schedule 1 to that Act (annual rates of duty), in paragraph 1 (rate for vehicle for which no other rate is specified)— and, in paragraph 2 (motorcycles), sub-paragraph (2) shall be omitted.
for paragraphs (a) and (b) of sub-paragraph (1) there shall be substituted “the general rate”; and
sub-paragraphs (3) to (5) shall be omitted;
In section 2(4) of that Act (rate of duty for vehicle not currently in use and for which no previous licence issued), for the words from “whichever” to the end there shall be substituted “the general rate currently specified in paragraph 1(2) of Schedule 1”.
In that Act— for “1(1)(a)” there shall be substituted “1”.
in section 13 (trade licences), in subsection (3)(b),
in section 13 as substituted under paragraph 8 of Schedule 4, in subsection (4)(b), and
in section 36(3)(b) (additional liability where cheque dishonoured),
This section has effect in relation to times after 28th November 1995.
In Schedule 2 to the Vehicle Excise and Registration Act 1994 (exempt vehicles), for paragraph 1A (inserted by section 18 above) there shall be substituted the following paragraph—
This section has effect in relation to times on or after 1st June 1996.
Paragraph 22 of Schedule 2 to the Vehicle Excise and Registration Act 1994 (exemption for vehicle testing) shall be amended as follows.
In sub-paragraph (1) (use for the purposes of submitting a vehicle to, or bringing it away from, a compulsory test), after the words “compulsory test”, in each place where they occur, there shall be inserted “or a vehicle weight test”.
A vehicle is an exempt vehicle when it is being used solely for the purpose of—
In sub-paragraph (2) (use by an authorised person in the course of compulsory test)—
after “compulsory test” there shall be inserted “, a vehicle weight test or a relevant re-examination and is being so used”; and
in paragraphs (a) and (b), after the words “the test”, in each place where they occur, there shall be inserted “or re-examination”.
After sub-paragraph (2) there shall be inserted the following sub-paragraph—
In sub-paragraph (3) (exemption applying where the relevant certificate is refused), after “a vehicle” there shall be inserted “or as a result of a relevant re-examination,”.
In sub-paragraph (5) (relevant examinations)—
for paragraph (a), there shall be substituted the following paragraph—;
the word “and” shall be inserted at the end of paragraph (b); and
paragraph (c) (examinations for the purpose of an appeal under section 60 of the Road Traffic Act 1988) shall be omitted.
After sub-paragraph (6) there shall be inserted the following sub-paragraphs—
Subject to section 21(3) below, in sub-paragraph (7) (meaning of “authorised person”)—
the word “and” at the end of paragraph (b) shall be omitted;
at the end of paragraph (c) there shall be inserted the word “and”; and
after that paragraph there shall be inserted the following paragraph—
This section shall be deemed to have come into force on 28th November 1995.
Paragraph 22 of Schedule 2 to the Vehicle Excise and Registration Act 1994 (exemption for vehicle testing) shall be further amended as follows.
In this paragraph “compulsory test” means, as respects Northern Ireland—
For paragraph (c) of sub-paragraph (7) (as amended by section 20(9) above) there shall be substituted the following paragraph—.
In sub-paragraph (9) (meaning of “relevant certificate” in Northern Ireland), for paragraphs (a) and (b) there shall be substituted the following paragraphs—.
In sub-paragraph (10)(a) (meaning of “relevant work”), the words “(or, in Northern Ireland, a vehicle test certificate)” shall be omitted.
This section shall be deemed to have come into force on the date of the coming into operation of Articles 61 and 65 of the Road Traffic (Northern Ireland) Order 1995 (“the operational date”).
Subsections (2), (4) and (5) above do not have effect in relation to a compulsory test carried out in Northern Ireland before the operational date except for the purpose of construing, in relation to such a test, the reference to a further compulsory test in paragraph 22(10)(a) of Schedule 2 to the Vehicle Excise and Registration Act 1994.
In section 42 of the Vehicle Excise and Registration Act 1994 (not fixing registration mark), in subsection (5)(b), for “Article 34 of the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “Article 63 of the Road Traffic (Northern Ireland) Order 1995”.
In subsection (6) of that section, for paragraph (b) there shall be substituted—
In section 60A(11) of that Act (special maximum weight in Northern Ireland), for “Article 29(3) of the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “Article 60(1) of the Road Traffic (Northern Ireland) Order 1995”.
In section 61(6) of that Act (meaning of “weight unladen”), for paragraph (b) there shall be substituted—
In paragraph 6 of Schedule 1 to that Act (vehicles used for exceptional loads), in sub-paragraph (2) for paragraph (b) there shall be substituted—.
In that paragraph—
in sub-paragraph (3)(a), for “Article 28 of the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “Article 55 of the Road Traffic (Northern Ireland) Order 1995”; and
in sub-paragraph (4), for “the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “the Road Traffic (Northern Ireland) Order 1995”.
In paragraph 17 of Schedule 3 to that Act (amendments of the Road Traffic (Northern Ireland) Order 1981)—
in sub-paragraph (1), “29(2),” and “34(6),” shall be omitted, and
sub-paragraph (2) shall be omitted.
Schedule 2 to this Act (which makes provision in connection with powers conferred on the Secretary of State by the Vehicle Excise and Registration Act 1994) shall have effect.
The following provisions (which provide for repayments, drawbacks or allowances in the case of certain excise duties) shall cease to have effect, that is to say—
section 3 of the Finance Act 1977 (repayment in respect of tobacco used in the manufacture of a tobacco product after having borne duty under section 4 of the Finance Act 1964);
section 22(6) of the Alcoholic Liquor Duties Act 1979 (additions in respect of waste which are deemed to be made to tinctures exported or shipped as stores);
section 23 of that Act of 1979 (allowances in respect of British compounded spirits);
section 92(6) of that Act of 1979 (transitional right to drawback); and
section 9(2) and (3) of the Isle of Man Act 1979 (removal to the Isle of Man treated as export for the purposes of drawback).
Sections 26 to 29 of and Schedule 3 to this Act are for the purpose of giving effect to requirements of the directive of the Council of the European Communities dated 17th May 1977 No.77/388/EEC and the amendments of that directive by the directive of that Council dated 10th April 1995 No.95/7/EC (amendments with a view to introducing new simplification measures with regard to value added tax).
The provisions of Schedule 3 to this Act shall have effect.
Subject to subsection (3) below, this section and Schedule 3 to this Act shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint, and shall apply to any acquisition of goods from another member State and any supply taking place on or after that day.
In so far as the provisions inserted by Schedule 3 to this Act confer power to make regulations they shall come into force on the day this Act is passed.
Section 21 of the Value Added Tax Act 1994 (value of imported goods) shall be amended as follows.
In subsection (2) of that section at the end of paragraph (a) the word “and” shall be omitted.
and in this subsection “the goods' first destination” means the place mentioned on the consignment note or any other document by means of which the goods are imported into the United Kingdom, or in the absence of such documentation it means the place of the first transfer of cargo in the United Kingdom.
This section shall have effect in relation to goods imported on or after 1st January 1996.
Section 22 of the Value Added Tax Act 1994 shall be omitted.
This section shall apply to supplies made on or after 1st January 1996.
The Value Added Tax Act 1994 shall be amended as follows.
After subsection (2) of section 30 there shall be inserted the following subsection—
In subsection (5) of section 55 (supplies of gold), after paragraph (b) there shall be inserted the following—; or;
and the word “or” at the end of paragraph (a) shall be omitted.
Paragraph 2 of Schedule 4 (which provides that the treatment or processing of another person’s goods shall in certain circumstances be a supply of goods) shall be omitted.
This section shall apply to supplies made on or after 1st January 1996.
For subsection (1) of section 35 of the Value Added Tax Act 1994 (refund of VAT to persons constructing certain buildings) there shall be substituted the following subsections—
In subsection (2) of that section (method of making claim), after “may by regulations prescribe” there shall be inserted “or, in the case of documents, as the Commissioners may determine in accordance with the regulations”.
After subsection (3) of that section there shall be inserted the following subsections—
This section applies in relation to any case in which a claim for repayment under section 35 of the Value Added Tax Act 1994 is made at any time on or after the day on which this Act is passed.
In section 43 of the Value Added Tax Act 1994 (groups of companies), after subsection (8) there shall be inserted the following subsection—
After Schedule 9 to that Act there shall be inserted the Schedule set out in Schedule 4 to this Act.
In section 83 of that Act (appeals), after paragraph (w) there shall be inserted the following paragraph—.
In section 84 of that Act (further provisions relating to appeals), after subsection (7) there shall be inserted the following subsection—
Subsection (1A) of section 43 of that Act shall not have effect in relation to supplies on or after the day on which this Act is passed.
In section 55 of the Value Added Tax Act 1994 (supplies of gold), for paragraph (a) of subsection (5) there shall be substituted the following paragraph—.
This section applies in relation to any supply after 28th November 1995.
In Schedule 4 to the Value Added Tax Act 1994 (matters to be treated as supply of goods or services), in paragraph 5(2)(a) (gift of goods in the course or furtherance of a business not a supply if cost to donor is not more than £10), for “£10” there shall be substituted “£15”.
The Treasury may by order substitute for the sum for the time being specified in sub-paragraph (2)(a) above such sum, not being less than £10, as they think fit.
In section 97(4) of that Act (orders which are subject to affirmative procedure), after paragraph (a) there shall be inserted the following paragraph—.
Subsection (1) above shall apply where a gift is made after 28th November 1995.
In section 28 of the Value Added Tax Act 1994 (payments on account of VAT), after subsection (2) there shall be inserted the following subsection—
The Value Added Tax Act 1994 shall be amended as follows.
After section 59 (default surcharge) there shall be inserted the following section—
In section 59, at the beginning of subsection (1) (circumstances amounting to a default in respect of any prescribed accounting period), there shall be inserted “Subject to subsection (1A) below”; and after that subsection there shall be inserted the following subsection—
After subsection (10) of that section there shall be inserted the following subsection—
After the section 59A inserted by subsection (2) above there shall be inserted the following section—
In section 69(4)(a) and (9)(b) (disregard in connection with penalties for breach of regulations of conduct giving rise to a surcharge), after the words “section 59”, in each case, there shall be inserted “or 59A”.
In section 76(1) and (3)(a) (assessments for surcharges), after the words “section 59”, in each case, there shall be inserted “or 59A”.
This section applies in relation to any prescribed accounting period ending on or after 1st June 1996, but a liability to make a payment on account of VAT shall be disregarded for the purposes of the amendments made by this section if the payment is one becoming due before that date.
In section 64 of the Value Added Tax Act 1994 (repeated misdeclaration penalty), the following subsections shall be substituted for subsections (6) and (7) (inaccuracies treated as not material)—
This section has effect in relation to inaccuracies contained in returns made on or after the day on which this Act is passed.
In section 67 of the Value Added Tax Act 1994 (penalty for failure to notify liability to be registered under Schedule 1, etc.)—
in subsection (1)(a), after “6” there shall be inserted “, 7”; and
in subsection (3)(a), for “or 6” there shall be substituted “, 6 or 7”.
Subject to subsection (3) below, subsection (1) above shall apply in relation to—
any person becoming liable to be registered by virtue of sub-paragraph (2) of paragraph 1 of Schedule 1 to the Value Added Tax Act 1994 on or after 1st January 1996; and
any person who became liable to be registered by virtue of that sub-paragraph before that date but who had not notified the Commissioners of the liability before that date.
In relation to a person falling within subsection (2)(b) above, section 67 of the Value Added Tax Act 1994 shall have effect as if in subsection (3)(a) for the words “the date with effect from which he is, in accordance with that paragraph, required to be registered” there were substituted “1st January 1996”.
Paragraph 2 of Schedule 11 to the Value Added Tax Act 1994 (regulations about accounting for VAT, VAT invoices etc.) shall be amended as follows.
Regulations under this paragraph may confer power on the Commissioners to allow the requirements of any regulations as to the statements and other matters to be contained in a VAT invoice to be relaxed or dispensed with.
In sub-paragraph (10) (adjustments of VAT accounts), at the end of paragraph (c) there shall be inserted and
A tax, to be known as landfill tax, shall be charged in accordance with this Part.
The tax shall be under the care and management of the Commissioners of Customs and Excise.
Tax shall be charged on a taxable disposal.
A disposal is a taxable disposal if—
it is a disposal of material as waste,
it is made by way of landfill,
it is made at a landfill site, and
it is made on or after 1st October 1996.
For this purpose a disposal is made at a landfill site if the land on or under which it is made constitutes or falls within land which is a landfill site at the time of the disposal.
The person liable to pay tax charged on a taxable disposal is the landfill site operator.
The reference here to the landfill site operator is to the person who is at the time of the disposal the operator of the landfill site which constitutes or contains the land on or under which the disposal is made.
The amount of tax charged on a taxable disposal shall be found by taking—
£7 for each whole tonne disposed of and a proportionately reduced sum for any additional part of a tonne, or
a proportionately reduced sum if less than a tonne is disposed of.
Where the material disposed of consists entirely of qualifying material this section applies as if the reference to £7 were to £2.
Qualifying material is material for the time being listed for the purposes of this section in an order.
The Treasury must have regard to the object of securing that material is listed if it is of a kind commonly described as inactive or inert.
A disposal is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—
has been removed (by dredging or otherwise) from water falling within subsection (2) below, and
formed part of or projected from the bed of the water concerned before its removal.
Water falls within this subsection if it is—
a river, canal or watercourse (whether natural or artificial), or
a dock or harbour (whether natural or artificial).
A disposal is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—
has been removed (by dredging or otherwise) from water falling within the approaches to a harbour (whether natural or artificial),
has been removed in the interests of navigation, and
formed part of or projected from the bed of the water concerned before its removal.
A disposal is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—
consists of naturally occurring mineral material, and
has been removed (by dredging or otherwise) from the sea in the course of commercial operations carried out to obtain substances such as sand or gravel from the seabed.
A disposal is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which fulfils each of the conditions set out in subsections (2) to (4) below.
The material must result from commercial mining operations (whether the mining is deep or open-cast) or from commercial quarrying operations.
The material must be naturally occurring material extracted from the earth in the course of the operations.
The material must not have been subjected to, or result from, a non-qualifying process carried out at any stage between the extraction and the disposal.
A non-qualifying process is—
a process separate from the mining or quarrying operations, or
a process forming part of those operations and permanently altering the material’s chemical composition.
A disposal is not a taxable disposal for the purposes of this Part if—
the disposal is of material consisting entirely of the remains of dead domestic pets, and
the landfill site at which the disposal is made fulfils the test set out in subsection (2) below.
The test is that during the relevant period—
no landfill disposal was made at the site, or
the only landfill disposals made at the site were of material consisting entirely of the remains of dead domestic pets.
For the purposes of subsection (2) above the relevant period—
begins with 1st October 1996 or (if later) with the coming into force in relation to the site of the licence or resolution mentioned in section 66 below, and
ends immediately before the disposal mentioned in subsection (1) above.
Provision may be made by order to produce the result that—
a disposal which would otherwise be a taxable disposal (by virtue of this Part as it applies for the time being) is not a taxable disposal;
a disposal which would otherwise not be a taxable disposal (by virtue of this Part as it applies for the time being) is a taxable disposal.
Without prejudice to the generality of subsection (1) above, an order under this section may—
confer exemption by reference to certificates issued by the Commissioners and to conditions set out in certificates;
allow the Commissioners to direct requirements to be met before certificates can be issued;
provide for the review of decisions about certificates and for appeals relating to decisions on review.
Provision may be made under this section in such way as the Treasury think fit (whether by amending this Part or otherwise).
The register kept under this section may contain such information as the Commissioners think is required for the purposes of the care and management of the tax.
A person who— is liable to be registered.
carries out taxable activities, and
is not registered,
Where— he shall notify the Commissioners of his intention.
a person at any time forms the intention of carrying out taxable activities, and
he is not registered,
A person who at any time ceases to have the intention of carrying out taxable activities shall notify the Commissioners of that fact.
Where a person is liable to be registered by virtue of subsection (2) above the Commissioners shall register him with effect from the time when he begins to carry out taxable activities; and this subsection applies whether or not he notifies the Commissioners under subsection (3) above.
Where the Commissioners are satisfied that a person has ceased to carry out taxable activities they may cancel his registration with effect from the earliest practicable time after he so ceased; and this subsection applies whether or not he notifies the Commissioners under subsection (4) above.
Where— the Commissioners shall cancel his registration with effect from the earliest practicable time after he ceases to carry out taxable activities.
a person notifies the Commissioners under subsection (4) above,
they are satisfied that he will not carry out taxable activities,
they are satisfied that no tax which he is liable to pay is unpaid,
they are satisfied that no credit to which he is entitled under regulations made under section 51 below is outstanding, and
subsection (8) below does not apply,
Where— the Commissioners shall cancel his registration with effect from the time when he ceased to have the intention to carry out taxable activities.
a person notifies the Commissioners under subsection (4) above, and
they are satisfied that he has not carried out, and will not carry out, taxable activities,
For the purposes of this section regulations may make provision—
as to the time within which a notification is to be made;
as to the form and manner in which any notification is to be made and as to the information to be contained in or provided with it;
requiring a person who has made a notification to notify the Commissioners if any information contained in or provided in connection with it is or becomes inaccurate;
as to the correction of entries in the register.
References in this Part to a registrable person are to a person who—
is registered under this section, or
is liable to be registered under this section.
Regulations may make provision requiring a registrable person to notify the Commissioners of particulars which—
are of changes in circumstances relating to the registrable person or any business carried on by him,
appear to the Commissioners to be required for the purpose of keeping the register kept under section 47 above up to date, and
are of a prescribed description.
Regulations may make provision—
as to the time within which a notification is to be made;
as to the form and manner in which a notification is to be made;
requiring a person who has made a notification to notify the Commissioners if any information contained in it is inaccurate.
Regulations may provide that a registrable person shall—
account for tax by reference to such periods (accounting periods) as may be determined by or under the regulations;
make, in relation to accounting periods, returns in such form as may be prescribed and at such times as may be so determined;
pay tax at such times and in such manner as may be so determined.
Where— the Commissioners may assess the amount of tax due from the person concerned to the best of their judgment and notify it to him.
a person has failed to make any returns required to be made under this Part,
a person has failed to keep any documents necessary to verify returns required to be made under this Part,
a person has failed to afford the facilities necessary to verify returns required to be made under this Part, or
it appears to the Commissioners that returns required to be made by a person under this Part are incomplete or incorrect,
Where a person has for an accounting period been paid an amount to which he purports to be entitled under regulations made under section 51 below, then, to the extent that the amount ought not to have been paid or would not have been paid had the facts been known or been as they later turn out to be, the Commissioners may assess the amount as being tax due from him for that period and notify it to him accordingly.
Where a person is assessed under subsections (1) and (2) above in respect of the same accounting period the assessments may be combined and notified to him as one assessment.
Where the person failing to make a return, or making a return which appears to the Commissioners to be incomplete or incorrect, was required to make the return as a personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity in relation to another person, subsection (1) above shall apply as if the reference to tax due from him included a reference to tax due from that other person.
An assessment under subsection (1) or (2) above of an amount of tax due for an accounting period shall not be made after the later of the following— but where further such evidence comes to their knowledge after the making of an assessment under subsection (1) or (2) above another assessment may be made under the subsection concerned in addition to any earlier assessment.
two years after the end of the accounting period;
one year after evidence of facts, sufficient in the Commissioners' opinion to justify the making of the assessment, comes to their knowledge;
Where— then, if the Commissioners think fit, having regard to the failure referred to in paragraph (a) above, they may specify in the assessment referred to in paragraph (c) above an amount of tax greater than that which they would otherwise have considered to be appropriate.
as a result of a person’s failure to make a return in relation to an accounting period the Commissioners have made an assessment under subsection (1) above for that period,
the tax assessed has been paid but no proper return has been made in relation to the period to which the assessment related, and
as a result of a failure to make a return in relation to a later accounting period, being a failure by the person referred to in paragraph (a) above or a person acting in a representative capacity in relation to him, as mentioned in subsection (4) above, the Commissioners find it necessary to make another assessment under subsection (1) above,
Where an amount has been assessed and notified to any person under subsection (1) or (2) above it shall be deemed to be an amount of tax due from him and may be recovered accordingly unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.
For the purposes of this section notification to— shall be treated as notification to the person in relation to whom the person mentioned in paragraph (a) above, or the first person mentioned in paragraph (b) above, acts.
a personal representative, trustee in bankruptcy, receiver or liquidator, or
a person otherwise acting in a representative capacity in relation to another person,
Subsection (5) above has effect subject to paragraph 33 of Schedule 5 to this Act.
In this section “trustee in bankruptcy” means, as respects Scotland, an interim or permanent trustee (within the meaning of the Bankruptcy (Scotland) Act 1985) or a trustee acting under a trust deed (within the meaning of that Act).
Regulations may provide that where— the person shall be entitled to credit of such an amount as is found in accordance with prescribed rules.
a person has paid or is liable to pay tax, and
prescribed conditions are fulfilled,
Regulations may make provision as to the manner in which a person is to benefit from credit, and in particular may make provision—
that a person shall be entitled to credit by reference to accounting periods;
that a person shall be entitled to deduct an amount equal to his total credit for an accounting period from the total amount of tax due from him for the period;
that if no tax is due from a person for an accounting period but he is entitled to credit for the period, the amount of the credit shall be paid to him by the Commissioners;
that if the amount of credit to which a person is entitled for an accounting period exceeds the amount of tax due from him for the period, an amount equal to the excess shall be paid to him by the Commissioners;
for the whole or part of any credit to be held over to be credited for a subsequent accounting period;
as to the manner in which a person who has ceased to be registrable is to benefit from credit.
Regulations under subsection (2)(c) or (d) above may provide that where at the end of an accounting period an amount is due to a person who has failed to submit returns for an earlier period as required by this Part, the Commissioners may withhold payment of the amount until he has complied with that requirement.
Regulations under subsection (2)(e) above may provide for credit to be held over either on the person’s application or in accordance with directions given by the Commissioners from time to time; and the regulations may allow directions to be given generally or with regard to particular cases.
Regulations may provide that—
no benefit shall be conferred in respect of credit except on a claim made in such manner and at such time as may be determined by or under regulations;
payment in respect of credit shall be made subject to such conditions (if any) as the Commissioners think fit to impose, including conditions as to repayment in specified circumstances;
deduction in respect of credit shall be made subject to such conditions (if any) as the Commissioners think fit to impose, including conditions as to the payment to the Commissioners, in specified circumstances, of an amount representing the whole or part of the amount deducted.
Regulations may require a claim by a person to be made in a return required by provision made under section 49 above.
Nothing in section 52 or 53 below shall be taken to derogate from the power to make regulations under this section (whether with regard to bad debts, the environment or any other matter).
Regulations may be made under section 51 above with a view to securing that a person is entitled to credit if—
he carries out a taxable activity as a result of which he becomes entitled to a debt which turns out to be bad (in whole or in part), and
such other conditions as may be prescribed are fulfilled.
The regulations may include provision under section 51(5)(b) or (c) above requiring repayment or payment if it turns out that it was not justified to regard a debt as bad (or to regard it as bad to the extent that it was so regarded).
The regulations may include provision for determining whether, and to what extent, a debt is to be taken to be bad.
Regulations may be made under section 51 above with a view to securing that a person is entitled to credit if—
he pays a sum to a body whose objects are or include the protection of the environment, and
such other conditions as may be prescribed are fulfilled.
The regulations may in particular prescribe conditions—
requiring bodies to which sums are paid (environmental bodies) to be approved by another body (the regulatory body);
requiring the regulatory body to be approved by the Commissioners;
requiring sums to be paid with the intention that they be expended on such matters connected with the protection of the environment as may be prescribed.
The regulations may include provision under section 51(5)(b) or (c) above requiring repayment or payment if—
a sum is not in fact expended on matters prescribed under subsection (2)(c) above, or
a prescribed condition turns out not to have been fulfilled.
The regulations may include—
provision for determining the amount of credit (including provision for limiting it);
provision that matters connected with the protection of the environment include such matters as overheads (including administration) of environmental bodies and the regulatory body;
provision as to the matters by reference to which an environmental body or the regulatory body can be, and remain, approved (including matters relating to the functions and activities of any such body);
provision allowing approval of an environmental body or the regulatory body to be withdrawn (whether prospectively or retrospectively);
provision that, if approval of the regulatory body is withdrawn, another body may be approved in its place or its functions may be performed by the Commissioners;
provision allowing the Commissioners to disclose to the regulatory body information which relates to the tax affairs of persons carrying out taxable activities and which is relevant to the credit scheme established by the regulations.
This section applies to the following decisions of the Commissioners—
a decision as to the registration or cancellation of registration of any person under this Part;
a decision as to whether tax is chargeable in respect of a disposal or as to how much tax is chargeable;
a decision as to whether a person is entitled to credit by virtue of regulations under section 51 above or as to how much credit a person is entitled to or as to the manner in which he is to benefit from credit;
a decision as to an assessment falling within subsection (2) below or as to the amount of such an assessment;
a decision to refuse a request under section 58(3) below;
a decision to refuse an application under section 59 below;
a decision as to whether conditions set out in a specification under the authority of provision made under section 68(4)(b) below are met in relation to a disposal;
a decision to give a direction under any provision contained in regulations by virtue of section 68(5) below;
a decision as to a claim for the repayment of an amount under paragraph 14 of Schedule 5 to this Act;
a decision as to liability to a penalty under Part V of that Schedule or as to the amount of such a penalty;
a decision under paragraph 19 of that Schedule (as mentioned in paragraph 19(5));
a decision as to any liability to pay interest under paragraph 26 or 27 of that Schedule or as to the amount of the interest payable;
a decision as to any liability to pay interest under paragraph 29 of that Schedule or as to the amount of the interest payable;
a decision to require any security under paragraph 31 of that Schedule or as to its amount;
a decision as to the amount of any penalty or interest specified in an assessment under paragraph 32 of that Schedule.
An assessment falls within this subsection if it is an assessment under section 50 above in respect of an accounting period in relation to which a return required to be made by virtue of regulations under section 49 above has been made.
Any person who is or will be affected by any decision to which this section applies may by notice in writing to the Commissioners require them to review the decision.
The Commissioners shall not be required under this section to review any decision unless the notice requiring the review is given before the end of the period of 45 days beginning with the day on which written notification of the decision, or of the assessment containing the decision, was first given to the person requiring the review.
For the purposes of subsection (4) above it shall be the duty of the Commissioners to give written notification of any decision to which this section applies to any person who—
requests such a notification,
has not previously been given written notification of that decision, and
if given such a notification, will be entitled to require a review of the decision under this section.
A person shall be entitled to give a notice under this section requiring a decision to be reviewed for a second or subsequent time only if—
the grounds on which he requires the further review are that the Commissioners did not, on any previous review, have the opportunity to consider certain facts or other matters, and
he does not, on the further review, require the Commissioners to consider any facts or matters which were considered on a previous review except in so far as they are relevant to any issue not previously considered.
Where the Commissioners are required in accordance with this section to review any decision it shall be their duty to do so; and on the review they may withdraw, vary or confirm the decision.
Where— they shall be deemed for the purposes of this Part to have confirmed the decision.
it is the duty under this section of the Commissioners to review any decision, and
they do not, within the period of 45 days beginning with the day on which the review was required, give notice to the person requiring it of their determination on the review,
Subject to the following provisions of this section, an appeal shall lie to an appeal tribunal with respect to any of the following decisions—
any decision by the Commissioners on a review under section 54 above (including a deemed confirmation under subsection (8) of that section);
any decision by the Commissioners on such review of a decision referred to in section 54(1) above as the Commissioners have agreed to undertake in consequence of a request made after the end of the period mentioned in section 54(4) above.
Where an appeal is made under this section by a person who is required to make returns by virtue of regulations under section 49 above, the appeal shall not be entertained unless the appellant—
has made all the returns which he is required to make by virtue of those regulations, and
has paid the amounts shown in those returns as payable by him.
Where an appeal is made under this section with respect to a decision falling within section 54(1)(b) or (d) above the appeal shall not be entertained unless—
the amount which the Commissioners have determined to be payable as tax has been paid or deposited with them, or
on being satisfied that the appellant would otherwise suffer hardship the Commissioners agree or the tribunal decides that it should be entertained notwithstanding that that amount has not been so paid or deposited.
On an appeal under this section against an assessment to a penalty under paragraph 18 of Schedule 5 to this Act, the burden of proof as to the matters specified in paragraphs (a) and (b) of sub-paragraph (1) of paragraph 18 shall lie upon the Commissioners.
Subsection (2) below applies where the Commissioners make a decision falling within section 54(1)(d) above and on a review of it there is a further decision with respect to which an appeal is made under section 55 above; and the reference here to a further decision includes a reference to a deemed confirmation under section 54(8) above.
Where on the appeal— the assessment shall have effect as an assessment of the amount specified in the direction and that amount shall be deemed to have been notified to the appellant.
it is found that the amount specified in the assessment is less than it ought to have been, and
the tribunal gives a direction specifying the correct amount,
Where on an appeal under section 55 above it is found that the whole or part of any amount paid or deposited in pursuance of section 55(3) above is not due, so much of that amount as is found not to be due shall be repaid with interest at such rate as the tribunal may determine.
Where on an appeal under section 55 above it is found that the whole or part of any amount due to the appellant by virtue of regulations under section 51(2)(c) or (d) or (f) above has not been paid, so much of that amount as is found not to have been paid shall be paid with interest at such rate as the tribunal may determine.
Where an appeal under section 55 above has been entertained notwithstanding that an amount determined by the Commissioners to be payable as tax has not been paid or deposited and it is found on the appeal that that amount is due the tribunal may, if it thinks fit, direct that that amount shall be paid with interest at such rate as may be specified in the direction.
Without prejudice to paragraph 25 of Schedule 5 to this Act, nothing in section 55 above shall be taken to confer on a tribunal any power to vary an amount assessed by way of penalty except in so far as it is necessary to reduce it to the amount which is appropriate under paragraphs 18 to 24 of that Schedule.
Without prejudice to paragraph 28 of Schedule 5 to this Act, nothing in section 55 above shall be taken to confer on a tribunal any power to vary an amount assessed by way of interest except in so far as it is necessary to reduce it to the amount which is appropriate under paragraph 26 or 27 of that Schedule.
Sections 85 and 87 of the Value Added Tax Act 1994 (settling of appeals by agreement and enforcement of certain decisions of tribunal) shall have effect as if—
the references to section 83 of that Act included references to section 55 above, and
the references to value added tax included references to landfill tax.
Sections 54 to 56 above shall come into force on—
1st October 1996, or
such earlier day as may be appointed by order.
As regards any case where a business is carried on in partnership or by another unincorporated body, regulations may make provision for determining by what persons anything required by this Part to be done by a person is to be done.
The registration under this Part of an unincorporated body other than a partnership may be in the name of the body concerned; and in determining whether taxable activities are carried out by such a body no account shall be taken of any change in its members.
The registration under this Part of a body corporate carrying on a business in several divisions may, if the body corporate so requests and the Commissioners see fit, be in the names of those divisions.
As regards any case where a person carries on a business of a person who has died or become bankrupt or incapacitated or whose estate has been sequestrated, or of a person which is in liquidation or receivership or in relation to which an administration order is in force, regulations may—
require the first-mentioned person to inform the Commissioners of the fact that he is carrying on the business and of the event that has led to his carrying it on;
make provision allowing the person to be treated for a limited time as if he were the other person;
make provision for securing continuity in the application of this Part where a person is so treated.
Regulations may make provision for securing continuity in the application of this Part in cases where a business carried on by a person is transferred to another person as a going concern.
Regulations under subsection (5) above may in particular— but the regulations may provide that no such provision as is mentioned in paragraph (b) or (c) of this subsection shall have effect in relation to any transferor and transferee unless an application in that behalf has been made by them under the regulations.
require the transferor to inform the Commissioners of the transfer;
provide for liabilities and duties under this Part of the transferor to become, to such extent as may be provided by the regulations, liabilities and duties of the transferee;
provide for any right of either of them to repayment or credit in respect of tax to be satisfied by making a repayment or allowing a credit to the other;
Where under the following provisions of this section any bodies corporate are treated as members of a group, for the purposes of this Part—
any liability of a member of the group to pay tax shall be taken to be a liability of the representative member;
the representative member shall be taken to carry out any taxable activities which a member of the group would carry out (apart from this section) by virtue of section 69 below;
all members of the group shall be jointly and severally liable for any tax due from the representative member.
Two or more bodies corporate are eligible to be treated as members of a group if the condition mentioned in subsection (3) below is fulfilled and—
one of them controls each of the others,
one person (whether a body corporate or an individual) controls all of them, or
two or more individuals carrying on a business in partnership control all of them.
The condition is that the prospective representative member has an established place of business in the United Kingdom.
Where an application to that effect is made to the Commissioners with respect to two or more bodies corporate eligible to be treated as members of a group, then— unless the Commissioners refuse the application; and the Commissioners shall not refuse the application unless it appears to them necessary to do so for the protection of the revenue.
from the beginning of an accounting period they shall be so treated, and
one of them shall be the representative member,
Where any bodies corporate are treated as members of a group and an application to that effect is made to the Commissioners, then, from the beginning of an accounting period— unless the application is to the effect mentioned in paragraph (a) or (c) above and the Commissioners refuse the application.
a further body eligible to be so treated shall be included among the bodies so treated,
a body corporate shall be excluded from the bodies so treated,
another member of the group shall be substituted as the representative member, or
the bodies corporate shall no longer be treated as members of a group,
The Commissioners may refuse an application under subsection (5)(a) or (c) above only if it appears to them necessary to do so for the protection of the revenue.
Where a body corporate is treated as a member of a group as being controlled by any person and it appears to the Commissioners that it has ceased to be so controlled, they shall, by notice given to that person, terminate that treatment from such date as may be specified in the notice.
An application under this section with respect to any bodies corporate must be made by one of those bodies or by the person controlling them and must be made not less than 90 days before the date from which it is to take effect, or at such later time as the Commissioners may allow.
For the purposes of this section a body corporate shall be taken to control another body corporate if it is empowered by statute to control that body’s activities or if it is that body’s holding company within the meaning of section 736 of the Companies Act 1985; and an individual or individuals shall be taken to control a body corporate if he or they, were he or they a company, would be that body’s holding company within the meaning of that section.
Schedule 5 to this Act (which contains provisions relating to information, powers, penalties and other matters) shall have effect.
Where— for the purposes of this Part the disposal shall be treated as made at the time the invoice is issued.
a taxable disposal is in fact made on a particular day,
within the period of 14 days beginning with that day the person liable to pay tax in respect of the disposal issues a landfill invoice in respect of the disposal, and
he has not notified the Commissioners in writing that he elects not to avail himself of this subsection,
The reference in subsection (1) above to a landfill invoice is to a document containing such particulars as regulations may prescribe for the purposes of that subsection.
The Commissioners may at the request of a person direct that subsection (1) above shall apply— as if for the period of 14 days there were substituted such longer period as may be specified in the direction.
in relation to disposals in respect of which he is liable to pay tax, or
in relation to such of them as may be specified in the direction,
For the purposes of this Part, regulations may make provision under this section in relation to a disposal which is a taxable disposal (or would be apart from the regulations).
The regulations may provide that if particular conditions are fulfilled—
the disposal shall be treated as not being a taxable disposal, or
the disposal shall, to the extent found in accordance with prescribed rules, be treated as not being a taxable disposal.
The regulations may provide that if particular conditions are fulfilled—
the disposal shall be treated as made at a time which is found in accordance with prescribed rules and which falls after the time when it would be regarded as made apart from the regulations, or
the disposal shall, to the extent found in accordance with prescribed rules, be treated as made at a time which is found in accordance with prescribed rules and which falls after the time when it would be regarded as made apart from the regulations.
In finding the time when the disposal would be regarded as made apart from the regulations, section 61(1) above and any direction under section 61(3) above shall be taken into account.
The regulations may be framed by reference to— and the regulations may specify conditions, or allow conditions to be specified, generally or with regard to particular cases.
conditions specified in the regulations or by the Commissioners or by an authorised person, or
any combination of such conditions;
The regulations may make provision under subsections (2)(b) and (3)(b) above in relation to the same disposal.
The regulations may only provide that a disposal is to be treated as not being a taxable disposal if or to the extent that—
the disposal is a temporary one pending the incineration or recycling of the material concerned, or pending the removal of the material for use elsewhere, or pending the sorting of the material with a view to its removal elsewhere or its eventual disposal, and
the temporary disposal is made in an area designated for the purpose by an authorised person.
This section applies for the purposes of section 42 above.
The Commissioners may direct that where material is disposed of it must be treated as qualifying material if it would in fact be such material but for a small quantity of non-qualifying material; and whether a quantity of non-qualifying material is small must be determined in accordance with the terms of the direction.
The Commissioners may at the request of a person direct that where there is a disposal in respect of which he is liable to pay tax the material disposed of must be treated as qualifying material if it would in fact be such material but for a small quantity of non-qualifying material, and—
a direction may apply to all disposals in respect of which a person is liable to pay tax or to such of them as are identified in the direction;
whether a quantity of non-qualifying material is small must be determined in accordance with the terms of the direction.
If a direction under subsection (3) above applies to a disposal any direction under subsection (2) above shall not apply to it.
An order may provide that material must not be treated as qualifying material unless prescribed conditions are met.
A condition may relate to any matter the Treasury think fit (such as the production of a document which includes a statement of the nature of the material).
A disposal of material is a disposal of it as waste if the person making the disposal does so with the intention of discarding the material.
The fact that the person making the disposal or any other person could benefit from or make use of the material is irrelevant.
Where a person makes a disposal on behalf of another person, for the purposes of subsections (1) and (2) above the person on whose behalf the disposal is made shall be treated as making the disposal.
The reference in subsection (3) above to a disposal on behalf of another person includes references to a disposal—
at the request of another person;
in pursuance of a contract with another person.
There is a disposal of material by way of landfill if—
it is deposited on the surface of land or on a structure set into the surface, or
it is deposited under the surface of land.
Subsection (1) above applies whether or not the material is placed in a container before it is deposited.
Subsection (1)(b) above applies whether the material—
is covered with earth after it is deposited, or
is deposited in a cavity (such as a cavern or mine).
If material is deposited on the surface of land (or on a structure set into the surface) with a view to it being covered with earth the disposal must be treated as made when the material is deposited and not when it is covered.
An order may provide that the meaning of the disposal of material by way of landfill (as it applies for the time being) shall be varied.
An order under subsection (5) above may make provision in such way as the Treasury think fit, whether by amending any of subsections (1) to (4) above or otherwise.
In this section “land” includes land covered by water where the land is above the low water mark of ordinary spring tides.
In this section “earth” includes similar matter (such as sand or rocks).
Land is a landfill site at a given time if at that time—
a licence which is a site licence for the purposes of Part II of the Environmental Protection Act 1990 (waste on land) is in force in relation to the land and authorises disposals in or on the land,
a resolution under section 54 of that Act (land occupied by waste disposal authorities in Scotland) is in force in relation to the land and authorises deposits or disposals in or on the land,
a disposal licence issued under Part II of the Pollution Control and Local Government (Northern Ireland) Order 1978 (waste on land) is in force in relation to the land and authorises deposits on the land,
a resolution passed under Article 13 of that Order (land occupied by district councils in Northern Ireland) is in force in relation to the land and relates to deposits on the land, or
a licence under any provision for the time being having effect in Northern Ireland and corresponding to section 35 of the Environmental Protection Act 1990 (waste management licences) is in force in relation to the land and authorises disposals in or on the land.
The operator of a landfill site at a given time is—
the person who is at the time concerned the holder of the licence, where section 66(a) above applies;
the waste disposal authority which at the time concerned occupies the landfill site, where section 66(b) above applies;
the person who is at the time concerned the holder of the licence, where section 66(c) above applies;
the district council which passed the resolution, where section 66(d) above applies;
the person who is at the time concerned the holder of the licence, where section 66(e) above applies.
The weight of the material disposed of on a taxable disposal shall be determined in accordance with regulations.
The regulations may—
prescribe rules for determining the weight;
authorise rules for determining the weight to be specified by the Commissioners in a prescribed manner;
authorise rules for determining the weight to be agreed by the person liable to pay the tax and an authorised person.
The regulations may in particular prescribe, or authorise the specification or agreement of, rules about—
the method by which the weight is to be determined;
the time by reference to which the weight is to be determined;
the discounting of constituents (such as water).
The regulations may include provision that a specification authorised under subsection (2)(b) above may provide— and the conditions may be framed by reference to such factors as the Commissioners think fit (such as the consent of an authorised person to the specification having effect in relation to disposals).
that it is to have effect only in relation to disposals of such descriptions as may be set out in the specification;
that it is not to have effect in relation to particular disposals unless the Commissioners are satisfied that such conditions as may be set out in the specification are met in relation to the disposals;
The regulations may include provision that— the Commissioners may direct that the agreed rules shall no longer have effect.
where rules are agreed as mentioned in subsection (2)(c) above, and
the Commissioners believe that they should no longer be applied because they do not give an accurate indication of the weight or they are not being fully observed or for some other reason,
The regulations shall be so framed that where in relation to a given disposal— the weight shall be determined in accordance with rules prescribed in the regulations.
no specification of the Commissioners has effect, and
no agreed rules have effect,
A person carries out a taxable activity if—
he makes a taxable disposal in respect of which he is liable to pay tax, or
he permits another person to make a taxable disposal in respect of which he (the first-mentioned person) is liable to pay tax.
Where— that person shall for the purposes of this section be taken to permit the disposal.
a taxable disposal is made, and
it is made without the knowledge of the person who is liable to pay tax in respect of it,
Unless the context otherwise requires—
“accounting period” shall be construed in accordance with section 49 above;
and in subsection (2) of that section for “subsection (1) above” there shall be substituted “subsections (1) and (1A) above”.
For subsection (5) of section 196 of that Act there shall be substituted the following subsections—
Section 6. The following is the Schedule which shall be inserted after Schedule 2 to the Misuse of rebated kerosene Hydrocarbon Oil Duties Act 1979—
Subsections (1) to (3) above shall have effect in relation to any disposal on or after 13th September 1995 and subsection (3) shall also have effect, and be deemed always to have had effect, for the construction of section 195 of the Taxation of Chargeable Gains Act 1992 in its application to disposals before that date.
Section 23.
In this Schedule “the 1994 Act” means the Vehicle Excise and Registration Act 1994.
Section 7 of the 1994 Act (issue of vehicle licences) shall be amended in accordance with this paragraph. After subsection (3) there shall be inserted the following subsections— Sub-paragraph (2) above applies to applications made on or after the day on which this Act is passed. In subsection (6)—
In section 11 of the 1994 Act (trade licences), after subsection (1) there shall be inserted the following subsection—
Subsection (1) of section 22 of the 1994 Act (registration regulations) shall be amended in accordance with this paragraph. In paragraph (d), after “a person by”, there shall be inserted “, through”. In paragraph (dd), after “a person by”, there shall be inserted “or through”. At the end of paragraph (h) there shall be inserted “or which contain any particulars which have become illegible or inaccurate”. After paragraph (h) there shall be inserted the following paragraph—
In subsection (1B)(a) of section 22 of the 1994 Act, for “the other person there mentioned or to the Secretary of State or to both;” there shall be substituted “another person there mentioned or to the Secretary of State or to another such person and to the Secretary of State;”.
After subsection (1B) of section 22 of the 1994 Act there shall be inserted the following subsection—
After subsection (1C) of section 22 of the 1994 Act there shall be inserted the following subsections—
In section 19 of the 1994 Act (surrender of licences), after subsection (2), there shall be inserted the following subsection—
In section 29 of the 1994 Act (penalty for using or keeping unlicensed vehicle), at the beginning of subsection (3) there shall be inserted “Subject to subsection (3A)”, and after subsection (3) there shall be inserted the following subsection— This paragraph applies in relation to offences committed on or after the day on which this Act is passed.
In section 33 of the 1994 Act (not exhibiting licence), after subsection (3) there shall be inserted the following subsection—
Section 45 of the 1994 Act (false or misleading declarations and information) shall be amended in accordance with this paragraph. After subsection (2) there shall be inserted the following subsection— In subsection (3) (offence of furnishing false or misleading particulars), in paragraph (a), after “required by” there shall be inserted “virtue of”.
After section 46 of the 1994 Act there shall be inserted the following section—
After section 51 of the 1994 Act there shall be inserted the following section—
In— after “section 29, 34” there shall in each case be inserted “, 35A”. In section 55(1) of the 1994 Act (guilty plea by absent accused), for paragraphs (a) and (b) there shall be substituted “an offence under section 29 or 35A”. This paragraph applies in relation to proceedings commenced on or after the day on which this Act is passed.
In section 59 of the 1994 Act (regulations: offences), after subsection (5), there shall be inserted the following subsection—
In section 57(1) of the 1994 Act (regulations generally), the words “(other than sections 7(2) and (3), 8, 26, 27, 52 and 54)” shall be omitted.
Where enactments re-enacted in the Taxation of Chargeable Gains Act 1992 apply, instead of that Act, in the case of any disposal before 13th September 1995, this section shall have effect as if it required amendments equivalent to those made by subsection (3) above to have effect, and be deemed always to have had effect, for the construction of any enactment corresponding to section 195 of that Act.
Section 26.
In subsection (1) of section 6 of the Value Added Tax Act 1994, for the words “section 18” there shall be substituted the words “sections 18, 18B and 18C”.
In subsection (1) of section 7 of the Value Added Tax Act 1994, for the words “sections 14 and 18” there shall be substituted the words “sections 14, 18 and 18B”.
In subsection (1) of section 12 of the Value Added Tax Act 1994, for the words “section 18” there shall be substituted “sections 18 and 18B”.
In subsection (1) of section 13 of the Value Added Tax Act 1994, for the words “section 18” there shall be substituted “sections 18 and 18B”.
The following sections shall be inserted in the Value Added Tax Act 1994 after section 18.
In subsection (1) of section 20 of the Value Added Tax Act 1994, there shall be inserted at the beginning the words “Subject to section 18C,”.
In section 30 of the Value Added Tax Act 1994 the following subsection shall be added after subsection (8)—, and in subsection (10) for the words “subsection (8) or (9)” there shall be substituted the words “subsection (8), (8A) or (9)” and for the words “subsection (6), (8) or (9)”, there shall be substituted the words “subsection (6), (8), (8A) or (9)”.
Section 62 of the Value Added Tax Act 1994 shall be amended as follows. In paragraph (a) of subsection (1), after the words “a person” there shall be inserted the words “by whom one or more acquisitions or”, the words “or” at the end of sub-paragraph (i) and “and” at the end of sub-paragraph (ii) shall be omitted and the following additional sub-paragraphs shall be inserted—. In the passage following paragraph (b) of subsection (1) and in subsections (3) and (4), after the word “giving” wherever it appears there shall be inserted the words “or preparing”. In subsection (3) after the words “gave” and “given” there shall be inserted in each case the words “or prepared”.
; or
In section 73 of the Value Added Tax Act 1994 the following subsections shall be added after subsection (7)—
In sections 73(9) and 76(5) of the Value Added Tax Act 1994 for the words “or (7)” there shall be substituted “, (7), (7A) or (7B)”.
In section 83 of the Value Added Tax Act 1994 the following paragraph shall be added after paragraph (d)—, and in paragraph (p)(ii) for “subsection (7)” there shall be substituted “subsections (7), (7A) or (7B)”.
In determining the value of a person’s supplies for the purposes of sub-paragraph (1) or (2) above, supplies to which section 18B(4) (last acquisition or supply of goods before removal from fiscal warehousing) applies and supplies treated as made by him under section 18C(3) (self-supply of services on removal of goods from warehousing) shall be disregarded.
For the purposes of sub-paragraphs (1) and (2) above supplies to which section 18B(4) (last acquisition or supply of goods before removal from fiscal warehousing) applies shall be disregarded.
In determining the value of a person’s acquisitions for the purposes of sub-paragraph (1) or (2) above, acquisitions to which section 18(B)(4) (last acquisition or supply of goods before removal from fiscal warehousing) applies shall be disregarded.
In paragraph 8(1) of Schedule 11 to the Value Added Tax Act 1994 after the words “another member State” there shall be inserted the words “, or in the possession of a fiscal warehousekeeper,”.
In paragraph 10(2) of Schedule 11 to the Value Added Tax Act 1994, after the words “on those premises” there shall be inserted the words “, or that any premises are used as a fiscal warehouse,”.
The following Schedule shall be added to the Value Added Tax Act 1994.
Section 31. The following is the Schedule which shall be inserted after Schedule 9 to the Value Added Tax Act 1994—
Every person who is concerned (in whatever capacity) with any landfill disposal shall furnish to the Commissioners such information relating to the disposal as the Commissioners may reasonably require. The information mentioned in sub-paragraph (1) above shall be furnished within such time and in such form as the Commissioners may reasonably require.
Regulations may require registrable persons to make records. Regulations under sub-paragraph (1) above may be framed by reference to such records as may be stipulated in any notice published by the Commissioners in pursuance of the regulations and not withdrawn by a further notice. Regulations may— Any duty under regulations to preserve records may be discharged by the preservation of the information contained in them by such means as the Commissioners may approve; and where that information is so preserved a copy of any document forming part of the records shall (subject to the following provisions of this paragraph) be admissible in evidence in any proceedings, whether civil or criminal, to the same extent as the records themselves. The Commissioners may, as a condition of approving under sub-paragraph (4) above any means of preserving information contained in any records, impose such reasonable requirements as appear to them necessary for securing that the information will be as readily available to them as if the records themselves had been preserved. A statement contained in a document produced by a computer shall not by virtue of sub-paragraph (4) above be admissible in evidence— In the case of civil proceedings in England and Wales to which sections 5 and 6 of the Civil Evidence Act 1968 apply, a statement contained in a document produced by a computer shall not be admissible in evidence by virtue of sub-paragraph (4) above except in accordance with those sections.
Every person who is concerned (in whatever capacity) with any landfill disposal shall upon demand made by an authorised person produce or cause to be produced for inspection by that person any documents relating to the disposal. Where, by virtue of sub-paragraph (1) above, an authorised person has power to require the production of any documents from any person, he shall have the like power to require production of the documents concerned from any other person who appears to the authorised person to be in possession of them; but where any such other person claims a lien on any document produced by him, the production shall be without prejudice to the lien. The documents mentioned in sub-paragraphs (1) and (2) above shall be produced— An authorised person may take copies of, or make extracts from, any document produced under sub-paragraph (1) or (2) above. If it appears to him to be necessary to do so, an authorised person may, at a reasonable time and for a reasonable period, remove any document produced under sub-paragraph (1) or (2) above and shall, on request, provide a receipt for any document so removed; and where a lien is claimed on a document produced under sub-paragraph (2) above the removal of the document under this sub-paragraph shall not be regarded as breaking the lien. Where a document removed by an authorised person under sub-paragraph (5) above is reasonably required for any purpose he shall, as soon as practicable, provide a copy of the document, free of charge, to the person by whom it was produced or caused to be produced. Where any documents removed under the powers conferred by this paragraph are lost or damaged the Commissioners shall be liable to compensate their owner for any expenses reasonably incurred by him in replacing or repairing the documents.
For the purpose of exercising any powers under this Part of this Act an authorised person may at any reasonable time enter and inspect premises used in connection with the carrying on of a business.
Where— he may issue a warrant in writing authorising any authorised person to enter those premises, if necessary by force, at any time within one month from the time of the issue of the warrant and search them. A person who enters the premises under the authority of the warrant may— but no woman or girl shall be searched except by a woman. The powers conferred by a warrant under this paragraph shall not be exercisable— An authorised person seeking to exercise the powers conferred by a warrant under this paragraph or, if there is more than one such authorised person, that one of them who is in charge of the search shall provide a copy of the warrant endorsed with his name as follows— In this paragraph “a fraud offence” means an offence under any provision of paragraph 15(1) to (5) below.
Where an authorised person has reasonable grounds for suspecting that a fraud offence has been committed he may arrest anyone whom he has reasonable grounds for suspecting to be guilty of the offence. In this paragraph “a fraud offence” means an offence under any provision of paragraph 15(1) to (5) below.
Where, on an application by an authorised person, a justice of the peace or, in Scotland, a justice (within the meaning of section 307 of the Criminal Procedure (Scotland) Act 1995) is satisfied that there are reasonable grounds for believing— he may make an order under this paragraph. An order under this paragraph is an order that the person who appears to the justice to be in possession of the recorded information to which the application relates shall— not later than the end of the period of 7 days beginning with the date of the order or the end of such longer period as the order may specify. The reference in sub-paragraph (2)(a) above to giving an authorised person access to the recorded information to which the application relates includes a reference to permitting the authorised person to take copies of it or to make extracts from it. Where the recorded information consists of information contained in a computer, an order under this paragraph shall have effect as an order to produce the information in a form in which it is visible and legible and, if the authorised person wishes to remove it, in a form in which it can be removed. This paragraph is without prejudice to paragraphs 3 to 5 above.
An authorised person who removes anything in the exercise of a power conferred by or under paragraph 5 or 7 above shall, if so requested by a person showing himself— provide that person with a record of what he removed. The authorised person shall provide the record within a reasonable time from the making of the request for it. Subject to sub-paragraph (7) below, if a request for permission to be allowed access to anything which— is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed or by someone acting on behalf of such a person, the officer shall allow the person who made the request access to it under the supervision of an authorised person. Subject to sub-paragraph (7) below, if a request for a photograph or copy of any such thing is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed, or by someone acting on behalf of such a person, the officer shall— Subject to sub-paragraph (7) below, where anything is photographed or copied under sub-paragraph (4)(b) above the officer shall supply the photograph or copy, or cause it to be supplied, to the person who made the request. The photograph or copy shall be supplied within a reasonable time from the making of the request. There is no duty under this paragraph to allow access to, or to supply a photograph or copy of, anything if the officer in overall charge of the investigation for the purposes of which it was removed has reasonable grounds for believing that to do so would prejudice— Any reference in this paragraph to the officer in overall charge of the investigation is a reference to the person whose name and address are endorsed on the warrant concerned as being the officer so in charge.
Where, on an application made as mentioned in sub-paragraph (2) below, the appropriate judicial authority is satisfied that a person has failed to comply with a requirement imposed by paragraph 8 above, the authority may order that person to comply with the requirement within such time and in such manner as may be specified in the order. An application under sub-paragraph (1) above shall be made— In this paragraph “the appropriate judicial authority” means— In England and Wales and Northern Ireland, an application for an order under this paragraph shall be made by way of complaint; and sections 21 and 42(2) of the Interpretation Act (Northern Ireland) 1954 shall apply as if any reference in those provisions to any enactment included a reference to this paragraph.
An authorised person, if it appears to him necessary for the protection of the revenue against mistake or fraud, may at any time take, from material which he has reasonable cause to believe is intended to be, is being, or has been disposed of as waste by way of landfill, such samples as he may require with a view to determining how the material ought to be or to have been treated for the purposes of tax. Any sample taken under this paragraph shall be disposed of in such manner as the Commissioners may direct.
Tax due from any person shall be recoverable as a debt due to the Crown.
In the Insolvency Act 1986, in section 386(1) (preferential debts) the words “landfill tax,” shall be inserted after “insurance premium tax,” and in Schedule 6 (categories of preferential debts) the following paragraph shall be inserted after paragraph 3A— In the Bankruptcy (Scotland) Act 1985, Schedule 3 (preferred debts) shall be amended as mentioned in sub-paragraphs (3) and (4) below. Any landfill tax which is referable to the period of six months next before the relevant date. The following shall be inserted after paragraph 8A— In the Insolvency (Northern Ireland) Order 1989, in Article 346(1) (preferential debts) the words “landfill tax” shall be inserted after “insurance premium tax” and in Schedule 4 (categories of preferential debts) the following paragraph shall be inserted after paragraph 3A—
Regulations may make provision in respect of England and Wales and Northern Ireland— In respect of Scotland, where any tax or any amount recoverable as if it were tax is due and has not been paid, the sheriff, on an application by the Commissioners accompanied by a certificate by the Commissioners— shall grant a summary warrant in a form prescribed by act of sederunt authorising the recovery, by any of the diligences mentioned in sub-paragraph (3) below, of the amount remaining due and unpaid. The diligences referred to in sub-paragraph (2) above are— Subject to sub-paragraph (5) below and without prejudice to paragraphs 25 to 34 of Schedule 5 to the Debtors (Scotland) Act 1987 (expenses of poinding and sale) the sheriff officer’s fees, together with the outlays necessarily incurred by him, in connection with the execution of a summary warrant shall be chargeable against the debtor. No fee shall be chargeable by the sheriff officer against the debtor for collecting, and accounting to the Commissioners for, sums paid to him by the debtor in respect of the amount owing. Regulations may make provision for anything which the Commissioners may do under sub-paragraphs (2) to (5) above to be done by an officer of the Commissioners holding such rank as the regulations may specify.
Where a person has paid an amount to the Commissioners by way of tax which was not tax due to them, they shall be liable to repay the amount to him. The Commissioners shall only be liable to repay an amount under this paragraph on a claim being made for the purpose. It shall be a defence, in relation to a claim under this paragraph, that repayment of an amount would unjustly enrich the claimant. No amount may be claimed under this paragraph after the expiry of six years from the date on which it was paid. A claim under this paragraph shall be made in such form and manner and shall be supported by such documentary evidence as may be prescribed by regulations. Except as provided by this paragraph, the Commissioners shall not be liable to repay an amount paid to them by way of tax by virtue of the fact that it was not tax due to them.
A person is guilty of an offence if— Any reference in sub-paragraph (1) above to the evasion of tax includes a reference to the obtaining of a payment under regulations under section 51(2)(c) or (d) or (f) of this Act. A person is guilty of an offence if with the requisite intent— and the requisite intent is intent to deceive or to secure that a machine will respond to the document as if it were a true document. A person is guilty of an offence if in furnishing any information for the purposes of this Part of this Act he makes a statement which he knows to be false in a material particular or recklessly makes a statement which is false in a material particular. A person is guilty of an offence by virtue of this sub-paragraph if his conduct during any specified period must have involved the commission by him of one or more offences under the preceding provisions of this paragraph; and the preceding provisions of this sub-paragraph apply whether or not the particulars of that offence or those offences are known. A person is guilty of an offence if— with reason to believe that tax in respect of the disposal concerned will be evaded. A person is guilty of an offence if he carries out taxable activities without giving security (or further security) he has been required to give under paragraph 31 below. For the purposes of this paragraph a taxable landfill contract is a contract under which there is to be a taxable disposal.
A person guilty of an offence under paragraph 15(1) above is liable— The reference in sub-paragraph (1) above to the amount of the tax shall be construed, in relation to tax itself or a payment falling within paragraph 15(2) above, as a reference to the aggregate of— A person guilty of an offence under paragraph 15(3) or (4) above is liable— Where— the alternative penalty is a penalty equal to three times the aggregate of the amount (if any) falsely claimed by way of credit and the amount (if any) by which the gross amount of tax was understated. A person guilty of an offence under paragraph 15(5) above is liable— and paragraph 15(2) and sub-paragraph (2) above shall apply for the purposes of this sub-paragraph as they apply respectively for the purposes of paragraph 15(1) and sub-paragraph (1) above. A person guilty of an offence under paragraph 15(6) above is liable on summary conviction to a penalty of level 5 on the standard scale or three times the amount of the tax, whichever is the greater. A person guilty of an offence under paragraph 15(7) above is liable on summary conviction to a penalty of level 5 on the standard scale. In this paragraph—
Sections 145 to 155 of the Customs and Excise Management Act 1979 (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to offences under paragraph 15 above and penalties imposed under paragraph 16 above as they apply in relation to offences and penalties under the customs and excise Acts as defined in that Act.
Where— he is liable to a penalty equal to the amount of tax evaded, or (as the case may be) sought to be evaded, by his conduct; but this is subject to sub-paragraph (7) below. The reference in sub-paragraph (1)(a) above to evading tax includes a reference to obtaining a payment under regulations under section 51(2)(c) or (d) or (f) of this Act in circumstances where the person concerned is not entitled to the sum. The reference in sub-paragraph (1) above to the amount of tax evaded or sought to be evaded is a reference to the aggregate of— In this paragraph— Statements made or documents produced by or on behalf of a person shall not be inadmissible in any such proceedings as are mentioned in sub-paragraph (6) below by reason only that it has been drawn to his attention— and that he was or may have been induced thereby to make the statements or produce the documents. The proceedings referred to in sub-paragraph (5) above are— Where, by reason of conduct falling within sub-paragraph (1) above, a person is convicted of an offence (whether under this Part of this Act or otherwise) that conduct shall not also give rise to liability to a penalty under this paragraph.
Where it appears to the Commissioners— the Commissioners may serve a notice under this paragraph on the body corporate and on the named officer. A notice under this paragraph shall state— Where a notice is served under this paragraph, the portion of the basic penalty specified in the notice shall be recoverable from the named officer as if he were personally liable under paragraph 18 above to a penalty which corresponds to that portion; and the amount of that penalty may be assessed and notified to him accordingly under paragraph 32 below. Where a notice is served under this paragraph— No appeal shall lie against a notice under this paragraph as such but— In this paragraph a “managing officer”, in relation to a body corporate, means any manager, secretary or other similar officer of the body corporate or any person purporting to act in any such capacity or as a director; and where the affairs of a body corporate are managed by its members, this paragraph shall apply in relation to the conduct of a member in connection with his functions of management as if he were a director of the body corporate.
Where, for an accounting period— the person concerned is liable, subject to sub-paragraphs (3) and (4) below, to a penalty equal to 5 per cent. of the amount of the understatement of liability or (as the case may be) overstatement of entitlement. Where— it shall be assumed for the purposes of this paragraph that the statement made by each such return is a correct statement for the accounting period to which the return relates. Conduct falling within sub-paragraph (1) above shall not give rise to liability to a penalty under this paragraph if the person concerned furnishes full information with respect to the inaccuracy concerned to the Commissioners— Where, by reason of conduct falling within sub-paragraph (1) above— that conduct shall not also give rise to liability to a penalty under this paragraph. In this paragraph “credit” means credit for which provision is made by regulations under section 51 of this Act.
A person who fails to comply with section 47(3) of this Act is liable to a penalty equal to 5 per cent. of the relevant tax or, if it is greater or the circumstances are such that there is no relevant tax, to a penalty of £250; but this is subject to sub-paragraph (4) below. In sub-paragraph (1) above “relevant tax” means the tax (if any) for which the person concerned is liable for the period which— A person who fails to comply with section 47(4) of this Act is liable to a penalty of £250. Where, by reason of conduct falling within sub-paragraph (1) above— that conduct shall not also give rise to liability to a penalty under this paragraph.
If a person— he is liable to a penalty of £250; but this is subject to sub-paragraph (4) below. Where— he is (subject to sub-paragraph (4) below) liable to a further penalty of £20 for each day during which (or any part of which) the failure continues after the day on which the initial penalty was imposed. A person who fails to preserve records in compliance with any provision of regulations made under paragraph 2 above (read with that paragraph and any direction given under the regulations) is liable to a penalty of £250; but this is subject to sub-paragraph (4) below. Where by reason of a failure falling within sub-paragraph (1) or (3) above— that failure shall not also give rise to liability to a penalty under this paragraph.
Where regulations made under this Part of this Act impose a requirement on any person, they may provide that if the person fails to comply with the requirement he shall be liable to a penalty of £250; but this is subject to sub-paragraphs (2) and (3) below. Where by reason of any conduct— that conduct shall not also give rise to liability to a penalty under the regulations. Sub-paragraph (1) above does not apply to any failure mentioned in paragraph 22 above.
This paragraph applies where— For the purposes of this paragraph a walking possession agreement is an agreement under which, in consideration of the property distrained upon being allowed to remain in the custody of the person in default and of the delaying of its sale, the person in default— If the person in default is in breach of the undertaking contained in a walking possession agreement, he is liable to a penalty equal to half of the tax or other amount referred to in sub-paragraph (1)(a) above. This paragraph does not extend to Scotland.
Where a person is liable to a penalty under this Part of this Schedule the Commissioners or, on appeal, an appeal tribunal may reduce the penalty to such amount (including nil) as they think proper. Where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for any breach, failure or other conduct, that is a factor which (among other things) may be taken into account under sub-paragraph (1) above. In the case of a penalty reduced by the Commissioners under sub-paragraph (1) above an appeal tribunal, on an appeal relating to the penalty, may cancel the whole or any part of the reduction made by the Commissioners.
Sub-paragraph (2) below applies where— The additional amount shall carry interest for the period which— For the purposes of sub-paragraph (2) above the relevant day is the earlier of— Sub-paragraph (5) below applies where under section 50(2) of this Act the Commissioners assess an amount as being tax due from a registrable person for an accounting period and notify it to him. The amount shall carry interest for the period which— For the purposes of sub-paragraph (5) above the relevant day is the earlier of— Interest under this paragraph shall be payable at the rate applicable under section 197 of this Act. Interest under this paragraph shall be paid without any deduction of income tax. Sub-paragraph (10) below applies where— In such a case—
Sub-paragraph (2) below applies where— The amount shall carry interest for the period which— Sub-paragraph (4) below applies where— The amount shall carry interest for the period which— Sub-paragraph (6) below applies where— The additional amount shall carry interest for the period which— Sub-paragraph (8) below applies where under section 50(2) of this Act the Commissioners assess an amount as being tax due from a registrable person for an accounting period and notify it to him. The amount shall carry interest for the period which— Sub-paragraph (10) below applies where under paragraph 32 below the Commissioners— The amount shall carry interest for the period which— Interest under this paragraph shall be compound interest calculated— and the penalty rate is the rate found by taking the rate at which interest is payable under paragraph 26 above and adding 10 percentage points to that rate. Interest under this paragraph shall be paid without any deduction of income tax. Where— the amount shall not carry interest by virtue of sub-paragraph (6) or (8) or (10) above (as the case may be). Sub-paragraph (15) below applies where— In such a case—
Where a person is liable to pay interest under paragraph 27 above the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper. Where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay interest, that is a factor which (among other things) may be taken into account under sub-paragraph (1) above. In the case of interest reduced by the Commissioners under sub-paragraph (1) above an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners.
Where, due to an error on the part of the Commissioners, a person— then, if and to the extent that they would not be liable to do so apart from this paragraph, they shall (subject to the following provisions of this paragraph) pay interest to him on that amount for the applicable period. The applicable period, in a case falling within sub-paragraph (1)(a) above, is the period— The applicable period, in a case falling within sub-paragraph (1)(b) or (c) above, is the period— In determining the applicable period for the purposes of this paragraph, there shall be left out of account any period referable to the raising and answering of any reasonable enquiry relating to any matter giving rise to, or otherwise connected with, the person’s entitlement to interest under this paragraph. In determining for the purposes of sub-paragraph (4) above whether any period is referable to the raising and answering of such an enquiry as is there mentioned, there shall be taken to be so referable any period which begins with the date on which the Commissioners first consider it necessary to make such an enquiry and ends with the date on which the Commissioners— but excluding so much of that period as may be prescribed by regulations. For the purposes of sub-paragraph (5) above it is immaterial— The Commissioners shall only be liable to pay interest under this paragraph on a claim made in writing for that purpose. No claim shall be made under this paragraph after the expiry of six years from the date on which the claimant discovered the error or could with reasonable diligence have discovered it. Any reference in this paragraph to receiving a payment from the Commissioners includes a reference to the discharge, by way of set-off, of their liability to make it. Interest under this paragraph shall be payable at the rate applicable under section 197 of this Act.
Where— the interest shall be treated as an amount to which he is entitled by way of credit in pursuance of the regulations. Sub-paragraph (1) above shall be disregarded for the purpose of determining a person’s entitlement to interest or the amount of interest to which he is entitled.
Where it appears to the Commissioners requisite to do so for the protection of the revenue they may require a registrable person, as a condition of his carrying out taxable activities, to give security (or further security) of such amount and in such manner as they may determine for the payment of any tax which is or may become due from him.
Where a person is liable— the Commissioners may, subject to sub-paragraph (2) below, assess the amount due by way of penalty or interest (as the case may be) and notify it to him accordingly; and the fact that any conduct giving rise to a penalty under Part V of this Schedule may have ceased before an assessment is made under this paragraph shall not affect the power of the Commissioners to make such an assessment. In the case of the penalties and interest referred to in the following paragraphs of this sub-paragraph, the assessment under this paragraph shall be of an amount due in respect of the accounting period which in the paragraph concerned is referred to as the relevant period— In a case where the amount of any penalty or interest falls to be calculated by reference to tax which was not paid at the time it should have been and that tax cannot be readily attributed to any one or more accounting periods, it shall be treated for the purposes of this Part of this Act as tax due for such period or periods as the Commissioners may determine to the best of their judgment and notify to the person liable for the tax and penalty or interest. Where a person is assessed under this paragraph to an amount due by way of any penalty or interest falling within sub-paragraph (2) above and is also assessed under subsection (1) or (2) of section 50 of this Act for the accounting period which is the relevant period under sub-paragraph (2) above, the assessments may be combined and notified to him as one assessment, but the amount of the penalty or interest shall be separately identified in the notice. Sub-paragraph (6) below applies in the case of an amount due by way of interest under paragraph 27 above. Where this sub-paragraph applies in the case of an amount— If, within such period as may be notified by the Commissioners to the person liable for the interest under paragraph 27 above, the amount referred to in paragraph 27(2), (4), (6), (8) or (10) above (as the case may be) is paid, it shall be treated for the purposes of paragraph 27 above as paid on the date specified as mentioned in sub-paragraph (6)(a) above. Where an amount has been assessed and notified to any person under this paragraph it shall be recoverable as if it were tax due from him unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced. Subsection (8) of section 50 of this Act shall apply for the purposes of this paragraph as it applies for the purposes of that section.
Subject to the following provisions of this paragraph, an assessment under— shall not be made more than six years after the end of the accounting period concerned or, in the case of an assessment under paragraph 32 above of an amount due by way of a penalty which is not a penalty referred to in sub-paragraph (2) of that paragraph, six years after the event giving rise to the penalty. Subject to sub-paragraph (5) below, an assessment under paragraph 32 above of— may be made at any time before the expiry of the period of two years beginning with the time when the amount of tax due for the accounting period concerned has been finally determined. In relation to an assessment under paragraph 32 above, any reference in sub-paragraph (1) or (2) above to the accounting period concerned is a reference to that period which, in the case of the penalty or interest concerned, is the relevant period referred to in sub-paragraph (2) of that paragraph. Subject to sub-paragraph (5) below, if tax has been lost— an assessment may be made as if, in sub-paragraph (1) above, each reference to six years were a reference to twenty years. Where after a person’s death the Commissioners propose to assess an amount as due by reason of some conduct of the deceased—
If, otherwise than in circumstances falling within subsection (5)(b) of section 50 of this Act, it appears to the Commissioners that the amount which ought to have been assessed in an assessment under any provision of that section or under paragraph 32 above exceeds the amount which was so assessed, then— the Commissioners may make a supplementary assessment of the amount of the excess and shall notify the person concerned accordingly.
under the like provision as that assessment was made, and
on or before the last day on which that assessment could have been made,
Notwithstanding any obligation not to disclose information that would otherwise apply, the Commissioners may disclose information to— for the purpose of assisting the principal concerned in the performance of the principal’s duties. Notwithstanding any such obligation as is mentioned in sub-paragraph (1) above, any person mentioned in sub-paragraph (1)(a) to (f) above may disclose information to the Commissioners or to an authorised officer of the Commissioners for the purpose of assisting the Commissioners in the performance of duties in relation to tax. Information that has been disclosed to a person by virtue of this paragraph shall not be disclosed by him except— References in the preceding provisions of this paragraph to an authorised officer of any person (the principal) are to any person who has been designated by the principal as a person to and by whom information may be disclosed by virtue of this paragraph. The Secretary of State shall notify the Commissioners in writing of the name of any person designated by the Secretary of State under sub-paragraph (4) above. No charge may be made for a disclosure made by virtue of this paragraph.
The Commissioners may publish, by such means as they think fit, information which— The descriptions are— Information may be published in accordance with this paragraph notwithstanding any obligation not to disclose the information that would otherwise apply.
A certificate of the Commissioners— shall be sufficient evidence of that fact until the contrary is proved. A photograph of any document furnished to the Commissioners for the purposes of this Part of this Act and certified by them to be such a photograph shall be admissible in any proceedings, whether civil or criminal, to the same extent as the document itself. Any document purporting to be a certificate under sub-paragraph (1) or (2) above shall be taken to be such a certificate until the contrary is proved.
Any notice, notification or requirement to be served on, given to or made of any person for the purposes of this Part of this Act may be served, given or made by sending it by post in a letter addressed to that person at his last or usual residence or place of business.
This paragraph applies to directions, specifications and conditions which the Commissioners or an authorised person may give or impose under any provision of this Part. A direction, specification or condition given or imposed by the Commissioners may be withdrawn or varied by them. A direction, specification or condition given or imposed by an authorised person may be withdrawn or varied by him or by another authorised person. No direction, specification or condition shall have effect as regards any person it is intended to affect unless— No withdrawal or variation of a direction, specification or condition shall have effect as regards any person the withdrawal or variation is intended to affect unless—
In section 827 of the Taxes Act 1988 (no deduction for penalties etc.) the following subsection shall be inserted after subsection (1B)—
All money and securities for money collected or received for or on account of the tax shall—
if collected or received in Great Britain, be placed to the general account of the Commissioners kept at the Bank of England under section 17 of the Customs and Excise Management Act 1979;
if collected or received in Northern Ireland, be paid into the Consolidated Fund of the United Kingdom in such manner as the Treasury may direct.
Regulations may make provision in relation to any case where— The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b) above, the latter shall be set off against the former. The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a) above, the Commissioners may set off the latter in paying the former. The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) above no payment need be made in respect of the former or the latter. The regulations may include provision treating any duty to pay mentioned in sub-paragraph (1) above as discharged accordingly. References in sub-paragraph (1) above to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalty. In this paragraph “tax” includes “duty”.
Regulations may make provision in relation to any case where— The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b) above, the latter shall be set off against the former. The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a) above, the Commissioners may set off the latter in paying the former. The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) above no payment need be made in respect of the former or the latter. The regulations may include provision treating any duty to pay mentioned in sub-paragraph (1) above as discharged accordingly. References in sub-paragraph (1) above to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalty. In this paragraph “tax” includes “duty”.
Where— an amount equal to the amount shown as tax shall be recoverable from the person as a debt due to the Crown. Where— an amount equal to the excess shall be recoverable from the person as a debt due to the Crown. References in this paragraph to an invoice are to any invoice, whether or not it is a landfill invoice within the meaning of section 61 of this Act.
This paragraph applies where— In such a case the amount of any payment mentioned in sub-paragraph (1)(b) above shall be adjusted, unless the disposal contract otherwise provides, so as to reflect the tax chargeable on the landfill disposal. For the purposes of this paragraph a disposal contract relating to material is a contract providing for the disposal of the material, and it is immaterial— The reference in sub-paragraph (1) above to a change in the tax chargeable is a reference to a change—
This paragraph applies where— In such a case the amount of any payment which falls to be made— shall be adjusted, unless the contract otherwise provides, so as to reflect the tax (if any) chargeable on the disposal. For the purposes of this paragraph a construction contract is a contract under which all or any of the following work is to be carried out—
This paragraph applies where— In such a case the agreement shall be taken to provide that tax be ignored in calculating the turnover.
Section 73.
In section 86 of the Taxes Management Act 1970 (interest on tax assessed in addition to deducted tax etc.), so far as it has effect without the substitutions made by paragraph 23 of Schedule 19 to the Finance Act 1994 and section 110 of the Finance Act 1995, in subsection (2)(b) after “the basic rate” there shall be inserted “or the lower rate”.
In section 4(2) of the Taxes Act 1988 (meaning of “relevant year of assessment” for the purposes of deductions etc.), for “subsection (1) above” there shall be substituted “this section”.
In section 5(4) of that Act (time when tax in addition to deducted tax etc. becomes due), after “basic rate” there shall be inserted “or the lower rate”.
Subject to sub-paragraph (2) below, in subsection (1)(b) of section 51B of that Act (periodic returns of tax on gilts), for “basic rate” there shall be substituted “lower rate”. Sub-paragraph (1) above has effect for the purposes only of the exercise on or after the day on which this Act is passed of the Treasury’s power to make regulations under that section; but that power may be exercised on or after that day for the purpose of making provision, with retrospective effect, on the basis that the assumption to be applied in relation to all payments made on or after 6th April 1996 was an assumption that such payments bear tax at the lower rate.
In paragraph (c) of section 246D(2) of that Act (application of section 207A to certain foreign income dividends), for the words from “as income” to the end of the paragraph there shall be substituted “(without prejudice to paragraph (a) above) as if it were income to which section 1A applies;”.
In section 249(4)(c) of that Act (application of section 207A), for the words from “as income” to “but” there shall be substituted “(without prejudice to paragraph (a) above) as if it were income to which section 1A applies, but”.
In subsection (2)(b)(ii) of section 326B of that Act (loss of exemption for TESSAs), for the words from “basic rate on” to the end of the sub-paragraph there shall be substituted “applicable rate on any interest or bonus paid on the account before that time;”. After subsection (2) of that section there shall be inserted the following subsection— This paragraph has effect as respects withdrawals on or after 6th April 1996.
In section 350 of that Act (charge to tax where payments made subject to deduction), in subsection (1) for “basic rate” there shall be substituted “applicable rate”; and after that subsection there shall be inserted the following subsection—
In section 421(1)(c) of that Act (application of section 207A), for the words from “as income” to “but” there shall be substituted “(without prejudice to paragraph (b) above) as if it were income to which section 1A applies, but”.
In section 468 of that Act (authorised unit trusts to be subject to corporation tax), the following subsection shall be inserted after subsection (1)— Sub-paragraph (1) above has effect in relation to any accounting period ending after 31st March 1996. Sections 468E and 468EE of that Act (rate of corporation tax on authorised unit trusts) shall not apply in relation to any accounting period ending after 31st March 1996 except so far as those sections relate to the financial year 1995.
In section 468L of that Act (interest distributions), after subsection (1) there shall be inserted the following subsection— After subsection (7) of that section there shall be inserted the following subsections— This paragraph has effect in relation to distribution periods ending on or after 1st April 1996.
In section 469(2) of that Act (taxation of income of unauthorised unit trusts), after the words “unit holders)”, in the first place where they occur, there shall be inserted “and, in the case of income to which section 1A applies, chargeable to income tax at the basic rate, instead of at the lower rate”.
In sections 549(2), 686(1), 699(2) and 819(2) of that Act (which refer to income tax being chargeable at the lower rate in accordance with section 207A), for “section 207A” there shall be substituted “section 1A”.
In paragraph (a)(i) of subsection (2) of section 582 of that Act (funding bonds), for “basic” there shall be substituted “applicable”. After that subsection there shall be inserted the following subsection—
In section 686 of that Act (liability to additional rate in the case of trustees of discretionary trusts), after subsection (2A) there shall be inserted the following subsection—
In Part XV of that Act (settlements), at the end of Chapter IC there shall be inserted the following Chapter—
In section 698A of that Act (taxation at the lower rate of the income of beneficiaries)—
in subsection (1), for the words from “section 207A” to the end there shall be substituted “section 1A shall have effect as if that income were income to which that section applies.”; and
in subsection (2), for the words from “section 207A” to the end there shall be substituted “section 1A shall have effect as if the payment made to the trustee were income of the trustee to which that section applies.”
In subsection (1) of section 737 of that Act (deductions from manufactured payments), after “shall apply” there shall be inserted “(subject to subsection (1A) below)”, and for subsection (1A) of that section there shall be substituted the following subsection— This paragraph has effect in relation to payments on or after 6th April 1996.
In section 737C(6) of that Act (computation of amount of deemed manufactured interest), for “basic” there shall be substituted “lower”.
In section 743(1) of that Act (supplemental provisions relating to transfers of assets abroad)—
after the words “the basic rate”, in the first place where they occur, there shall be inserted “or the lower rate”; and
for “income that has borne tax at the basic rate”, there shall be substituted “any income to the extent that it has borne tax at that rate”.
In section 789(2) of that Act (old double taxation relief agreements), for “to bear income tax at the basic rate and” there shall be substituted —.
In paragraph (a) of section 821(1) of that Act (under-deductions from payments made before passing of annual Act to be charged under Case VI of Schedule D), for the words from “under Schedule D in respect” to the end of the paragraph there shall be substituted “under Case III of Schedule D in respect of those payments; and”.
In section 822(1) of that Act (over-deductions from interest on loan capital etc. made before the passing of annual Act where basic rate for the year is lower than in the previous year), for “basic rate lower” there shall be substituted “lower rate less”.
In section 835(6)(a) of that Act (estimating total income), after “basic rate” there shall be inserted “or the lower rate”.
In Schedule 3 to that Act (public revenue dividends etc.)— This paragraph has effect in relation to payments made on or after 6th April 1996 and before the day on which this Act is passed.
In section 88(1) of the Finance Act 1989 (rate of corporation tax on policy holders' fraction of profits to be equal to the basic rate), after “subsection (2)” there shall be inserted “and section 88A”. After section 88 of that Act there shall be inserted the following section— In section 89 of that Act (meaning of “policy holders' share” of profits), in subsection (1)— and in subsection (2), in each of paragraphs (b) and (c), for “the business” there shall be substituted “the company’s life assurance business”. This paragraph shall have effect for the financial year 1996 and subsequent financial years.
In section 4(3A) of the Taxation of Chargeable Gains Act 1992 (disregard of income chargeable at lower rate in accordance with section 207A of the Taxes Act 1988), for “section 207A” there shall be substituted “section 1A”.
Subject to any express provisions as to commencement that are contained in the preceding provisions of this Schedule, this Schedule has effect for the year 1996-97 and subsequent years of assessment.
Section 79.
The Taxes Act 1988 shall be amended in accordance with paragraphs 2 to 28 below.
In section 1(1) (the charge to income tax), for “Schedules A, C, D, E and F” there shall be substituted “Schedules A, D, E and F”.
Section 17 (Schedule C) shall be omitted.
In section 18 (Schedule D), in subsection (1), in paragraph (b) of Schedule D, for “not charged under Schedule A, C or E” there shall be substituted “not charged under Schedule A or E”. In subsection (3) of that section— Immediately before subsection (4) of section 18, there shall be inserted the following subsections— In subsection (5) of that section, for “Part IV contains” there shall be substituted “Parts III and IV contain”.
In section 19(1), in paragraph 2 of Schedule E, for the words “under Schedule C” there shall be substituted “under paragraph (c) of Case III of Schedule D”.
For the heading to Part III there shall be substituted the following heading—Government Securities
Section 44 (mode of charge of tax under Schedule C) shall be omitted.
Section 45 (interpretation of Part III) shall be omitted.
Section 48 (securities of foreign states) shall be omitted.
In section 49 (stock and dividends in name of Treasury etc.), after subsection (2) there shall be inserted the following subsection—
In sections 50(1) and 51A(1) (which provide for interest on certain securities to be paid without deduction of tax), the words “but shall be chargeable to tax under Case III of Schedule D” shall in each case be omitted.
Section 52 (taxation of interest on converted securities and interest which becomes subject to deduction) shall be omitted.
Section 123 (foreign dividends) shall be omitted.
In section 124— shall be omitted.
in subsection (6) (definitions in connection with quoted Eurobonds), the definitions of “recognised clearing system” and “relevant foreign securities”, and the word “and” immediately preceding those definitions, and
subsection (7),
In section 322(1) (consular officers and employees), the words “and he shall be treated as not resident in the United Kingdom for the purposes of sections 48 and 123(4)” shall be omitted.
In section 398 (transactions in deposits with and without certificates or in debts), in paragraph (b), the words “C or” shall be omitted.
In section 468M(4) (meaning of “eligible income” in connection with interest distributions of authorised unit trusts), for paragraphs (c) to (e) there shall be substituted the following paragraph—.
In section 474 (treatment of tax-free income), subsections (1) and (3) shall be omitted.
In section 505 (exemptions for charities), in subsection (1), in paragraph (c), sub-paragraph (i) shall be omitted. For paragraph (d) of that subsection there shall be substituted the following paragraph—. After that subsection there shall be inserted the following subsection—
In section 512 (exemption from income tax for Atomic Energy Authority and National Radiological Protection Board)— After subsection (2) of that section there shall be inserted the following subsection—
In section 516 (government securities held by non-resident central banks), in subsection (1), for “dividends (within the meaning of Schedule C) paid out of the public revenue of the United Kingdom where they are” there shall be substituted “income from securities which is payable out of the public revenue of the United Kingdom and which is”. In subsection (2) of that section, for “such dividends” there shall be substituted “such income”.
In section 582A (designated international organisations), subsection (3) shall be omitted.
In section 730 (transfers of income arising from securities)— there shall in each case be substituted “by virtue of section 18(3B)”.
in subsections (2), (4)(b) and (6), for “under Schedule C or under section 123(3)”, and
in subsection (8), for “under Schedule C or section 123(3)”,
In section 828(2) (orders and regulations not required to be made by statutory instrument), for “section 124(6) or 841(1)(b) or paragraph 15(4) of Schedule 3” there shall be substituted “section 841(1)(b) or 841A”.
In section 832(1) (interpretation of the Tax Acts), the definition of “recognised clearing system” shall be omitted.
After section 841 there shall be inserted the following section—
Schedule 3 (machinery for payment of income tax under Schedule C and, in certain cases, Schedule D) shall be omitted.
In Schedule 23A (manufactured dividends and interest), in paragraph 1(1) (definitions)— for “Eurobonds held in a recognised clearing system, within the meaning of section 124” there shall be substituted “Eurobonds (as defined by section 124) held in a recognised clearing system”. In paragraph 4(8) of that Schedule, for paragraphs (a) to (d) there shall be substituted the following paragraphs—.
In the Table in section 98 of the Taxes Management Act 1970 (penalties in respect of certain information provisions)— shall be omitted.
in the first column, the entry relating to paragraph 13(1) of Schedule 3 to the Taxes Act 1988, and
in the second column, the entry relating to paragraph 6C of that Schedule,
In section 178(2)(m) of the Finance Act 1989 (provisions to which power to set rates of interest applies), the words “and paragraph 6B of Schedule 3 to” shall be omitted.
In section 128 of the Finance Act 1995 (limit on income chargeable on non-residents: income tax), in subsection (3)(a), the words “Schedule C,” shall be omitted.
Subject to paragraphs 33 and 34 below, this Schedule has effect—
for the purposes of income tax, for the year 1996-97 and subsequent years of assessment;
for the purposes of corporation tax, for accounting periods ending after 31st March 1996.
Subject to the following provisions of this paragraph and paragraph 34 below— The repeal of Schedule 3 shall not affect the operation of paragraph 6B of that Schedule in relation to any amount— The Board may by regulations make provision with respect to returns to be made for the quarter which includes both times before the day on which this Act was passed and times on and after that day. Regulations under sub-paragraph (3) above may, in particular, provide that section 98 of the Taxes Management Act 1970 shall have effect as if it included a reference in the second column of the Table to any specified provision of the regulations. In this paragraph “Schedule 3” means Schedule 3 to the Taxes Act 1988.
Transitional payments of tax made on a person’s behalf in relation to times to which this paragraph applies shall be treated as made only for the purpose of being applied in the discharge of that person’s liability to tax charged under Schedule D. If a transitional payment of tax has been made on a person’s behalf, but it appears to the Board that— the Board shall make or allow such repayments, adjustments or set-offs against unpaid tax as they think appropriate. In this paragraph “transitional payment of tax” means a payment to which paragraph 33 above applies.
Paragraphs 33 and 34 above apply in relation to times falling—
within a year of assessment or an accounting period mentioned in paragraph 32 above, but
before the day on which this Act was passed.
Section 83.
This paragraph applies where a claim is made under section 83(2)(a) of this Act for the whole or any part of the deficit to be set off against profits of any description for the deficit period. Subject to the following provisions of this paragraph— Any reduction by virtue of sub-paragraph (2) above shall be made— Relief shall not be given by virtue of a claim under section 83(2)(a) of this Act against any ring fence profits of the company within the meaning of Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities).
This paragraph applies where the company makes a claim under section 83(2)(b) of this Act for the whole or any part of the deficit to be treated as eligible for group relief. The amount to which the claim relates shall be treated as if, for the purposes of subsection (1) of section 403 of the Taxes Act 1988 (group relief for trades)—
This paragraph applies where a claim is made under section 83(2)(c) of this Act for the whole or any part of the deficit to be carried back to be set off against profits for earlier accounting periods. The claim shall have effect only if it relates to an amount that is equal to whichever is smaller of the following amounts, that is to say— Where the claim has effect, the amount to which the claim relates shall be set off against the profits available for relief under this paragraph— Subject to sub-paragraph (5) below, the profits available for relief under this paragraph are the amounts which, for accounting periods ending within the permitted period, would be taken— to be chargeable under Case III of Schedule D as profits and gains arising from the company’s loan relationships. Where any accounting period begins before the beginning of the permitted period but ends in the course of it— The reliefs which fall to be given in priority to relief under this paragraph in respect of any loss are— In this paragraph “the permitted period” means the period of three years immediately preceding the beginning of the deficit period so far as that three year period falls after 31st March 1996.
This paragraph applies where a claim is made under section 83(2)(d) of this Act for the whole or any part of the deficit to be carried forward and set against non-trading profits for the next accounting period. The amount to which the claim relates shall be set off against the non-trading profits of the company for the accounting period immediately following the deficit period, and those profits shall be treated as reduced accordingly. In this paragraph “non-trading profits”, in relation to a company, means so much of any profits of the company (of whatever description) as do not consist in trading income for the purposes of section 393A of the Taxes Act 1988 (setting-off of trading losses against profits of the same or an earlier period).
In this Schedule “the deficit” and “the deficit period” shall be construed by reference to section 83(1) of this Act.
Section 84.
The credits and debits to be brought into account for the purposes of this Chapter shall not include any credits or debits relating to any amount falling, when paid, to be treated as a distribution.
This paragraph applies for the purpose of bringing debits into account for the purposes of this Chapter in respect of a debtor relationship of a company where an authorised accruals basis of accounting is used as respects that relationship in pursuance of section 87 of this Act. If— then debits relating to that interest shall be brought into account on the assumption that the interest does not accrue until it is paid.
This paragraph applies for determining the credits and debits to be brought into account for any accounting period in accordance with an authorised accruals basis of accounting, where— depends on the exercise of an option by a party to the relationship or an associate of his, or is otherwise under the control of such a party or an associate of his. It shall be assumed that the party or his associate will exercise his power to determine whether and on what date any amount will become due in the manner which (apart from taxation) appears, as at the end of the accounting period in question, to be the most advantageous to that party. In this paragraph “associate” has the meaning given for the purposes of Part XI of the Taxes Act 1988 by section 417(3) and (4) of that Act.
The credits and debits to be brought into account for the purposes of this Chapter shall be computed disregarding so much of any authorised accounting method as, by requiring the translation or conversion of amounts from one currency into another, has the effect that credits and debits produced by that method include sums in which profits, gains or losses arising from fluctuations in the value of a currency are to any extent represented. This paragraph is without prejudice to the provisions of Chapter II of Part II of the Finance Act 1993 (exchange gains and losses).
In determining the credits and debits to be brought into account in accordance with an accruals basis of accounting, a departure from the assumption in the case of the creditor relationships of a company that every amount payable under those relationships will be paid in full as it becomes due shall be allowed (subject to paragraph 6 below) to the extent only that— Such a departure shall be made only where the accounting arrangements allowing the departure also require appropriate adjustments, in the form of credits, to be made if the whole or any part of an amount taken or estimated to represent an amount of bad debt is paid or otherwise ceases to be an amount in respect of which such a departure is allowed. Where— no credit in respect of the release shall be required to be brought into account in the case of that company if the release is part of a relevant arrangement or compromise (within the meaning given by section 74(2) of the Taxes Act 1988) or the relationship is one as respects which section 87 of this Act requires the use of an authorised accruals basis of accounting.
This paragraph applies where for any accounting period section 87 of this Act requires an authorised accruals basis of accounting to be used as respects a creditor relationship of a company. The credits and debits which for that period are to be brought into account for the purposes of this Chapter in accordance with that accounting method shall be computed subject to sub-paragraphs (3) to (6) below. The assumption that every amount payable under the relationship will be paid in full shall be applied as if no departure from that assumption were authorised by virtue of paragraph 5 above except where it is allowed by sub-paragraph (4) below. A departure from that assumption shall be allowed in relation to a liability to pay any amount to the company (“the creditor company”) under the creditor relationship where— That condition is that there would be no connection between the two companies for the accounting period in which that consideration is given if the question whether there is such a connection for that period fell to be determined, in accordance with section 87 of this Act, by reference only to times before the creditor company acquired possession of, or any entitlement to, the shares in question. Where the company ceases in the accounting period in question to be a party to the relationship— In determining for the purposes of sub-paragraph (6) above the debits and credits that would have been brought into account if a company had not ceased to be a party to a loan relationship, no account shall be taken of any amounts that would have accrued at times after it ceased to be a party to the relationship.
Where any government investment in a company is written off by the release of a liability to pay any amount under a debtor relationship of the company, no credit shall be required, in the case of that company, to be brought into account for the purposes of this Chapter in respect of that release. Subsections (7) and (8) of section 400 of the Taxes Act 1988 shall apply, as they apply for the purposes of that section, for construing the reference in sub-paragraph (1) above to the writing-off of a government investment.
This paragraph applies for the purposes of the use, as respects any loan relationship of a company and in conformity with paragraph 5 above, of an authorised accruals basis of accounting. Where the company is one to which a relevant overseas debt is owed, the debits and credits to be brought into account on that basis for the purposes of this Chapter shall be determined, for any accounting period of the company, on the assumption that it is not permissible for more than the relevant percentage of the debt to be estimated to be bad. For the purposes of this paragraph the relevant percentage of a debt for any accounting period of a company is (subject to sub-paragraph (4) below) such percentage (which may be zero) as may be determined, by reference to the position at the end of the relevant period of account, in accordance with regulations made by the Treasury. Where, apart from this sub-paragraph, the relevant percentage of a debt for any accounting period is more than the adjusted base percentage of that debt for that period, the relevant percentage of the debt for that period shall be taken to be equal to its adjusted base percentage for that period. For the purposes of this paragraph the adjusted base percentage of a debt for any accounting period shall be calculated by— In this paragraph “the relevant period of account”, in relation to any accounting period of a company, means the period of account ending with that accounting period or, if a period of account does not end with that accounting period, the last period of account of the company to end before the end of that accounting period. In this paragraph “relevant overseas debt” means any debt which— Those conditions are— In this paragraph “overseas State authority” means— and for this purpose “controlled” shall be construed in accordance with section 840 of the Taxes Act 1988. The Treasury shall not make any regulations under this paragraph unless a draft of them has been laid before and approved by a resolution of the House of Commons.
“creditor relationship”, in relation to a company, means any loan relationship of that company in the case of which it stands in the position of a creditor as respects the debt in question;
“bad investment advice” means investment advice in respect of which an action against the person who gave it has been, or may be, brought—
by reason of a breach of a fiduciary obligation; or
by reason of a contravention which is actionable under section 62 of the Financial Services Act 1986;
A landfill disposal is a disposal—
of material as waste, and
made by way of landfill.
A reference to this Part includes a reference to any order or regulations made under it and a reference to a provision of this Part includes a reference to any order or regulations made under the provision, unless otherwise required by the context or any order or regulations.
This section and sections 64 to 69 above apply for the purposes of this Part.
The power to make an order under section 57 above shall be exercisable by the Commissioners, and the power to make an order under any other provision of this Part shall be exercisable by the Treasury.
Any power to make regulations under this Part shall be exercisable by the Commissioners.
Any power to make an order or regulations under this Part shall be exercisable by statutory instrument.
An order to which this subsection applies shall be laid before the House of Commons; and unless it is approved by that House before the expiration of a period of 28 days beginning with the date on which it was made it shall cease to have effect on the expiration of that period, but without prejudice to anything previously done under the order or to the making of a new order.
In reckoning any such period as is mentioned in subsection (4) above no account shall be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than four days.
A statutory instrument containing an order or regulations under this Part (other than an order under section 57 above or an order to which subsection (4) above applies) shall be subject to annulment in pursuance of a resolution of the House of Commons.
Subsection (4) above applies to—
an order under section 42(3) above providing for material which would otherwise be qualifying material not to be qualifying material;
an order under section 46 above which produces the result that a disposal which would otherwise not be a taxable disposal is a taxable disposal;
an order under section 63(5) above other than one which provides only that an earlier order under section 63(5) is not to apply to material;
an order under section 65(5) above providing for anything which would otherwise not be a disposal of material by way of landfill to be such a disposal.
Any power to make an order or regulations under this Part—
may be exercised as regards prescribed cases or descriptions of case;
may be exercised differently in relation to different cases or descriptions of case.
An order or regulations under this Part may include such supplementary, incidental, consequential or transitional provisions as appear to the Treasury or the Commissioners (as the case may be) to be necessary or expedient.
No specific provision of this Part about an order or regulations shall prejudice the generality of subsections (8) and (9) above.
Income tax shall be charged for the year 1996-97, and for that year—
the lower rate shall be 20 per cent.;
the basic rate shall be 24 per cent.; and
the higher rate shall be 40 per cent.
For the year 1996-97 section 1(2) of the Taxes Act 1988 shall apply— and, accordingly, section 1(4) of that Act (indexation) shall not apply for the year 1996-97.
as if the amount specified in paragraph (aa) (the lower rate limit) were £3,900; and
as if the amount specified in paragraph (b) (the basic rate limit) were £25,500;
Section 559(4) of the Taxes Act 1988 (deductions from payments to sub-contractors in the construction industry) shall have effect—
in relation to payments made on or after 1st July 1996 and before the appointed day (within the meaning of section 139 of the Finance Act 1995), with “24 per cent.” substituted for “25 per cent.”; and
in relation to payments made on or after that appointed day, as if the substitution for which section 139(1) of the Finance Act 1995 provided were a substitution of “the relevant percentage” for “24 per cent.”
After section 1 of the Taxes Act 1988 there shall be inserted the following section—
In section 4 of that Act (construction of references to deduction of tax), after subsection (1) there shall be inserted the following subsection—
Subsection (1) above has effect in relation to the year 1996-97 and subsequent years of assessment and subsection (2) above has effect in relation to payments on or after 6th April 1996.
Schedule 6 to this Act (which makes further amendments in connection with the charge at the lower rate on income from savings etc.) shall have effect.
Where any subordinate legislation (within the meaning of the Interpretation Act 1978) falls to be construed in accordance with section 4 of the Taxes Act 1988, that legislation (whenever it was made) shall be construed, in relation to payments on or after 6th April 1996, subject to subsection (1A) of that section.
For the year 1996-97 the amounts specified in the provisions mentioned in subsection (2) below shall be taken to be as set out in that subsection; and, accordingly, section 257C(1) of the Taxes Act 1988 (indexation), so far as it relates to the amounts so specified, shall not apply for the year 1996-97.
In section 257 of that Act (personal allowance)—
the amount in subsection (1) (basic allowance) shall be £3,765;
the amount in subsection (2) (allowance for persons aged 65 or more but not aged 75 or more) shall be £4,910; and
the amount in subsection (3) (allowance for persons aged 75 or more) shall be £5,090.
In section 265(1) of the Taxes Act 1988 (blind person’s allowance), for “£1,200” there shall be substituted “£1,250”.
This section shall apply for the year 1996-97 and subsequent years of assessment.
For the year 1996-97 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.
Corporation tax shall be charged for the financial year 1996 at the rate of 33 per cent.
For the financial year 1996—
the small companies' rate shall be 24 per cent.; and
the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be nine four-hundredths.
The charge to tax under Schedule C is abolished—
for the purposes of income tax, for the year 1996-97 and subsequent years of assessment;
for the purposes of corporation tax, for accounting periods ending after 31st March 1996.
Schedule 7 to this Act (which, together with Chapter II of this Part of this Act, makes provision for imposing a charge under Schedule D on descriptions of income previously charged under Schedule C, and makes connected amendments) shall have effect.
For the purposes of corporation tax all profits and gains arising to a company from its loan relationships shall be chargeable to tax as income in accordance with this Chapter.
To the extent that a company is a party to a loan relationship for the purposes of a trade carried on by the company, profits and gains arising from the relationship shall be brought into account in computing the profits and gains of the trade.
Profits and gains arising from a loan relationship of a company that are not brought into account under subsection (2) above shall be brought into account as profits and gains chargeable to tax under Case III of Schedule D.
This Chapter shall also have effect for the purposes of corporation tax for determining how any deficit on a company’s loan relationships is to be brought into account in any case, including a case where none of the company’s loan relationships falls by virtue of this Chapter to be regarded as a source of income.
Subject to any express provision to the contrary, the amounts which in the case of any company are brought into account in accordance with this Chapter as respects any matter shall be the only amounts brought into account for the purposes of corporation tax as respects that matter.
Subject to the following provisions of this section, a company has a loan relationship for the purposes of the Corporation Tax Acts wherever— and references to a loan relationship and to a company’s being a party to a loan relationship shall be construed accordingly.
the company stands (whether by reference to a security or otherwise) in the position of a creditor or debtor as respects any money debt; and
that debt is one arising from a transaction for the lending of money;
For the purposes of this Chapter a money debt is a debt which falls to be settled—
by the payment of money; or
by the transfer of a right to settlement under a debt which is itself a money debt.
Subject to subsection (4) below, where an instrument is issued by any person for the purpose of representing security for, or the rights of a creditor in respect of, any money debt, then (whatever the circumstances of the issue of the instrument) that debt shall be taken for the purposes of this Chapter to be a debt arising from a transaction for the lending of money.
For the purposes of this Chapter a debt shall not be taken to arise from a transaction for the lending of money to the extent that it is a debt arising from rights conferred by shares in a company.
For the purposes of this Chapter— and those rights or liabilities shall be taken to include the rights or liabilities attached to any security which, being a security issued in relation to the money debt in question, is a security representing that relationship.
references to payments or interest under a loan relationship are references to payments or interest made or payable in pursuance of any of the rights or liabilities under that relationship; and
references to rights or liabilities under a loan relationship are references to any of the rights or liabilities under the agreement or arrangements by virtue of which that relationship subsists;
In this Chapter “money” includes money expressed in a currency other than sterling.
For the purposes of corporation tax— shall be computed in accordance with this section using the credits and debits given for the accounting period in question by the following provisions of this Chapter.
the profits and gains arising from the loan relationships of a company, and
any deficit on a company’s loan relationships,
To the extent that, in any accounting period, a loan relationship of a company is one to which it is a party for the purposes of a trade carried on by it, the credits and debits given in respect of that relationship for that period shall be treated (according to whether they are credits or debits) either—
as receipts of that trade falling to be brought into account in computing the profits and gains of that trade for that period; or
as expenses of that trade which are deductible in computing those profits and gains.
Where for any accounting period there are, in respect of the loan relationships of a company, both— the aggregate of the non-trading debits shall be subtracted from the aggregate of the non-trading credits to give the amount to be brought into account under subsection (4) below.
credits that are not brought into account under subsection (2) above (“non-trading credits”), and
debits that are not so brought into account (“non-trading debits”),
That amount is the amount which for any accounting period is to be taken (according to whether the aggregate of the non-trading credits or the aggregate of the non-trading debits is the greater) to be either—
the amount of the company’s profits and gains for that period that are chargeable under Case III of Schedule D as profits and gains arising from the company’s loan relationships; or
the amount of the company’s non-trading deficit for that period on its loan relationships.
Where for any accounting period a company has non-trading credits but no non-trading debits in respect of its loan relationships, the aggregate amount of the credits shall be the amount of the company’s profits and gains for that period that are chargeable under Case III of Schedule D as profits and gains arising from those relationships.
Where for any accounting period a company has non-trading debits but no non-trading credits in respect of its loan relationships, that company shall have a non-trading deficit on its loan relationships for that period equal to the aggregate of the debits.
Subsection (2) above, so far as it provides for any amount to be deductible as mentioned in paragraph (b) of that subsection, shall have effect notwithstanding anything in section 74 of the Taxes Act 1988 (allowable deductions).
This section applies for the purposes of corporation tax where for any accounting period (“the deficit period”) there is a non-trading deficit on a company’s loan relationships.
The company may make a claim for the whole or any part of the deficit to be treated in any of the following ways, that is to say—
to be set off against any profits of the company (of whatever description) for the deficit period;
to be treated as eligible for group relief;
to be carried back to be set off against profits for earlier accounting periods; or
to be carried forward and set against non-trading profits for the next accounting period.
So much of the deficit for the deficit period as is not the subject of a claim under subsection (2) above shall be carried forward so as to be brought into account for the purposes of this Chapter as a non-trading debit (“a carried-forward debit”) for the accounting period immediately following the deficit period.
No claim shall be made under subsection (2)(a) to (c) above in respect of so much (if any) of the non-trading deficit of a company for any accounting period as is equal to the amount by which that deficit is greater than it would have been if any carried-forward debit for that period had been disregarded.
No part of any non-trading deficit of a company established for charitable purposes only shall be set off against the profits of that or any other company in pursuance of a claim under subsection (2) above.
A claim under subsection (2) above must be made within the period of two years immediately following the end of the relevant period, or within such further period as the Board may allow.
In subsection (6) above “the relevant period”—
in relation to a claim under subsection (2)(a), (b) or (c) above, means the deficit period; and
in relation to a claim under subsection (2)(d) above, means the accounting period immediately following the deficit period.
Different claims may be made under subsection (2) above as respects different parts of a non-trading deficit for any period, but no claim may be made as respects any part of a deficit to which another claim made under that subsection relates.
Schedule 8 to this Act (which makes provision about what happens where a claim is made under subsection (2) above) shall have effect.
The credits and debits to be brought into account in the case of any company in respect of its loan relationships shall be the sums which, in accordance with an authorised accounting method and when taken together, fairly represent, for the accounting period in question—
all profits, gains and losses of the company, including those of a capital nature, which (disregarding interest and any charges or expenses) arise to the company from its loan relationships and related transactions; and
all interest under the company’s loan relationship and all charges and expenses incurred by the company under or for the purposes of its loan relationships and related transactions.
The reference in subsection (1) above to the profits, gains and losses arising to a company—
does not include a reference to any amounts required to be transferred to the company’s share premium account; but
does include a reference to any profits, gains or losses which, in accordance with normal accountancy practice, are carried to or sustained by any other reserve maintained by the company.
The reference in subsection (1)(b) above to charges and expenses incurred for the purposes of a company’s loan relationships and related transactions does not include a reference to any charges or expenses other than those incurred directly—
in bringing any of those relationships into existence;
in entering into or giving effect to any of those transactions;
in making payments under any of those relationships or in pursuance of any of those transactions; or
in taking steps for ensuring the receipt of payments under any of those relationships or in accordance with any of those transactions.
Where— those charges or expenses shall be treated for the purposes of this Chapter as charges or expenses in relation to which debits may be brought into account in accordance with subsection (1)(b) above to the same extent as if the relationship or transaction had been entered into.
any charges or expenses are incurred by a company for purposes connected—
with entering into a loan relationship or related transaction, or
with giving effect to any obligation that might arise under a loan relationship or related transaction,
at the time when the charges or expenses are incurred, the relationship or transaction is one into which the company may enter but has not entered, and
if that relationship or transaction had been entered into by that company, the charges or expenses would be charges or expenses incurred as mentioned in subsection (3) above,
In this section “related transaction”, in relation to a loan relationship, means any disposal or acquisition (in whole or in part) of rights or liabilities under that relationship.
The cases where there shall be taken for the purposes of this section to be a disposal and acquisition of rights or liabilities under a loan relationship shall include those where such rights or liabilities are transferred or extinguished by any sale, gift, exchange, surrender, redemption or release.
This section has effect subject to Schedule 9 to this Act (which contains provision disallowing certain debits and credits for the purposes of this Chapter and making assumptions about how an authorised accounting method is to be applied in certain cases).
Subject to the following provisions of this Chapter, the alternative accounting methods that are authorised for the purposes of this Chapter are—
an accruals basis of accounting; and
a mark to market basis of accounting under which any loan relationship to which that basis is applied is brought into account in each accounting period at a fair value.
An accounting method applied in any case shall be treated as authorised for the purposes of this Chapter only if—
it conforms (subject to paragraphs (b) and (c) below) to normal accountancy practice, as followed in cases where such practice allows the use of that method;
it contains proper provision for allocating payments under a loan relationship to accounting periods; and
where it is an accruals basis of accounting, it does not contain any provision (other than provision comprised in authorised arrangements for bad debt) that gives debits by reference to the valuation at different times of any asset representing a loan relationship.
In the case of an accruals basis of accounting, proper provision for allocating payments under a loan relationship to accounting periods is provision which—
allocates payments to the period to which they relate, without regard to the periods in which they are made or received or in which they become due and payable;
includes provision which, where payments relate to two or more periods, apportions them on a just and reasonable basis between the different periods;
assumes, subject to authorised arrangements for bad debt, that, so far as any company in the position of a creditor is concerned, every amount payable under the relationship will be paid in full as it becomes due;
secures the making of the adjustments required in the case of the relationship by authorised arrangements for bad debt; and
provides, subject to authorised arrangements for bad debt and for writing off government investments, that, where there is a release of any liability under the relationship, the appropriate amount in respect of the release is credited to the debtor in the accounting period in which the release takes place.
In the case of a mark to market basis of accounting, proper provision for allocating payments under a loan relationship to accounting periods is provision which allocates payments to the accounting period in which they become due and payable.
In this section—
the references to authorised arrangements for bad debt are references to accounting arrangements under which debits and credits are brought into account in conformity with the provisions of paragraph 5 of Schedule 9 to this Act; and
the reference to authorised arrangements for writing off government investments is a reference to accounting arrangements that give effect to paragraph 7 of that Schedule.
In this section “fair value”, in relation to any loan relationship of a company, means the amount which, at the time as at which the value falls to be determined, is the amount that the company would obtain from or, as the case may be, would have to pay to an independent person for—
the transfer of all the company’s rights under the relationship in respect of amounts which at that time are not yet due and payable; and
the release of all the company’s liabilities under the relationship in respect of amounts which at that time are not yet due and payable.
This section has effect, subject to the following provisions of this Chapter, for the determination of which of the alternative authorised accounting methods that are available by virtue of section 85 above is to be used as respects the loan relationships of a company.
Different methods may be used as respects different relationships or, as respects the same relationship, for different accounting periods or for different parts of the same accounting period.
If a basis of accounting which is or equates with an authorised accounting method is used as respects any loan relationship of a company in a company’s statutory accounts, then the method which is to be used for the purposes of this Chapter as respects that relationship for the accounting period, or part of a period, for which that basis is used in those accounts shall be—
where the basis used in those accounts is an authorised accounting method, that method; and
where it is not, the authorised accounting method with which it equates.
For any period or part of a period for which the authorised accounting method to be used as respects a loan relationship of a company is not determined under subsection (3) above, an authorised accruals basis of accounting shall be used for the purposes of this Chapter as respects that loan relationship.
For the purposes of this section (but subject to subsection (6) below)—
a basis of accounting equates with an authorised accruals basis of accounting if it purports to allocate payments under a loan relationship to accounting periods according to when they are taken to accrue; and
a basis of accounting equates with an authorised mark to market basis of accounting if (without equating with an authorised accruals basis of accounting) it purports in respect of a loan relationship—
to produce credits or debits computed by reference to the determination, as at different times in an accounting period, of a fair value; and
to produce credits or debits relating to payments under that relationship according to when they become due and payable.
An accounting method which purports to make any such allocation of payments under a loan relationship as is mentioned in subsection (5)(a) above shall be taken for the purposes of this section to equate with an authorised mark to market basis of accounting (rather than with an authorised accruals basis of accounting) if—
it purports to bring that relationship into account in each accounting period at a value which would be a fair value if the valuation were made on the basis that interest under the relationship were to be disregarded to the extent that it has already accrued; and
the credits and debits produced in the case of that relationship by that method (when it is properly applied) correspond, for all practical purposes, to the credits and debits produced in the case of that relationship, and for the same accounting period, by an authorised mark to market basis of accounting.
In this section “fair value” has the same meaning as in section 85 above.
In this section “statutory accounts”, in relation to a company, means—
any accounts relating to that company that are drawn up in accordance with any requirements of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 that apply in relation to that company;
any accounts relating to that company that are drawn up in accordance with any requirements of regulations under section 70 of the Friendly Societies Act 1992 that apply in relation to that company;
any accounts relating to that company which are accounts to which Part I of Schedule 21C to the Companies Act 1985 or Part I of Schedule 21D to that Act (companies with UK branches) applies;
in the case of a company which— any accounts relating to the company drawn up in accordance with requirements imposed in relation to that company under the law of its home State; and
is not subject to any such requirements as are mentioned in paragraphs (a) or (b) above, and
is a company in whose case there are no accounts for the period in question that fall within paragraph (c) above,
in the case of a company which— the accounts relating to the company that most closely correspond to the accounts which, in the case of a company formed and registered under the Companies Act 1985, are required under that Act.
is not subject to any such requirements as are mentioned in paragraphs (a), (b) or (d) above, and
is a company in whose case there are no accounts for the period in question that fall within paragraph (c) above,
For the purposes of subsection (8) above the home State of a company is the country or territory under whose law the company is incorporated.
This section applies in the case of a loan relationship of a company where for any accounting period there is a connection between the company and—
in the case of a debtor relationship of the company, a person standing in the position of a creditor as respects the debt in question; or
in the case of a creditor relationship of the company, a person standing in the position of a debtor as respects that debt.
The only accounting method authorised for the purposes of this Chapter for use by the company as respects the loan relationship shall be an authorised accruals basis of accounting.
For the purposes of this section there is a connection between a company and another person for an accounting period if (subject to subsection (4) and section 88 below)—
the other person is a company and there is a time in that period, or in the two years before the beginning of that period, when one of the companies has had control of the other;
the other person is a company and there is a time in that period, or in those two years, when both the companies have been under the control of the same person; or
there is a time in that accounting period, or in those two years, when the company was a close company and the other person was a participator in that company or the associate of a person who was such a participator at that time.
Two companies which have at any time been under the control of the same person shall not, by virtue of that fact, be taken for the purposes of this section to be companies between whom there is a connection if the person was the Crown, a Minister of the Crown, a government department, a Northern Ireland department, a foreign sovereign power or an international organisation.
The references in subsection (1) above to a person who stands in the position of a creditor or debtor as respects a loan relationship include references to a person who indirectly stands in that position by reference to a series of loan relationships.
Subsections (2) to (6) of section 416 of the Taxes Act 1988 (meaning of “control”) shall apply for the purposes of this section as they apply for the purposes of Part XI of that Act.
Subject to subsection (8) below, in this section “participator” and “associate” have the meanings given for the purposes of Part XI of the Taxes Act 1988 by section 417 of that Act.
A person shall not for the purposes of this section be regarded as a participator in relation to a company by reason only that he is a loan creditor of the company.
Subject to subsection (5) below, where a creditor relationship of a company is one to which that company is a party in any accounting period in exempt circumstances, any connection for that accounting period between the company and a person who stands in the position of a debtor as respects the debt shall be disregarded for the purposes of section 87 above.
A company having a creditor relationship in any accounting period shall, for that period, be taken for the purposes of this section to be a party to that relationship in exempt circumstances if—
the company, in the course of carrying on any activities forming an integral part of a trade carried on by that company in that period, disposes of or acquires assets representing creditor relationships;
that period is one for which the company uses an authorised mark to market basis of accounting as respects all the creditor relationships represented by assets acquired in the course of those activities;
the asset representing the creditor relationship in question was acquired in the course of those activities;
that asset is either—
listed on a recognised stock exchange at the end of that period; or
a security the redemption of which must occur within twelve months of its issue;
there is a time in that period when assets of the same kind as the asset representing the loan relationship in question are in the beneficial ownership of persons other than the company; and
there is not more than three months, in aggregate, in that accounting period during which the equivalent of 30 per cent. or more of the assets of that kind is in the beneficial ownership of connected persons.
An insurance company carrying on basic life assurance and general annuity business and having a creditor relationship in any accounting period shall, for that period, be taken for the purposes of this section to be a party to that relationship in exempt circumstances if—
assets of the company representing any of its creditor relationships are linked for that period to its basic life assurance and general annuity business;
that period is one for which the company uses an authorised mark to market basis of accounting as respects all the creditor relationships of the company represented by assets that are so linked;
the asset representing the creditor relationship in question is so linked;
that asset is either—
listed on a recognised stock exchange at the end of that period; or
a security the redemption of which must occur within twelve months of its issue;
there is a time in that period when assets of the same kind as the asset representing the creditor relationship in question are in the beneficial ownership of persons other than the company; and
there is not more than three months, in aggregate, in that accounting period during which the equivalent of 30 per cent. or more of the assets of that kind is in the beneficial ownership of connected persons.
For the purposes of subsections (2) and (3) above—
assets shall be taken to be of the same kind where they are treated as being of the same kind by the practice of any recognised stock exchange, or would be so treated if dealt with on such a stock exchange; and
a connected person has the beneficial ownership of an asset wherever there is, or (apart from this section) would be, a connection (within the meaning of section 87 above) between—
the person who has the beneficial ownership of the asset, and
a person who stands in the position of a debtor as respects the money debt by reference to which any loan relationship represented by that asset subsists.
Where for any accounting period— that subsection shall not apply for determining, for the purposes of so much of section 87 above as relates to the corresponding debtor relationship, whether there is a connection between the two companies.
subsection (1) above has effect in the case of a creditor relationship of a company, and
the person who stands in the position of a debtor as respects the debt in question is also a company,
Subsection (5) of section 87 above shall apply for the purposes of this section as it applies for the purposes of that section.
In this section “basic life assurance and general annuity business” and “insurance company” have the same meanings as in Chapter I of Part XII of the Taxes Act 1988, and section 432ZA of that Act (linked assets) shall apply for the purposes of this section as it applies for the purposes of that Chapter.
Where there is any inconsistency or other material difference between the way in which any authorised accounting method is applied as respects the same loan relationship in successive accounting periods, a balancing credit or balancing debit shall be brought into account in the second of those periods (“the second period”).
The amount of the balancing credit or debit shall be computed as respects the relationship in question by—
taking the amount given by subsection (3) below and the amount given by subsection (4) below; and
then aggregating those amounts (treating any debit as a negative amount) to produce a net credit or net debit.
The amount given by this subsection is whichever of the following is applicable—
a debit equal to the amount (if any) by which the first of the following amounts exceeds the second, that is to say—
the aggregate of the credits actually brought into account for all previous periods in which the accounting method was used; and
the aggregate of the credits that would have been brought into account if that method had been applied in those periods in the same way as it was applied in the second period;
a credit equal to the amount (if any) by which the second aggregate mentioned in paragraph (a) above exceeds the first; or
if both those aggregates are the same, nil.
The amount given by this subsection is whichever of the following is applicable—
a credit equal to the amount (if any) by which the first of the following amounts exceeds the second, that is to say—
the aggregate of the debits actually brought into account for all previous periods in which the accounting method was used; and
the aggregate of the debits that would have been brought into account if that method had been applied in those periods in the same way as it was applied in the second period;
a debit equal to the amount (if any) by which the second aggregate mentioned in paragraph (a) above exceeds the first; or
if both those aggregates are the same, nil.
In this section “previous period” means any accounting period before the second period.
This section applies where different authorised accounting methods are used for the purposes of this Chapter as respects the same loan relationship for different parts of the same accounting period or for successive accounting periods.
Where, in the case of any loan relationship, the use of any authorised accounting method is superseded in the course of any accounting period by the use of another—
the assumptions specified in subsection (4) below shall be made;
each method shall be applied on those assumptions as respects the part of the period for which it is used; and
the credits and debits given by the application of those methods on those assumptions shall be brought into account in the accounting period in which the change of method takes effect.
Where, in the case of any loan relationship, the use of any authorised accounting method is superseded as from the beginning of an accounting period by the use of another—
a net credit or debit shall be computed (treating any debit used in the computation as a negative amount) by— and
aggregating the credits and debits which, on the assumptions specified in subsection (4) below, would have been given in respect of that relationship for the successive accounting periods by the use for each period of the accounting method actually used for that period;
aggregating the credits and debits so given without the making of those assumptions; and
subtracting the second aggregate from the first;
the net credit or debit shall be brought into account for the purposes of this Chapter in the accounting period as from the beginning of which the change of method takes effect.
The assumptions mentioned in subsections (2) and (3) above are—
that the company ceased to be a party to the relationship immediately before the end of the period, or part of a period, for which the superseded method is used;
that the company again became a party to that relationship as from the beginning of the period or, as the case may be, part of a period for which the other authorised accounting method is used;
that the relationship to which the company is deemed to have become a party is separate and distinct from the one to which it is deemed to have ceased to be a party;
that the amount payable under the transaction comprised in each of the assumptions specified in paragraphs (a) and (b) above was equal to the fair value of the relationship; and
so far as relevant, that that amount became due at the time when the company is deemed to have ceased to be a party to the relationship or, as the case may be, to have again become a party to it.
Where— that amount shall be taken for those purposes to be equal to the amount resulting from the subtraction of the amount given by subsection (6)(a) below from the amount given by subsection (6)(b) below.
a mark to market basis of accounting is superseded by an accruals basis of accounting in the case of any loan relationship, and
the amount which would have accrued in respect of that relationship in the period or part of a period for which the accruals basis of accounting is used falls to be determined for the purposes of this section in accordance with the assumptions mentioned in subsection (4) above,
Those amounts are—
the amount which by virtue of the assumptions mentioned in subsection (4) above is given as an opening value for the period or part of a period; and
the amount equal to whatever, in the computation in accordance with an authorised accruals basis of accounting of the amount accruing in that period or part of a period, would have been taken to be the closing value applicable as at the end of that period or part of a period if such a basis of accounting had always been used as respects the relationship.
In this section “fair value” has the same meaning as in section 85 above.
This section applies where—
any company receives a payment of interest on which it bears income tax by deduction; and
in the case of that company, a credit relating to that interest has been brought into account for the purposes of this Chapter for an accounting period ending more than two years before the receipt of the payment.
On a claim made by the company to an officer of the Board, section 7(2) or, as the case may be, 11(3) of the Taxes Act 1988 (deducted income tax to be set against liability to corporation tax) shall have effect in relation to the income tax on the payment as if the interest had fallen to be taken into account for the purposes of corporation tax in the accounting period in which the payment of that interest is received.
In determining for the purposes of this section which accounting period is the accounting period for which a credit relating to interest paid subsequently was brought into account, every payment of interest to a company under a loan relationship of that company shall be assumed to be a payment in discharge of the earliest outstanding liability to that company in respect of interest payable under the relationship.
For the purposes of this section, the earliest outstanding liability to interest payable under a loan relationship of a company shall be identified, in relation to any payment of such interest, according to the authorised accounting method most recently used as respects that relationship, so that—
if that method is an authorised accruals basis of accounting, it shall be determined by reference to the time when the interest accrued; and
if that method is an authorised mark to market basis of accounting, it shall be determined by reference to the time when the interest became due and payable.
In subsection (4) above the reference, in relation to a payment of interest made to a company in any accounting period, to the authorised accounting method most recently used as respects that relationship is a reference to the authorised accounting method which, in the case of that company, has been used as respects that relationship for the accounting period which, when the payment is made, is the most recent for which amounts in respect of that relationship have been brought into account for the purposes of this Chapter.
A claim under this section shall not be made in respect of any payment of interest at any time after the later of the following, that is to say—
the time two years after the end of the accounting period in which the payment is received; and
the time six years after the end of the accounting period for which the credit in respect of the interest was brought into account for the purposes of this Chapter.
Where— the company shall not be entitled to make any claim under paragraph 5 of Schedule 16 to the Taxes Act 1988 (set off of income tax borne against income tax payable) in respect of that payment.
there is a payment of interest to a company under a loan relationship of that company, and
the company is prevented by virtue of subsection (6) above from making any claim under this section in respect of that payment,
This section applies to an asset if—
the asset represents a creditor relationship of a company;
the rights attached to the asset include provision by virtue of which the company is or may become entitled to acquire (whether by conversion or exchange or otherwise) any shares in a company;
the extent to which shares may be acquired under that provision is not determined using a cash value which is specified in that provision or which is or will be ascertainable by reference to the terms of that provision;
the asset is not a relevant discounted security within the meaning of Schedule 13 to this Act;
at the time when the asset came into existence there was a more than negligible likelihood that the right to acquire shares in a company would in due course be exercised to a significant extent; and
the asset is not one the disposal of which by the company would fall to be treated as a disposal in the course of activities forming an integral part of a trade carried on by the company.
The amounts falling for any accounting period to be brought into account for the purposes of this Chapter in respect of a creditor relationship represented by an asset to which this section applies shall be confined to amounts relating to interest.
Only an authorised accruals basis of accounting shall be used for ascertaining those amounts.
Amounts shall be brought into account in computing the profits of the company for the purposes of corporation tax as if the Taxation of Chargeable Gains Act 1992 had effect in relation to any asset to which this section applies as it has effect in relation to an asset that does not represent a loan relationship.
For the purposes of that Act the amount or value of the consideration for any disposal or acquisition of the asset shall be treated as adjusted so as to exclude so much of it as, on a just and reasonable apportionment, relates to any interest which—
falls to be brought into account under subsections (2) and (3) above as accruing to any company at any time; and
in consequence of, or of the terms of, the disposal or acquisition, is not paid or payable to the company to which it is treated for the purposes of this Chapter as accruing.
In subsection (5) above the references to a disposal, in relation to an asset, are references to anything which— and the references to the acquisition of an asset shall be construed accordingly.
is a disposal of that asset (within the meaning of the Taxation of Chargeable Gains Act 1992); or
would be such a disposal but for section 127 or 116(10) of that Act (reorganisations etc.);
This section applies in the case of any loan relationship of a company that is linked to the value of chargeable assets unless it is one the disposal of which by the company would fall to be treated as a disposal in the course of activities forming an integral part of a trade carried on by the company.
The amounts falling for any accounting period to be brought into account for the purposes of this Chapter in respect of the relationship shall be confined to amounts relating to interest.
Only an authorised accruals basis of accounting shall be used for ascertaining those amounts.
Amounts shall be brought into account in computing the profits of the company for the purposes of corporation tax as if the Taxation of Chargeable Gains Act 1992 had effect in relation to the asset representing the relationship as it has effect in relation to an asset that does not represent a loan relationship.
For the purposes of that Act the amount or value of the consideration for any disposal or acquisition of the asset shall be treated as adjusted so as to exclude so much of it as, on a just and reasonable apportionment, relates to any interest which—
falls to be brought into account under subsections (2) and (3) above as accruing to any company at any time; and
in consequence of, or of the terms of, the disposal or acquisition, is not paid or payable to the company to which it is treated for the purposes of this Chapter as accruing.
For the purposes of this section a loan relationship is linked to the value of chargeable assets if, in pursuance of any provision having effect for the purposes of that relationship, the amount that must be paid to discharge the money debt (whether on redemption of a security issued in relation to that debt or otherwise) is equal to the amount determined by applying a relevant percentage change in the value of chargeable assets to the amount falling for the purposes of this Chapter to be regarded as the amount of the original loan from which the money debt arises.
In subsection (6) above the reference to a relevant percentage change in the value of chargeable assets is a reference to the amount of the percentage change (if any) over the relevant period in the value of chargeable assets of any particular description or in any index of the value of any such assets.
In subsection (7) above “the relevant period” means—
the period between the time of the original loan and the discharge of the money debt; or
any other period in which almost all of that period is comprised and which differs from that period exclusively for purposes connected with giving effect to a valuation in relation to rights or liabilities under the loan relationship.
If— that other provision shall be disregarded in determining for the purposes of this section whether the relationship is linked to the value of chargeable assets.
there is a provision which, in the case of any loan relationship, falls within subsection (6) above,
that provision is made subject to any other provision applying to the determination of the amount payable to discharge the money debt,
that other provision is to the effect only that the amount so payable must not be less than a specified percentage of the amount falling for the purposes of this Chapter to be regarded as the amount of the original loan, and
the specified percentage is not more than 10 per cent.,
For the purposes of this section an asset is a chargeable asset, in relation to a loan relationship of a company, if any gain accruing on the disposal of the asset by the company on or after 1st April 1996 would, on the assumptions specified in subsection (11) below, be a chargeable gain for the purposes of the Taxation of Chargeable Gains Act 1992.
Those assumptions are—
where it is not otherwise the case, that the asset is an asset of the company;
that the asset is not one the disposal of which by the company would fall to be treated for the purposes of corporation tax as a disposal in the course of a trade carried on by the company; and
that chargeable gains that might accrue under section 116(10) of that Act (postponed charges) are to be disregarded.
In subsection (5) above references to a disposal, in relation to an asset, are references to anything which— and the references to the acquisition of an asset shall be construed accordingly.
is a disposal of that asset (within the meaning of the Taxation of Chargeable Gains Act 1992); or
would be such a disposal but for section 127 or 116(10) of that Act (reorganisations etc.);
For the purposes of this section neither— shall be taken to be an index of the value of chargeable assets.
the retail prices index, nor
any similar general index of prices published by the government of any territory or by the agent of any such government,
In the case of any loan relationship represented by an index-linked gilt-edged security, the adjustment for which this section provides shall be made in computing the credits and debits which fall, for any accounting period, to be brought into account for the purposes of this Chapter in respect of that relationship as non-trading credits or non-trading debits.
The adjustment shall be made wherever—
the authorised accounting method applied as respects the index-linked gilt-edged security gives credits or debits by reference to the value of the security at two different times, and
there is any change in the retail prices index between those times.
Subject to subsection (4) below, the adjustment is such an adjustment of the amount which would otherwise be taken for the purposes of that accounting method to be the value of the security at the earlier time (“the opening value”) as results in the amount in fact so taken being equal to the opening value increased or, as the case may be, reduced by the same percentage as the percentage increase or reduction in the retail prices index between the earlier and the later time.
The Treasury may, in relation to any description of index-linked gilt-edged securities, by order provide that—
there are to be no adjustments under this section; or
that an adjustment specified in the order (instead of the adjustment specified in subsection (3) above) is to be the adjustment for which this section provides.
An order under subsection (4) above—
shall not have effect in relation to any gilt-edged security issued before the making of the order; but
may make different provision for different descriptions of securities.
For the purposes of this section the percentage increase or reduction in the retail prices index between any two times shall be determined by reference to the difference between—
that index for the month in which the earlier time falls; and
that index for the month in which the later time falls.
In this section “index-linked gilt-edged securities” means any gilt-edged securities the amounts of the payments under which are determined wholly or partly by reference to the retail prices index.
This section has effect for the purposes of the application of an authorised accruals basis of accounting as respects a loan relationship represented by a gilt-edged security or a strip of a gilt-edged security.
Where a gilt-edged security is exchanged by any person for strips of that security—
the security shall be deemed to have been redeemed at the time of the exchange by the payment to that person of its market value; and
that person shall be deemed to have acquired each strip for the amount which bears the same proportion to that market value as is borne by the market value of the strip to the aggregate of the market values of all the strips received in exchange for the security.
Where strips of a gilt-edged security are consolidated into a single gilt-edged security by being exchanged by any person for that security—
each of the strips shall be deemed to have been redeemed at the time of the exchange by the payment to that person of the amount equal to its market value; and
that person shall be deemed to have acquired the security received in the exchange for the amount equal to the aggregate of the market values of the strips given in exchange for the security.
References in this section to the market value of a security given or received in exchange for another are references to its market value at the time of the exchange.
Without prejudice to the generality of any power conferred by section 202 below, the Treasury may by regulations make provision for the purposes of this section as to the manner of determining the market value at any time of any gilt-edged security (including any strip).
Regulations under subsection (5) above may—
make different provision for different cases; and
contain such incidental, supplemental, consequential and transitional provision as the Treasury may think fit.
In this section “strip” means anything which, within the meaning of section 47 of the Finance Act 1942, is a strip of a gilt-edged security.
This section applies as respects any loan relationship of a company if—
it is represented by a security of any of the following descriptions— and
3½% Funding Stock 1999-2004; or
5½% Treasury Stock 2008-2012;
it is one to which the company is a party otherwise than in the course of activities that form an integral part of a trade carried on by the company.
The amounts falling for any accounting period to be brought into account for the purposes of this Chapter in respect of a loan relationship to which this section applies shall be confined to amounts relating to interest.
Only an authorised accruals basis of accounting shall be used for ascertaining those amounts.
This section applies where—
any amount (“manufactured interest”) is payable by or on behalf of, or to, any company under any contract or arrangements relating to the transfer of an asset representing a loan relationship; and
that amount is, or (when paid) will fall to be treated as, representative of interest under that relationship (“the real interest”).
In relation to that company the manufactured interest shall be treated for the purposes of this Chapter—
as if it were interest under a loan relationship to which the company is a party; and
where that company is the company to which the manufactured interest is payable, as if that relationship were the one under which the real interest is payable.
Any question whether debits or credits falling to be brought into account in the case of any company by virtue of this section— shall be determined according to the extent (if any) to which the manufactured interest is paid for the purposes of a trade carried on by the company or is received in the course of activities forming an integral part of such a trade.
are to be brought into account under section 82(2) above, or
are to be treated as non-trading debits or non-trading credits,
Where section 737A(5) of the Taxes Act 1988 (deemed manufactured payments) has effect in relation to a transaction relating to an asset representing a loan relationship so as, for the purposes of section 737 of, or Schedule 23A to, that Act, to deem there to have been a payment representative of interest under that relationship, this section shall apply as it would have applied if such a representative payment had in fact been made.
This section does not apply where the manufactured interest is treated by virtue of paragraph 5(2)(c) or (4)(c) of Schedule 23A to the Taxes Act 1988 (manufactured interest passing through the market) as not being income of the person who receives it.
The provisions of this Chapter have effect subject to the provisions of Schedule 10 to this Act (which makes special provision in relation to certain collective investment schemes).
The preceding provisions of this Chapter have effect subject to Schedule 11 to this Act (which makes special provision in relation to certain insurance companies and in relation to corporate members of Lloyd's).
This Chapter shall have effect in accordance with subsection (2) below where—
interest on a money debt is payable to or by any company;
that debt is one as respects which it stands, or has stood, in the position of a creditor or debtor; and
that debt did not arise from a loan relationship.
It shall be assumed for the purposes of this Chapter—
that the interest is interest payable under a loan relationship to which the company is a party; but
that the only credits or debits to be brought into account for those purposes in respect of that relationship are those relating to the interest.
References in this section to interest payable on a money debt include references to any amount which, in pursuance of sections 770 to 772 of the Taxes Act 1988 (transactions at an undervalue or overvalue), as those sections have effect by virtue of section 773(4) of that Act, falls to be treated in pursuance of those sections as—
interest on a money debt; or
interest on an amount which is treated as a money debt.
Any question whether debits or credits falling to be brought into account in accordance with this section in relation to any company— shall be determined according to the extent (if any) to which the interest in question is paid for the purposes of a trade carried on by the company or is received in the course of activities forming an integral part of such a trade, or (in the case of deemed interest) would be deemed to be so paid or received.
are to be brought into account under section 82(2) above, or
are to be treated as non-trading debits or non-trading credits,
This section has effect subject to the provisions of Schedules 9 and 11 to this Act.
Chapter II of Part IV of the Finance Act 1994 (provisions relating to certain financial instruments) shall not apply to any profit or loss which, in accordance with that Chapter, accrues to a company for any accounting period on a qualifying contract by virtue of which the company is a party to any loan relationship if— is brought into account for that period for the purposes of this Chapter.
an amount representing that profit or loss, or
an amount representing the profit or loss accruing to that company on that contract,
After section 147 of that Act (qualifying contracts) there shall be inserted the following section—
After section 150 of that Act (qualifying contracts) there shall be inserted the section set out in Schedule 12 to this Act (which defines debt contracts and options by reference to contracts and options conferring rights and duties to participate in loan relationships).
In section 151 of that Act (provisions that may be included in contracts and options), for the words “or a currency contract or option,”, in each place where they occur, there shall be substituted “a currency contract or option or a debt contract or option”.
In section 152(1) of that Act (disregard of provisions for relatively small payments in contracts and options), after “150” there shall be inserted “or 150A”.
In section 153(1) of that Act (qualifying payments), for the word “and” at the end of paragraph (c) there shall be substituted—.
Schedule 13 to this Act (which, in connection with the provisions of this Chapter relating to corporation tax, makes provision for income tax purposes about discounted securities) shall have effect.
In this Chapter—
“money” shall be construed in accordance with section 81(6) above and subsection (5) below;
“money debt” shall be construed in accordance with section 81(2) above;
In subsection (1) of section 196 of the Taxation of Chargeable Gains Act 1992 (interpretation of sections 194 and 195), for “licence” there shall be substituted “UK licence”.
After subsection (1) of section 196 of that Act there shall be inserted the following subsection—;
will be such securities on the making of any order under paragraph 1 of Schedule 9 to that Act the making of which is anticipated in the prospectus under which they are issued;
“debtor relationship”, in relation to a company, means any loan relationship of that company in the case of which it stands in the position of a debtor as respects the debt in question;
For the purposes of this Chapter a company shall be taken to be a party to a creditor relationship for the purposes of a trade carried on by that company only if it is a party to that relationship in the course of activities forming an integral part of that trade.
For the purposes of this Chapter, and of so much of any other enactment as contains provision by reference to which amounts fall to be brought into account for the purposes of this Chapter, activities carried on by a company in the course of— shall be deemed not to constitute the whole or any part of a trade.
any mutual trading, or
any mutual insurance or other mutual business which is not life assurance business (within the meaning of Chapter I of Part XII of the Taxes Act 1988),
If, in any proceedings, any question arises whether a person is an international organisation for the purposes of any provision of this Chapter, a certificate issued by or under the authority of the Secretary of State stating any fact relevant to that question shall be conclusive evidence of that fact.
For the purposes of this Chapter the European currency unit (as for the time being defined in Council Regulation No. 3180/78/EEC or in any Community instrument replacing it) shall be taken to be a currency other than sterling.
Schedule 14 to this Act (which, for the purposes of both corporation tax and income tax, makes certain minor and consequential amendments in connection with the provisions of this Chapter) shall have effect.
Subject to Schedule 15 to this Act, this Chapter has effect—
for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996; and
so far as it makes provision for the purposes of income tax, in relation to the year 1996-97 and subsequent years of assessment.
Schedule 15 to this Act (which contains transitional provisions and savings in connection with the coming into force of this Chapter) shall have effect.
In subsection (1) of section 145 of the Taxes Act 1988 (living accommodation provided for employees), the words “and is not otherwise made the subject of any charge to him by way of income tax” shall be omitted.
After section 146 of that Act there shall be inserted the following section—
This section applies for the year 1996-97 and subsequent years of assessment.
For section 160(1B) of the Taxes Act 1988 (aggregation of loans) there shall be substituted the following subsections—
In paragraph 5 of Schedule 7 to that Act (alternative method of calculation)—
in sub-paragraph (1)(a), for the words from “for the purpose” to “appeal)” there shall be substituted “at a time allowed by sub-paragraph (2) below”; and
in sub-paragraph (1)(b), for “within the time allowed by sub-paragraph (2) below” there shall be substituted “at such a time”.
A notice containing a requirement or election for the purposes of sub-paragraph (1) above is allowed to be given at any time before the end of the period of 12 months beginning with the 31st January next following the relevant year.
This section has effect for the year 1996-97 and subsequent years of assessment and applies to loans whenever made.
After section 200 of the Taxes Act 1988 (expenses of Members of Parliament) there shall be inserted the following section—
This section has effect for the year 1996–97 and subsequent years of assessment.
In section 202(7) of the Taxes Act 1988 (which limits to £900 the deductions attracting relief), for “£900” there shall be substituted “£1,200”.
This section has effect for the year 1996-97 and subsequent years of assessment.
After section 206 of the Taxes Act 1988 there shall be inserted the following section—
Section 149A of the Taxation of Chargeable Gains Act 1992 (consideration for grant of option under approved share option schemes not to be deemed to be equal to market value of option) shall be amended as follows.
In subsection (1)(b) (restriction to approved share option schemes) for “as mentioned in section 185(1) of the Taxes Act (approved share option schemes)” there shall be substituted “by an individual by reason of his office or employment as a director or employee of that or any other body corporate”.
In subsection (2) (grantor to be treated as if the amount or value of the consideration was its actual amount or value) for “The grantor of the option” there shall be substituted “Both the grantor of the option and the person to whom the option is granted”.
Subsection (4) (section not to affect treatment under that Act of person to whom option granted) shall cease to have effect.
For the side-note to that section there shall be substituted “Share option schemes.”
This section has effect in relation to any right to acquire shares in a body corporate obtained on or after 28th November 1995 by an individual by reason of his office or employment as a director or employee of a body corporate.
After section 237 of the Taxation of Chargeable Gains Act 1992 there shall be inserted—
Section 238(4) of that Act (which provides that the release of an option under an approved share option scheme in exchange for another option, in connection with a company take-over, is not to involve a disposal, and which is superseded by subsection (1) above) shall cease to have effect.
This section has effect in relation to transactions effected on or after 28th November 1995.
In paragraph 21 of Schedule 9 to the Taxes Act 1988 (provisions which an approved savings-related share option scheme may make with respect to the exercise of rights under the scheme) in sub-paragraph (1), the word “and” immediately preceding paragraph (e) shall be omitted and after that paragraph there shall be inserted and
Where a scheme approved before the date of the passing of the Finance Act 1996 is altered before 5th May 1998 so as to include such a provision as is specified in sub-paragraph (1)(f) above, the scheme may apply the provision to rights obtained under the scheme before the alteration takes effect, whether the bonus date in relation to the rights occurred before or after the passing of that Act; and where the provision is applied to such rights by virtue of this sub-paragraph, its application to such rights shall not itself be regarded as the acquisition of a right for the purposes of this Schedule. This sub-paragraph has effect subject to paragraph 4 above.
In paragraph 26(3) of that Schedule (only directors or employees of grantor or participating company to be eligible to participate, except as provided by paragraph 19 or pursuant to such a provision as is referred to in paragraph 21(1)(e)) after “21(1)(e)” there shall be inserted “or (f)”.
Part IV of Schedule 9 to the Taxes Act 1988 (requirements applicable to approved share option schemes which are not savings-related) shall be amended in accordance with subsections (2) and (3) below.
In paragraph 28 (scheme must impose limit on aggregate market value of shares which may be acquired in pursuance of rights obtained under the scheme or certain related schemes)—
in sub-paragraph (1) (aggregate market value of shares not to exceed the appropriate limit) for “the appropriate limit” there shall be substituted “£30,000”; and
sub-paragraphs (2) and (4) (meaning of the appropriate limit and, for the purposes of that definition, the relevant emoluments) shall cease to have effect.
The price at which scheme shares may be acquired by the exercise of a right obtained under the scheme—
Section 185 of the Taxes Act 1988 (approved share option schemes) shall be amended in accordance with subsections (5) to (7) below.
In subsection (2), for “Subject to subsections (6) to (6B) below” there shall be substituted “Subject to subsection (6) below”.
For subsections (6) to (6B) there shall be substituted—
In subsections (7) and (8) for “(6A)” there shall be substituted “(6)”.
In section 120 of the Taxation of Chargeable Gains Act 1992 (increase in expenditure by reference to tax charged in relation to shares etc) in subsection (6) (which defines the applicable provision) for paragraph (b) (which refers to subsection (6A) of section 185 of the Taxes Act 1988) there shall be substituted—
Schedule 16 to this Act, which makes provision with respect to share option schemes approved before the day on which this Act is passed, shall have effect.
Subsections (3) to (7) above have effect in relation to rights obtained on or after the day on which this Act is passed.
If, during the period— any rights have been obtained by a person under an approved share option scheme in circumstances falling within subsection (2) below, the rights shall be treated for the purposes of sections 185 to 187 of, and Schedule 9 to, the Taxes Act 1988 as being rights obtained otherwise than in accordance with the provisions of an approved share option scheme.
beginning with 17th July 1995, and
ending with the day preceding the passing of this Act,
The circumstances mentioned in subsection (1) above are circumstances such that, on the assumptions in subsection (3) below, there would, by virtue of paragraph 28 or 29 of Schedule 9 to the Taxes Act 1988 (limit on what may be obtained and requirements with respect to price), have been, with respect to the operation of the scheme, a contravention of any of the relevant requirements or of the scheme itself.
The assumptions mentioned in subsection (2) above are—
that the amendments made by subsection (2) of section 114 above had effect at all times on and after 17th July 1995;
that the amendments made by subsections (3) to (7) of that section had effect in relation to rights obtained at any time on or after that date; and
that the provisions of paragraphs 1(1) and 2 to 5 of Schedule 16 to this Act had effect at all times on and after 17th July 1995, but with the substitution for references to the day on which this Act is passed of references to that date.
For the purposes of this section, rights obtained by a person on or after 17th July 1995 shall be treated as having been obtained by him before that date if—
the scheme in question is one approved before that date;
an offer of the rights or an invitation to apply for them was made in writing to that person before that date; and
he obtained the rights within the period of thirty days beginning with the day on which the offer or invitation was made.
In this section—
“approved share option scheme” means an approved share option scheme, within the meaning of section 185 of the Taxes Act 1988, other than a savings-related share option scheme;
In section 187(2) of the Taxes Act 1988 (interpretation of sections 185 and 186 of, and Schedules 9 and 10 to, that Act) in the definition of “release date” (the fifth anniversary of the date on which shares were appropriated to a participant in a profit sharing scheme) for “fifth” there shall be substituted “third”.
The amendment made by subsection (1) above shall have effect in relation to shares of a participant in a profit sharing scheme if the third anniversary of the appropriation of the shares to the participant occurs on or after the day on which this Act is passed.
If the third anniversary of the appropriation of any shares to a participant in a profit sharing scheme has occurred, but the fifth anniversary of their appropriation to him has not occurred, before the passing of this Act, then, in the application of sections 186 and 187 of, and Schedules 9 and 10 to, the Taxes Act 1988 in relation to those shares, the release date shall be the day on which this Act is passed.
In Schedule 10 to the Taxes Act 1988 (further provisions relating to profit sharing schemes) for paragraph 3 (the appropriate percentage) there shall be substituted—
In section 187(8) of that Act (determination of certain values and percentages where shares are appropriated to a participant at different times) paragraph (b) (which relates to the appropriate percentage), and the word “and” immediately preceding it, shall cease to have effect.
Subsections (1) and (2) above have effect in relation to the occurrence, on or after the day on which this Act is passed, of events by reason of whose occurrence any provision of section 186 or 187 of, or Schedule 9 or 10 to, the Taxes Act 1988 charges an individual to income tax under Schedule E.
In section 186(12) of the Taxes Act 1988 (determination of the appropriate allowance for the purposes of the charge to tax on capital receipts by a participant in an approved profit sharing scheme)—
for “£100” there shall be substituted “£60”; and
for “five years” there shall be substituted “three years”.
Subsection (1) above has effect for the year 1997-98 and subsequent years of assessment.
In Schedule 5 to the Finance Act 1989 (employee share ownership trusts) in paragraph 4(5)(a) (for a trust to be a qualifying ESOT, its beneficiaries must have been employees or directors of the company for at least one year) the words “not less than one year and” shall cease to have effect.
This section applies to trusts established on or after the day on which this Act is passed.
The trust deed may provide that a person is a beneficiary at a given time if at that time he is eligible to participate in a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988— Where a trust deed contains a rule conforming with sub-paragraph (2A) above it must provide that the only powers and duties which the trustees may exercise in relation to persons who are beneficiaries by virtue only of that rule are those which may be exercised in accordance with the provisions of a scheme such as is mentioned in that sub-paragraph.
In consequence of the amendment made by subsection (1) above, section 69 of, and Schedule 5 to, the Finance Act 1989 (which respectively make provision about chargeable events in relation to the trustees of qualifying employee share ownership trusts and the requirements to be satisfied by such trusts) shall be amended in accordance with the following provisions of this section.
In subsection (4) of that section (meaning of “qualifying terms” for the purposes of the provision that the transfer of securities to beneficiaries is a chargeable event if it is not on qualifying terms)—
in paragraph (a) (securities which are transferred at the same time must be transferred on similar terms) after “time” there shall be inserted “other than those transferred on a transfer such as is mentioned in subsection (4ZA) below”;
in paragraph (b) (securities must have been offered to all the persons who are beneficiaries), after “trust deed” there shall be inserted “by virtue of a rule which conforms with paragraph 4(2), (3) or (4) of Schedule 5 to this Act”; and
in paragraph (c) (securities must be transferred to all such beneficiaries who have accepted the offer) for “beneficiaries” there shall be substituted “persons”.
After subsection (4) of that section there shall be inserted—
In sub-paragraph (4) of paragraph 4 of that Schedule (trust deed may provide for charity to be beneficiary if there are no beneficiaries falling within a rule conforming with sub-paragraph (2) or (3)) after “sub-paragraph (2)” there shall be inserted “, (2A)”.
In sub-paragraph (7) of that paragraph (trust deed must not provide for a person to be a beneficiary unless he falls within a rule conforming with sub-paragraph (2), (3) or (4)) after “sub-paragraph (2)” there shall be inserted “, (2A)”.
In sub-paragraph (8) of that paragraph (trust deed must provide that person with material interest in founding company cannot be a beneficiary) after “at a particular time (the relevant time)” there shall be inserted “by virtue of a rule which conforms with sub-paragraph (2), (3) or (4) above”.
In paragraph 5(2) of that Schedule (trust deed must be so expressed that it is apparent that the general functions of the trustees are as mentioned in paragraphs (a) to (e)) after paragraph (c) there shall be inserted—.
In paragraph 9 of that Schedule (trust deed must provide that transfers of securities to beneficiaries must be on qualifying terms and within the qualifying period) in sub-paragraph (2) (meaning of qualifying terms)—
in paragraph (a) (securities which are transferred at the same time must be transferred on similar terms) after “time” there shall be inserted “other than those transferred on a transfer such as is mentioned in sub-paragraph (2ZA) below”;
in paragraph (b) (securities must have been offered to all the persons who are beneficiaries) after “trust deed” there shall be inserted “by virtue of a rule which conforms with paragraph 4(2), (3) or (4) above”; and
in paragraph (c) (securities must be transferred to all such beneficiaries who have accepted the offer) for “beneficiaries” there shall be substituted “persons”.
After sub-paragraph (2) of that paragraph there shall be inserted—
In paragraph 10 of that Schedule (trust deed must not contain features not essential or reasonably incidental to purposes mentioned in that paragraph)—
after “acquiring sums and securities,” there shall be inserted “granting rights to acquire shares to persons who are eligible to participate in savings-related share option schemes approved under Schedule 9 to the Taxes Act 1988, transferring shares to such persons,”; and
for “Schedule 9 to the Taxes Act 1988” there shall be substituted “that Schedule”.
This section has effect in relation to trusts established on or after the day on which this Act is passed.
In subsection (1) of section 8 of the Taxes Management Act 1970 (personal return), and in subsection (1) of section 8A of that Act (trustee’s return), after the words “year of assessment,” there shall be inserted the words “and the amount payable by him by way of income tax for that year,”.
In subsection (1A) of each of those sections, the words from “and the amounts referred to” to the end shall cease to have effect.
After that subsection of each of those sections there shall be inserted the following subsection—
For subsection (1) of section 9 of that Act (returns to include self-assessment) there shall be substituted the following subsection—
In subsection (1)(b) of section 11AA of that Act (return of profits to include self-assessment), for the words “, allowance or repayment of tax” there shall be substituted the words “or allowance”.
In subsection (1)(a) of section 12AA of that Act (partnership return), after the words “so chargeable” there shall be inserted the words “and the amount payable by way of income tax by each such partner”.
For subsection (1A) of that section there shall be substituted the following subsection—
This section and sections 122, 123, 125 to 127 and 141 below—
so far as they relate to income tax and capital gains tax, have effect as respects the year 1996-97 and subsequent years of assessment, and
so far as they relate to corporation tax, have effect as respects accounting periods ending on or after the appointed day for the purposes of Chapter III of Part IV of the Finance Act 1994.
At the end of subsection (1) of section 9 of the Taxes Management Act 1970 (as substituted by section 121(4) above) there shall be inserted the words “but nothing in this subsection shall enable a self-assessment to show as repayable any income tax treated as deducted or paid by virtue of section 233(1), 246D(1), 249(4), 421(1), 547(5) or 599A(5) of the principal Act.”
At the end of subsection (1) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the words “but nothing in this subsection shall require the repayment of any income tax treated as deducted or paid by virtue of section 233(1), 246D(1), 249(4), 421(1), 547(5) or 599A(5) of the principal Act.”
In subsection (1) of section 233 of the Taxes Act 1988 (taxation of certain recipients of distributions), for paragraphs (a) and (b) there shall be substituted the following paragraphs—.
In paragraph (a) of subsection (1A) of that section—
for sub-paragraph (i) there shall be substituted the following sub-paragraph—; and
for the words “that assessment” there shall be substituted the words “that subsection”.
In the following enactments, namely— for the words from “no assessment” to “on it” there shall be substituted the words “the individual shall be treated as having paid income tax at the lower rate on that income”.
subsection (2)(a) of section 246D of that Act (individuals etc.); and
subsection (4)(a) of section 249 of that Act (stock dividends treated as income),
In subsection (1)(b) of section 421 of that Act (taxation of borrower when loan released), for the words “no assessment shall be made on him in respect of” there shall be substituted the words “he shall not be liable to pay”.
The following shall cease to have effect, namely—
in subsection (5)(a) of section 547 of that Act (method of charging to tax), the words from “no assessment” to “but”;
in subsection (6) of section 599A of that Act (charge to tax: payments out of surplus funds), the words from “subject” to “and”; and
subsection (7) of that section.
In subsection (2) of section 12AA of the Taxes Management Act 1970 (partnership return) after the words “with the notice” there shall be inserted the words “or a successor of his”.
In subsection (3) of that section after the words “the partner” there shall be inserted the words “or a successor of his”.
In subsection (7)(a) of that section, the words “any part of” shall cease to have effect.
At the end of that section there shall be inserted the following subsections—
In subsection (1) of section 12AB of that Act (partnership return to include partnership statement)—
in paragraph (a), for the words “each period of account ending within the period in respect of which the return is made” there shall be substituted the words “the period in respect of which the return is made and each period of account ending within that period”;
in sub-paragraph (i) of that paragraph, for the words “that period” there shall be substituted the words “the period in question”;
after that sub-paragraph there shall be inserted the following sub-paragraph—; and
in paragraph (b), after the words “such period” there shall be inserted the words “as is mentioned in paragraph (a) above” and after the word “loss,” there shall be inserted the word “consideration,”.
In subsection (2) of that section—
in paragraph (a) after the words “to that person” there shall be inserted the words “or a successor”; and
in paragraph (b) for the words from “partnership statement” to “he” there shall be substituted the words “or a predecessor’s partnership statement as to give effect to any amendments to the return in which it is included which he or a predecessor”.
In section 12AC of that Act (power to enquire into partnership return)—
in subsection (1)(b), after the word “person” there shall be inserted the words “or a successor of that person”; and
subsection (6) (which is superseded by subsection (4) above) shall cease to have effect.
In subsection (1)(b) of section 93A of that Act (failure to make partnership return), after the word “he” there shall be inserted the words “or a successor of his”.
In subsections (3) and (4) of that section, after the words “the representative partner” there shall be inserted the words “or a successor of his”.
In subsection (6) of that section—
after the words “the representative partner” there shall be inserted the words “or a successor of his”; and
after the words “that partner”, in both places where they occur, there shall be inserted the words “or successor”.
In subsection (7) of that section, for the words “the representative partner had a reasonable excuse for not delivering the return” there shall be substituted the words “the person for the time being required to deliver the return (whether the representative partner or a successor of his) had a reasonable excuse for not delivering it”.
In subsection (1)(a)(ii) of section 95A of that Act (incorrect partnership return or accounts), for the words “such a return” there shall be substituted the words “a return of such a kind”.
In subsection (3) of that section—
after the words “the representative partner” there shall be inserted the words “or a successor of his”; and
after the words “that partner”, in both places where they occur, there shall be inserted the words “or successor”.
“successor”, in relation to a person who is required to make and deliver, or has made and delivered, a return under section 12AA of this Act, and “predecessor” and “successor”, in relation to the successor of such a person, shall be construed in accordance with section 12AA(11) of this Act;
The Taxes Management Act 1970, as it has effect— shall be amended in accordance with the following provisions of this section.
for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment, and
for the purposes of corporation tax, as respects 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 (self-assessment management provisions),
In section 12B (records to be kept for purposes of returns) in subsection (4) (which permits the duty to preserve records to be discharged by the preservation of the information contained in them, and provides for the admissibility in evidence of copy documents) at the beginning there shall be inserted the words “Except in the case of records falling within subsection (4A) below,”.
After that subsection there shall be inserted—
In subsection (5) of that section (penalty for failure to comply with section 12B(1) or (2A)) for “Subject to subsection (5A)” there shall be substituted “Subject to subsections (5A) and (5B)”.
After subsection (5A) of that section there shall be inserted—
In Schedule 1A (claims etc not included in returns) in paragraph 2A (keeping and preserving of records) in sub-paragraph (3) (which makes corresponding provision to section 12B(4)) at the beginning there shall be inserted “Except in the case of records falling within section 12B(4A) of this Act,”.
In sub-paragraph (4) of that paragraph (penalty for failure to comply with paragraph 2A(1)) at the beginning there shall be inserted “Subject to sub-paragraph (5) below,”.
Sub-paragraph (4) above does not apply where—
The amendments made by this section shall not have effect in relation to—
any time before this Act is passed, or
any records which a person fails to preserve before this Act is passed.
For subsection (1) of section 28C of the Taxes Management Act 1970 (determination of tax where no return delivered) there shall be substituted the following subsections—
In subsection (3) of that section the words “or 11AA” shall cease to have effect.
In subsection (6) of that section for the words “, section 8A(1A) or, as the case may be, section 11(4)” there shall be substituted the words “or, as the case may be, section 8A(1A)”.
After subsection (5) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the following subsection—
After subsection (9) of section 59A of the Taxes Management Act 1970 (payments on account of income tax) there shall be inserted the following subsection—
After subsection (7) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the following subsection—
After subsection (4) of section 59B of the Taxes Management Act 1970 (payment of income tax and capital gains tax) there shall be inserted the following subsection—
In section 42 of the Taxes Management Act 1970 (procedure for making claims etc.)—
subsections (3A) and (3B) (which are superseded by subsection (2) below) shall cease to have effect;
in subsection (7)(a), the words “534, 535, 537A, 538” shall cease to have effect; and
after subsection (11) there shall be inserted the following subsection—
After Schedule 1A to that Act there shall be inserted, as Schedule 1B, the provisions set out in Schedule 17 to this Act (claims for reliefs involving two or more years).
For subsection (9) of section 96 of the Taxes Act 1988 (relief for fluctuating profits of farming etc.) there shall be substituted the following subsection—
In section 108 of that Act (election for carry-back)—
for the words “the inspector within two years after” there shall be substituted the words “an officer of the Board within one year from the 31st January next following”; and
the words from “and, in any such case” to the end shall cease to have effect.
For subsection (5) of section 534 of that Act (relief for copyright payments) there shall be substituted the following subsections—
After subsection (6) of that section there shall be inserted the following subsection—
In section 535 of that Act (relief where copyright sold after ten years or more), the following shall cease to have effect, namely—
in subsection (4), the words “Subject to subsection (5) below”;
subsections (5) and (7); and
in subsection (6), the words from “unless the author” to the end.
After subsection (8) of that section there shall be inserted the following subsection—
For subsection (5) of section 537A of that Act (relief for payments in respect of designs) there shall be substituted the following subsections—
After subsection (3) of section 538 of that Act (relief for painters, sculptors and other artists) there shall be inserted the following subsection—
This section (except subsections (1)(b) and (6) above) and Schedule 17 to this Act have effect as respects claims made (or deemed to be made) in relation to the year 1996-97 or later years of assessment.
Subsection (1)(b) above has effect as respects claims made in relation to the year 1997-98 or later years of assessment.
Nothing in section 42 of the Taxes Management Act 1970 (procedure for making claims etc.), or Schedule 1A to that Act (claims etc. not included in returns), shall apply in relation to—
any claim under subsection (6)(b) of section 54 (medical insurance relief) of the Finance Act 1989 (“the 1989 Act”); or
any claim under subsection (5)(b) of section 32 (vocational training relief) of the Finance Act 1991 (“the 1991 Act”).
In section 54(6)(b) of the 1989 Act and section 32(5)(b) of the 1991 Act, after the words “on making a claim” there shall be inserted the words “in accordance with regulations”.
In section 57(1) of the 1989 Act (medical insurance relief: supplementary), after paragraph (a) there shall be inserted the following paragraph—.
In section 33(1) of the 1991 Act (vocational training relief: supplementary), after paragraph (a) there shall be inserted the following paragraph—.
Subsection (1)(a) above shall not apply in relation to claims made before the coming into force of regulations made by virtue of section 57(1)(aa) of the 1989 Act.
Subsection (1)(b) above shall not apply in relation to claims made before the coming into force of regulations made by virtue of section 33(1)(aa) of the 1991 Act.
Section 42 of, and Schedule 1A to, the Taxes Management Act 1970, as they have effect— shall be amended in accordance with the following provisions of this section.
for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment, and
for the purposes of corporation tax, as respects 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 (self-assessment management provisions),
In subsection (7) of section 42 (which contains a list of provisions, claims under which must be made in accordance with subsection (6)) the following words shall cease to have effect, that is to say—
in paragraph (a), “62A,” and “401,”; and
in paragraph (c), “30,”, “33,”, “48, 49,” and “124A,”.
In subsection (10) of that section (section 42 to apply in relation to elections and notices as it applies in relation to claims) the words “and notices” shall cease to have effect.
In subsection (11) of that section (Schedule 1A to apply as respects any claim, election or notice made otherwise than in a return under section 8 etc) for the words “, election or notice” there shall be substituted “or election”.
In paragraph 1 of Schedule 1A (claims etc. not included in returns), in the definition of “claim”, for the words “means a claim, election or notice” there shall be substituted “means a claim or election”.
Section 110 of the Finance Act 1995 (interest on overdue tax) shall be deemed to have been enacted with the insertion after subsection (3) of the following subsection—
In subsection (3) of section 86 of the Taxes Management Act 1970 (which was substituted by the said section 110), for the words “section 93” there shall be substituted the words “section 92”.
In Schedule 19 to the Finance Act 1994, paragraph 23 (which is superseded by the said section 110) shall cease to have effect.
Schedule 18 to this Act (which amends enactments relating to overdue tax or excessive payments by the Board) shall have effect.
Schedule 19 to this Act (which, for purposes connected with self-assessment, further amends provisions relating to claims and enquiries) shall have effect.
Schedule 20 to this Act (which in connection with self-assessment modifies enactments by virtue of which a decision or other action affecting an assessment may be or is required to be taken by the Board, or one of their officers, before the making of the assessment) shall have effect.
Subject to subsection (3) below, the amendments made by that Schedule shall have effect—
for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment; and
for the purposes of corporation tax, as respects 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 (self-assessment management provisions).
Paragraphs 22 and 23 of that Schedule shall have effect in relation to shares issued on or after 6th April 1996.
Schedule 21 to this Act (which in connection with self-assessment modifies enactments which impose time limits on the making of claims, elections, adjustments and assessments and the giving of notices, and enactments which provide for the giving of notice to the inspector) shall have effect.
Subject to subsections (3) to (5) below, the amendments made by that Schedule shall have effect—
for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment; and
for the purposes of corporation tax, as respects 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 (self-assessment management provisions).
The amendments made to the Capital Allowances Act 1990 and the Finance Act 1994 by that Schedule, in their application to trades, professions or vocations set up and commenced before 6th April 1994, shall (so far as relating to income tax) have effect as respects the year 1997-98 and subsequent years of assessment.
The Capital Allowances Act 1990, as it has effect for the year 1996-97 in relation to trades, professions or vocations set up and commenced before 6th April 1994, shall (so far as relating to income tax) have effect as respects that year with the following modifications, that is to say, as if—
in sections 25(3)(c), 30(1), 31(3) and 33(1) and (4), for “two years after the end of” there were substituted “the first anniversary of the 31st January next following”;
in section 37(2)(c), for “more than two years after the end of the chargeable period or its basis period” there were substituted “later than the first anniversary of the 31st January next following the year of assessment in which ends the basis period”;
in section 53(2), for “before the expiry of the period of two years beginning at the end of” there were substituted “on or before the first anniversary of the 31st January next following”;
in section 68(5), for “two years after the end of that period” there were substituted “the first anniversary of the 31st January next following the year of assessment in which the relevant period ends”;
in section 68(9A)(b), for “two years after the end of” there were substituted “the first anniversary of the 31st January next following the year of assessment in which ends”;
in section 129(2), for “not more than two years after the end of” there were substituted “on or before the first anniversary of the 31st January next following”;
in section 141(3), for “the inspector not later than two years after the end of” there were substituted “an officer of the Board on or before the first anniversary of the 31st January next following”.
Section 118 of the Finance Act 1994, as it has effect for the year 1996-97 in relation to trades, professions or vocations set up and commenced before 6th April 1994, shall (so far as relating to income tax) have effect as respects that year as if, in subsection (3), for “two years after the end of” there were substituted “the first anniversary of the 31st January next following”.
Schedule 22 to this Act (which makes provision, in connection with self-assessment, about appeals) shall have effect.
Schedule 23 to this Act shall have effect.
The amendments made by that Schedule shall have effect as respects return periods ending on or after the appointed day for the purposes of Chapter III of Part IV of the Finance Act 1994.
In subsection (2) above “return period” means—
so far as relating to Schedule 13 to the Taxes Act 1988, a period for which a return is required to be made under paragraph 1 of that Schedule; and
so far as relating to Schedule 16 to that Act, a period for which a return is required to be made under paragraph 2 of that Schedule.
Schedule 24 to this Act (which makes provision, in connection with self-assessment, in relation to accounting periods) shall have effect.
Schedule 25 to this Act (which makes provision, in connection with self-assessment, about surrenders of advance corporation tax) shall have effect.
In section 101 of the Taxation of Chargeable Gains Act 1992 (transfer of company’s assets to investment trust) after subsection (1) there shall be inserted—
This section shall have effect as respects 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 (self-assessment management provisions).
In subsection (4) of section 152 of the Taxation of Chargeable Gains Act 1992 (roll-over relief)—
after the word “making” there shall be inserted the words “or amending”; and
after the word “assessments”, in the second place where it occurs, there shall be inserted the words “or amendments”.
After section 153 of that Act there shall be inserted the following section—
In section 175 of that Act (replacement of business assets by members of a group)—
in subsections (2A) and (2B), after the words “Section 152” there shall be inserted the words “or 153”; and
in subsection (2C), for the words “Section 152 shall not” there shall be substituted the words “Neither section 152 nor section 153 shall”.
In section 246 of that Act (time of disposal or acquisition), the words from “or, if earlier” to the end shall cease to have effect.
In subsection (5)(b) of section 247 of that Act (roll-over relief on compulsory acquisition), for the words “subsection (3)” there shall be substituted the words “subsections (3) and (4)”.
After that section there shall be inserted the following section—
Paragraph 3 of Schedule 8 to the Taxation of Chargeable Gains Act 1992 (premiums for leases) shall be amended as follows.
In sub-paragraph (2), for the words “for the period” to the end there shall be substituted the words , being a premium which—
In sub-paragraph (3), for the words “for the period” to the end there shall be substituted the words , being a premium which—
Where under sub-paragraph (2) or (3) above a premium is deemed to have been received by the landlord, that shall not be the occasion of any recomputation of the gain accruing on the receipt of any other premium, and the premium shall be regarded— If under sub-paragraph (2) or (3) above a premium is deemed to have been received by the landlord, otherwise than as consideration for the surrender of the lease, and the landlord is a tenant under a lease the duration of which does not exceed 50 years, this Schedule shall apply—
This section has effect as respects sums payable on or after 6th April 1996.
After section 580 of the Taxes Act 1988 there shall be inserted the following sections—
This section has effect for the year 1996-97 and subsequent years of assessment in relation to—
any payment which under the policy in question falls to be paid at any time on or after 6th April 1996; and
any payment not falling within paragraph (a) above in relation to which the conditions mentioned in subsection (3)(a) and (b) below are satisfied.
This section shall also be deemed to have had effect for earlier years of assessment in relation to any payment in relation to which the following conditions are satisfied, that is to say—
the payment was made under a policy in relation to which the requirements of subsection (4) below were fulfilled; and
the policy in question provided for the right to annual payments under the policy to cease when all the liabilities in question were discharged.
The requirements of this subsection are fulfilled in relation to any policy if—
the only or main purpose of the insurance under the policy was to secure that the insured would be able to meet (in whole or in part) liabilities that would or might arise from any transaction;
the policy expressly identified the transaction or, as the case may be, all the transactions (whether actual or proposed) by reference to which the insurance was taken out; and
none of the transactions which would or might give rise to the liabilities mentioned in paragraph (a) above could be one entered into after any of the circumstances insured against arose.
In subsection (4) above “transaction” includes any arrangements for the provision of credit or for the supply of services to residential premises.
Section 32 of the Finance Act 1991 (vocational training relief) shall be amended in accordance with the following provisions of this section.
In subsection (1) (application of section) for paragraph (ca) (individual has attained school leaving age etc at time of paying for the course) there shall be substituted—.
For subsection (10) (meaning of “qualifying course of vocational training”) there shall be substituted—
This section applies to payments made on or after 6th May 1996.
In section 278(2)(a) of the Taxes Act 1988 (exclusion of non-residents from entitlement to personal reliefs not to apply to Commonwealth citizens or citizens of the Republic of Ireland), for “a citizen of the Republic of Ireland” there shall be substituted “an EEA national”.
After subsection (8) of that section (claims to be made to the Board) there shall be added the following subsection—
This section has effect for the year 1996-97 and subsequent years of assessment.
Section 505(1) of the Taxes Act 1988 (exemptions for charities) shall be amended as follows.
For paragraph (a) (rents etc.) there shall be substituted the following paragraph—.
For sub-paragraph (ii) of paragraph (c) (yearly interest and annual payments) there shall be substituted the following sub-paragraphs—.
In paragraph (e) (trading profits), after “by a charity” there shall be inserted “(whether in the United Kingdom or elsewhere)”.
This section has effect—
for the purposes of income tax, for the year 1996-97 and subsequent years of assessment; and
for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996.
In section 617 of the Taxes Act 1988 (social security benefits and contributions), subsection (5) (relief for Class 4 contributions) shall cease to have effect.
In consequence of the provision made by subsection (1) above, in paragraph 3(2) of Schedule 2 to— the words “(e) section 617(5) (relief for Class 4 contributions);” shall be omitted.
the Social Security Contributions and Benefits Act 1992, and
the Social Security Contributions and Benefits (Northern Ireland) Act 1992,
This section shall have effect in relation to the year 1996-97 and subsequent years of assessment.
Income tax shall not be chargeable on any payment falling within subsection (3) or (5) below.
Receipt of a payment falling within subsection (3) below shall not be regarded for the purposes of capital gains tax as the disposal of an asset.
A payment falls within this subsection if it is a capital sum by way of compensation for loss suffered, or reasonably likely to be suffered, by a person in a case where that person, or some other person, acting in reliance on bad investment advice at least some of which was given during the period beginning with 29th April 1988 and ending with 30th June 1994,—
has, while eligible, or reasonably likely to become eligible, to be a member of an occupational pension scheme, instead become a member of a personal pension scheme or entered into a retirement annuity contract;
has ceased to be a member of, or to pay contributions to, an occupational pension scheme and has instead become a member of a personal pension scheme or entered into a retirement annuity contract;
has transferred to a personal pension scheme accrued rights of his under an occupational pension scheme; or
has ceased to be a member of an occupational pension scheme and has instead (by virtue of such a provision as is mentioned in section 591(2)(g) of the Taxes Act 1988) entered into arrangements for securing relevant benefits by means of an annuity contract.
A payment chargeable to income tax apart from subsection (1) above may nevertheless be regarded as a capital sum for the purpose of determining whether it falls within subsection (3) above.
A payment falls within this subsection if and to the extent that it is a payment of interest, on the whole or any part of a capital sum such as is mentioned in subsection (3) above, for a period ending on or before the earliest date on which a determination (whether or not subsequently varied on an appeal or in any other proceedings) of the amount of the particular capital sum in question is made, whether by agreement or by a decision of—
a court, tribunal or commissioner,
an arbitrator or (in Scotland) arbiter, or
any other person appointed for the purpose.
In this section—
“occupational pension scheme” means—
a scheme approved, or being considered for approval, under Chapter I of Part XIV of the Taxes Act 1988 (retirement benefit schemes);
a relevant statutory scheme, as defined in section 611A(1) of that Act; or
a fund to which section 608 of that Act applies (superannuation funds approved before 6th April 1980 etc);
This section shall have effect, and be taken always to have had effect, in relation to any payment falling within subsection (3) or (5) above, whether made before or after the passing of this Act.
Section 347A of the Taxes Act 1988 (annual payments not a charge on the income of a payer) shall apply to any payment made on or after 6th April 1996— as if that obligation were not an existing obligation within the definition contained in section 36(4) of the Finance Act 1988.
in pursuance of any obligation which falls within section 36(4)(a) of the Finance Act 1988 (existing obligations under certain court orders), and
for the benefit, maintenance or education of a person (whether or not the person to whom the payment is made) who attained the age of 21 before 6th April 1994,
Subsection (1) above does not apply to any payment to which section 38 of the Finance Act 1988 (treatment of certain maintenance payments under existing obligations) applies.
The sections set out in Schedule 26 to this Act shall be inserted after section 329 of the Taxes Act 1988.
The first of those sections supersedes sections 329A and 329B inserted by the Finance Act 1995 and applies to payments received after the passing of this Act irrespective of when the agreement or order referred to in that section was made or took effect.
Subsections (1) and (2) of the second of those sections supersede section 329C inserted by the Criminal Injuries Compensation Act 1995 and apply to payments received after the passing of that Act.
The repeal of sections 329A and 329B does not affect the operation of those sections in relation to payments received before the passing of this Act.
The Treasury may by order make provision for the Income Tax Acts to have effect in relation to any amount of benefit payable by virtue of a Government pilot scheme as if it was, as they think fit, either—
wholly or partly exempt from income tax and, accordingly, to be disregarded in computing the amount of any receipts brought into account for income tax purposes; or
to the extent specified in the order, to be brought into account for the purposes of income tax as income of a description so specified or as a receipt of a description so specified.
The Treasury may by order provide for any amount of benefit payable by virtue of a Government pilot scheme to be left out of account, to the extent specified in the order, in the determination for the purposes of section 153 of the Capital Allowances Act 1990 (subsidies etc.) of how far any expenditure has been or is to be met directly or indirectly by the Crown or by an authority or person other than the person actually incurring it.
In this section “Government pilot scheme” means any arrangements (whether or not contained in a scheme) which—
are made, under any enactment or otherwise, by the Secretary of State or any Northern Ireland department;
make provision for or about the payment of amounts of benefit either—
for purposes that are similar to those for which any social security or comparable benefit is payable; or
for purposes connected with the carrying out of any functions of the Secretary of State or any such department in relation to employment or training for employment;
are arrangements relating to a temporary experimental period; and
are made wholly or partly for the purpose of facilitating a decision as to whether, or to what extent, it is desirable for provision to be made on a permanent basis for or in relation to any benefit.
In subsection (3)(b) above the reference to making provision for or about the payment of amounts of benefit for purposes that are similar to those for which any social security or comparable benefit is payable shall include a reference to making provision by virtue of which there is a modification of the conditions of entitlement to, or the conditions for the payment of, an existing social security or comparable benefit.
An order under this section may—
make different provision for different cases, and
contain such incidental, supplemental, consequential and transitional provision (including provision modifying provision made by or under the Income Tax Acts) as the Treasury may think fit.
In this section “benefit” includes any allowance, grant or other amount the whole or any part of which is payable directly or indirectly out of public funds.
The power to make an order under this section—
shall be exercisable for the year 1996-97 and subsequent years of assessment; and
so far as exercisable for the year 1996-97, shall be exercisable in relation to benefits, allowances and other amounts paid at times on or after 6th April 1996 but before the making of the order.
The Treasury shall not make an order under this section containing any such provision as is mentioned in subsection (1)(b) above unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.
The Income Tax Acts shall have effect, and be deemed always to have had effect, as if jobfinder’s grant were exempt from income tax and, accordingly, were to be disregarded in computing the amount of any receipts brought into account for income tax purposes.
In this section “jobfinder’s grant” means grant paid under that name by virtue of arrangements made in pursuance of section 2 of the Employment and Training Act 1973 or section 1 of the Employment and Training Act (Northern Ireland) 1950 (arrangements for assisting persons to select, train for, obtain or retain employment).
Schedule 27 to this Act (which makes provision relating to foreign income dividends) shall have effect.
The modifications which, under section 60 of the Finance Act 1940, may be made for the purposes of any issue of securities to the conditions about tax exemption specified in section 22 of the Finance (No. 2) Act 1931 shall include a modification by virtue of which the tax exemption contained in any condition of the issue applies, as respects capital, irrespective of where the person with the beneficial ownership of the securities is domiciled.
Subject to subsections (3) to (5) below, nothing in the Tax Acts shall impose any charge to tax on any person in respect of so much of any profits or gains arising from a FOTRA security, or from any loan relationship represented by a FOTRA security, as is expressed to be exempt from tax in the tax exemption condition applying to that security.
Exemption from tax shall not be conferred by virtue of subsection (2) above in relation to any security unless the requirements imposed as respects that exemption by the conditions with which the security is issued (including any requirement as to the making of a claim) are complied with.
The tax exemption condition of a FOTRA security shall not be taken to confer any exemption from any charge to tax imposed by virtue of the provisions of Chapter IA of Part XV or Chapter III of Part XVII of the Taxes Act 1988 (anti-avoidance provisions for residents etc.)
Nothing in this section shall entitle any person to any repayment of tax which he has not claimed within the time limit which would be applicable under the Tax Acts (apart from this section) to a claim for the repayment of that tax.
A person with the beneficial ownership of a FOTRA security who would, by virtue of this section, be exempt from tax in respect of some or all of the profits and gains arising from that security, or from any loan relationship represented by it, shall not be entitled for the purposes of income tax or corporation tax to bring into account any amount—
in respect of changes in the value of that security;
as expenses or disbursements incurred in, or in connection with, the holding of the security or any transaction relating to the security; or
as a debit given, in respect of any loan relationship represented by that security, by any provision of Chapter II of this Part of this Act in respect of such a relationship.
Schedule 28 to this Act (which contains amendments consequential on the provisions of this section) shall have effect.
References in this section to a FOTRA security are references to— and references, in relation to such a security, to the tax exemption condition shall be construed accordingly.
any security issued with such a condition about exemption from taxation as is authorised in relation to its issue by virtue of section 22 of the Finance (No. 2) Act 1931; or
any 3½% War Loan 1952 Or After which was issued with a condition authorised by virtue of section 47 of the Finance (No. 2) Act 1915;
This section and Schedule 28 to this Act shall have effect—
for the purposes of income tax, for the year 1996-97 and subsequent years of assessment; and
for the purposes of corporation tax, for accounting periods ending after 31st March 1996.
After section 51 of the Taxes Act 1988 there shall be inserted the following section—
Schedule 29 to this Act (which amends the rules relating to paying and collecting agents) shall have effect.
After section 129A of the Taxes Act 1988 (interest on cash collateral paid in connection with stock lending arrangements) there shall be inserted the following section—
This section has effect in relation to any arrangements entered into on or after 2nd January 1996.
In section 710(5) of the Taxes Act 1988 (meaning of “transfer” in sections 711 to 728), after “or otherwise” there shall be inserted , but—.
Subsection (1) of section 721 of that Act (transfer of securities on death) shall cease to have effect.
For subsection (2) of that section (transfers by personal representatives to legatees) there shall be substituted—
Subsection (4) of that section (interest period treated as ending with death) shall cease to have effect.
This section has effect as respects deaths on or after 6th April 1996.
Sections 729, 737A(2)(b) and 786(4) of the Taxes Act 1988 (provisions applying to sale and repurchase agreements) shall cease to have effect except in relation to cases where the initial agreement to sell or transfer the securities or other property was made before the appointed day.
In section 737 of that Act—
in subsection (5) (manufactured dividends paid to UK residents by non-residents), for the words from “a person resident in the United Kingdom” to “the United Kingdom recipient shall” there shall be substituted “a United Kingdom recipient, that recipient shall”; and
after that subsection there shall be inserted the following subsection—
In section 737C of that Act (deemed manufactured payments), the following subsection shall be inserted after subsection (11A) in relation to cases where the initial agreement to sell the securities is made on or after the appointed day, that is to say—
In sub-paragraph (3) of paragraph 4 of Schedule 23A to that Act (manufactured overseas dividends paid to UK residents by non-residents), for the words from “a person resident in the United Kingdom” to “the United Kingdom recipient shall” there shall be substituted “a United Kingdom recipient, that recipient shall”.
After that sub-paragraph there shall be inserted the following sub-paragraphs—
Those amounts and sums are—
In sub-paragraph (1) of paragraph 8 of that Schedule (power to modify provisions of Schedule)—
before the “or” at the end of paragraph (a) there shall be inserted— and
in the words after paragraph (b), for “paragraph 2, 3 or 4 above” there shall be substituted “paragraphs 2 to 5 above”.
Dividend manufacturing regulations may provide, in relation to prescribed cases where a person makes or receives the payment of any amount representative of an overseas dividend, or is treated for any purposes of this Schedule or such regulations as a person making or receiving such a payment—
Subsections (2), (4) and (5) above have effect—
for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996; and
for the purposes of income tax, in relation to the year 1996-97 and subsequent years of assessment.
In this section “the appointed day” means such day as the Treasury may by order appoint, and different days may be appointed under this subsection for different purposes.
Schedule 30 to this Act (which makes provision conferring relief from corporation tax on companies that invest in housing) shall have effect.
Schedule 28B to the Taxes Act 1988 (venture capital trusts: meaning of qualifying holdings) shall have effect, and be deemed always to have had effect, subject to the amendments in subsections (2) and (3) below.
In paragraph 9 (requirements as to subsidiaries etc. of the relevant company), the following shall be omitted—
in sub-paragraph (1), the words “subject to sub-paragraph (2) below”; and
sub-paragraph (2).
For the purposes of paragraphs 5(2) and 9 above, the question whether a person controls a company shall be determined in accordance with subsections (2) to (6) of section 416 with the modification given by sub-paragraph (3) below. The modification is that, in determining whether a person controls a company, there shall be disregarded— Section 839 shall apply for the purposes of this Schedule, but as if the reference in subsection (8) to section 416 were a reference to subsections (2) to (6) of section 416 with the modification given by sub-paragraph (3) above. For the purposes of sub-paragraph (3) above—
Section 55 of the Finance Act 1995 (removal of certification requirements for qualifying policies with respect to any time on or after 5th May 1996 etc) shall have effect—
with the substitution for “5th May 1996”, wherever occurring, of “the appointed date”; and
with the addition of the following subsection after subsection (8)—
In Schedule 15 to the Taxes Act 1988 (qualifying policies) paragraphs 24(2A) and 25(2) shall have effect with the substitution for “5th May 1996” of “the appointed date for the purposes of section 55 of the Finance Act 1995 (removal of certification requirements)”.
Schedule 31 to this Act, which makes provision about losses arising to insurance companies in the carrying on of life assurance business, shall have effect.
For subsections (2) to (5) of section 76 of the Taxes Act 1988 there shall be substituted the following subsections—
In subsection (8) of that section—
“basic deduction”, in relation to an accounting period of an insurance company, means the amount which, by virtue of this section, would be deductible by way of management expenses for that period but for subsection (2) above; and
“relevant franked investment income”, in relation to any insurance company, means any franked investment income of the company in so far as it is not income the tax credits comprised in which may be claimed by the company under section 438(4) or 441A(7);
In paragraph 5 of Schedule 19AC to the Taxes Act 1988 (modification of section 76)—
in sub-paragraph (1), in the subsection (6B) treated as inserted in section 76, for “their” there shall be substituted “its” and the words “and subsections (2) and (3)(b) above” shall be omitted; and
In section 76 references to franked investment income shall be treated as being references to UK distribution income within the meaning of paragraph 5B of this Schedule.
In section 56(4) of the Taxes Act 1988 (which contains a reference to the computation required by section 76(2) of that Act), for “by” there shall be substituted “for the purposes of”.
Subject to subsection (6) below, this section has effect in relation to accounting periods beginning on or after 1st January 1996.
Notwithstanding anything in the previous provisions of this section, section 76 of the Taxes Act 1988 has effect in relation to accounting periods beginning on or after 1st January 1996—
as if the reference in subsection (2D) of that section to a previous accounting period included a reference to an accounting period beginning before that date, and
in relation to such a previous accounting period, as if the references— were to be construed by reference to whatever provisions had effect in relation to that previous period for purposes corresponding to those of that section as amended by this section.
to the amount deductible by virtue of this section, and
to the basic deduction,
In section 337 of the Taxes Act 1988 (deductions in computing income), the following subsections shall be inserted after subsection (2)—
In section 338(2) of that Act, in the words after paragraph (b) (payments which are not charges on income), after “corporation tax” there shall be inserted “nor any annuity or other annual payment which (without being so deductible) is paid wholly or partly as mentioned in section 337(2A)”.
In section 434B of that Act (treatment of interest and annuities in the case of insurance companies), subsection (1) shall cease to have effect; and in subsection (2), for the words from the beginning to “mentioned in subsection (1) above” there shall be substituted—.
Subject to subsection (5) below, this section has effect in relation to accounting periods beginning on or after 1st January 1996.
In relation to any accounting period beginning on or after 1st January 1996 but ending before 1st April 1996, this section shall have effect as if any reference in provisions inserted by this section to an annuity payable or paid by an insurance company included a reference to any such interest as was mentioned in section 434B(1) of the Taxes Act 1988 before its repeal by virtue of this section.
Schedule 32 to this Act (which makes provision about the tax treatment of equalisation reserves maintained by insurance companies) shall have effect.
In section 432 of the Taxes Act 1988, subsection (2) (industrial assurance business treated as separate business for the purposes of Chapter I of Part XII) shall cease to have effect.
In section 432A(2) of the Taxes Act 1988, for paragraphs (d) and (e) (different categories of basic life assurance and general annuity business, including and not including industrial assurance business), there shall be substituted the following paragraph—.
In section 86 of the Finance Act 1989 (spreading of relief for acquisition expenses)—
in subsection (1)(a), for “in respect of industrial life assurance business carried on by the company” there shall be substituted “for persons who collect premiums from house to house”; and
in subsection (2), for “in respect of industrial life assurance business” there shall be substituted “for persons who collect premiums from house to house”.
In section 832 of the Taxes Act 1988 (interpretation), in the definition of “industrial assurance business” for “has” there shall be substituted “means any such business carried on before the day appointed for the coming into force of section 167(4) of the Finance Act 1996 as was industrial assurance business within”.
In Schedule 14 to the Taxes Act 1988 (ancillary provisions about relief in respect of life assurance premiums), in paragraph 8, at the beginning of sub-paragraph (4) (policy which is varied so as to increase benefits, etc. to be treated as issued after 13th March 1984) there shall be inserted “Subject to sub-paragraph (8) below,”.
After sub-paragraph (7) of that paragraph there shall be inserted the following sub-paragraph—
In Schedule 15 to the Taxes Act 1988 (qualifying policies)—
in paragraph 1(6) (calculation of amount included in premiums of whole life and term insurances in respect of their payment otherwise than annually), for “and if the policy is issued in the course of an industrial assurance business,” there shall be substituted “and if the policy provides for payment otherwise than annually without providing for the amount of the premiums if they are paid annually,”; and
in paragraph 2(2) (the equivalent calculation for endowment assurances), for “issued in the course of an industrial assurance business” there shall be substituted “that provides for the payment of premiums otherwise than annually without providing for the amount of the premiums if they are paid annually,”.
After paragraph 8 of that Schedule there shall be inserted the following paragraph—
In paragraph 18(3) of that Schedule (certain variations of a policy not to affect whether policy is a qualifying policy), after paragraph (b) there shall be inserted or
Subsections (1) to (3) above have effect in relation to accounting periods beginning on or after 1st January 1996.
Subsection (4) above shall come into force on such day as the Board may by order appoint.
Subsection (7) above shall have effect in relation to policies issued on or after such day as the Board may by order appoint.
For subsection (3) of section 458 of the Taxes Act 1988 (meaning of capital redemption business) there shall be substituted the following subsection—
Schedule 33 to this Act (which makes provision for the application of the I minus E basis of charging tax to companies carrying on capital redemption business) shall have effect.
In Chapter I of Part XII of the Taxes Act 1988, after section 458 (capital redemption business) there shall be inserted the following section—
In section 539(3) of that Act, in the definition of “capital redemption policy” for “insurance” there shall be substituted “contract”.
In section 553(10) of that Act, in paragraph (a) of the definition of “new offshore capital redemption policy”, for “an insurance” there shall be substituted “a contract”.
Subsection (1) above shall have effect as respects 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 (self-assessment management provisions), and subsections (4) and (5) above shall have effect as respects contracts effected on or after that day.
Schedule 19AB to the Taxes Act 1988 (pension business: payments on account of tax credits and deducted tax) shall be amended in accordance with the provisions of Part I of Schedule 34 to this Act.
Schedule 19AC to the Taxes Act 1988 (modification of that Act in relation to overseas life insurance companies) shall be amended in accordance with the provisions of Part II of Schedule 34 to this Act.
The amendments made by Schedule 34 to this Act shall have effect in relation to provisional repayment periods, within the meaning of Schedule 19AB to the Taxes Act 1988, falling in 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 (self-assessment management provisions).
After section 11AB of the Taxes Management Act 1970 there shall be inserted the following sections—
The amendment made by subsection (1) above shall have effect as respects 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 (self-assessment management provisions).
In section 466 of the Taxes Act 1988 (interpretation of Chapter II of Part XII) for subsection (1) (meaning of “life or endowment business”) there shall be substituted—
In subsection (2) of that section (other definitions) there shall be inserted at the appropriate places—; and .
In section 266 of that Act (life assurance premium relief) in subsection (6) (deduction from total income where relief given for part of certain payments to friendly societies) after paragraph (b) there shall be inserted and.
After that subsection there shall be inserted—
In section 463(1) of that Act (Corporation Tax Acts to apply to friendly societies' life or endowment business as they apply to insurance companies' mutual life assurance business) after “mutual life assurance business” there shall be inserted “(or other long term business)”.
The amendment made by subsection (5) above shall have effect in relation to accounting periods ending on or after 1st September 1996.
In section 633(1) of the Taxes Act 1988 (Board not to approve a personal pension scheme which makes provision for any benefit other than those specified in paragraphs (a) to (e)) in paragraph (e) (payment on or after the death of a member of a lump sum satisfying the conditions in section 637A) for the words following “a lump sum” there shall be substituted “with respect to which the conditions in section 637A (return of contributions) are satisfied”.
For section 637A of that Act (return of contributions on or after death of member) there shall be substituted—
This section—
has effect in relation to approvals, of schemes or amendments, given under Chapter IV of Part XIV of the Taxes Act 1988 (personal pension schemes) after the passing of this Act; and
does not affect any approval previously given.
Section 419 of the Taxes Act 1988 (loans to participators etc.) shall be amended in accordance with subsections (2) to (4) below.
For subsection (3) (time when tax becomes due) there shall be substituted the following subsection—
After subsection (4) (relief in respect of repayment) there shall be inserted the following subsection—
In subsection (6) (application to loans and advances to certain companies who are participators etc.), the words “and to a company not resident in the United Kingdom” shall be omitted.
In section 826(4) of that Act (interest on repayment of tax by virtue of section 419), for paragraph (a) there shall be substituted the following paragraph—.
This section has effect in relation to any loan or advance made in an accounting period ending on or after 31st March 1996.
Section 13 of the Taxation of Chargeable Gains Act 1992 (attribution of gains to members of non-resident companies) shall be amended in accordance with subsections (2) to (9) below.
In subsection (2) (persons subject to charge on gain to company), for “holds shares” there shall be substituted “is a participator”.
For subsections (3) and (4) (part of gain attributed to person subject to charge) there shall be substituted the following subsections—
In subsection (5), paragraph (a) (section not to apply where gain distributed within two years) shall be omitted; and after that subsection there shall be inserted the following subsection—
In subsection (7) (deduction of tax paid in computing gain on shares in the company)—
for “not reimbursed by the company)” there shall be inserted “neither reimbursed by the company nor applied under subsection (5A) above for reducing any liability to tax)”; and
for “the shares by reference to which the tax was paid” there shall be substituted “any asset representing his interest as a participator in the company.”
After subsection (7) there shall be inserted the following subsection—
In subsection (9) (cases where person charged is a company)—
for “the person owning any of the shares in the company” there shall be substituted “a person who is a participator in the company”; and
for the words from “to the shares” onwards there shall be substituted “to the participating company’s interest as a participator in the company to which the gain accrues shall be further apportioned among the participators in the participating company according to the extent of their respective interests as participators, and subsection (2) above shall apply to them accordingly in relation to the amounts further apportioned, and so on through any number of companies.”
In subsection (10) (application to trustees), for “owning shares in the company” there shall be substituted “who are participators in the company, or in any company amongst the participators in which the gain is apportioned under subsection (9) above,”.
After subsection (11) there shall be inserted the following subsections—
In paragraph 1(3) of Schedule 5 to the Taxation of Chargeable Gains Act 1992 (application of section 86 to section 13 gains)—
in paragraph (a), for “hold shares in a company which originate” there shall be substituted “are participators in a company in respect of property which originates”;
in paragraph (b), for “the shares” there shall be substituted “so much of their interest as participators as arises from that property”; and
Subsections (12) and (13) of section 13 shall apply for the purposes of this sub-paragraph as they apply for the purposes of that section.
This section applies to gains accruing on or after 28th November 1995.
In section 704 of the Taxes Act 1988 (which relates to the cancellation of tax advantages and specifies the circumstances mentioned in section 703(1)) in paragraph D(2)(b) (companies which do not satisfy the conditions there specified with respect to their shares or stocks) for “are authorised to be dealt in on the Stock Exchange, and are so dealt in (regularly or from time to time)” there shall be substituted “are listed in the Official List of the Stock Exchange, and are dealt in on the Stock Exchange regularly or from time to time”.
The reference in paragraph D(2)(b) of section 704 of the Taxes Act 1988 to being listed in the Official List of the Stock Exchange and being dealt in on the Stock Exchange regularly or from time to time shall be taken to include a reference to being dealt in on the Unlisted Securities Market regularly or from time to time, but this subsection is subject to subsection (3) below.
Subsection (2) above—
so far as relating to sub-paragraph (2) of paragraph D of section 704 of the Taxes Act 1988 as it applies for the purposes of sub-paragraph (1) of that paragraph or paragraph E of that section, shall not have effect where the relevant transaction takes place after the date on which the Unlisted Securities Market closes;
so far as relating to paragraph D of that section as it applies for the purposes of section 210(3) or 211(2) of that Act (which relate to bonus issues following, and other matters to be treated or not treated as, repayment of share capital) shall not have effect—
in the case of section 210(3), in relation to share capital issued after that date; or
in the case of section 211(2), in relation to distributions made after that date.
Except as provided by subsection (3) above, this section—
so far as relating to sub-paragraph (2) of paragraph D of section 704 of the Taxes Act 1988 as it applies for the purposes of sub-paragraph (1) of that paragraph or paragraph E of that section, shall have effect where the relevant transaction takes place after the passing of this Act; and
so far as relating to paragraph D of that section as it applies for the purposes of section 210(3) or 211(2) of that Act, shall have effect—
in the case of section 210(3), in relation to share capital issued after the passing of this Act; or
in the case of section 211(2), in relation to distributions made after the passing of this Act.
In this section “the relevant transaction” means— as the case may be.
the transaction in securities mentioned in paragraph (b) of section 703(1) of the Taxes Act 1988, or
the first of the two or more such transactions mentioned in that paragraph,
In each of sections 163 and 164 of, and paragraph 5 of Schedule 6 to, the Taxation of Chargeable Gains Act 1992 (retirement relief), for “the age of 55”, wherever occurring, there shall be substituted “the age of 50”.
The amendments made by this section shall apply in relation to disposals on or after 28th November 1995.
Section 164A of the Taxation of Chargeable Gains Act 1992 (re-investment relief) shall have effect, and be deemed always to have had effect, as if the following subsections were inserted after subsection (2)—
In section 566 of the Taxes Act 1988 (powers to make regulations in connection with the provisions relating to sub-contractors in the construction industry), after subsection (2) there shall be inserted the following subsection—
regulations under section 566(1), (2) or (2A);
Schedule 35 to this Act (which amends sections 33A to 33F of the Capital Allowances Act 1990) shall have effect.
The Capital Allowances Act 1990 shall have effect, and be deemed always to have had effect, with the following sections inserted after section 138 (assets ceasing to belong to traders)—
Section 151(1) of the Capital Allowances Act 1990 (procedure on apportionments under Parts I, III to VI and Part VIII) shall have effect, and be deemed always to have had effect, as if for “VI” there were substituted “VII”.
In section 118 of the Capital Allowances Act 1990 (mineral extraction licences in the case of assets formerly owned by non-traders), the existing provisions shall become subsection (1) of that section and the following subsection shall be inserted after that subsection—
Subsection (3) above applies in relation to any sale taking place on or after 13th September 1995.
In any case to which enactments re-enacted in the Capital Allowances Act 1990 apply instead of that Act, this section shall have effect as if it required amendments equivalent to those made by subsections (1) and (2) above to have effect, and be deemed always to have had effect, in relation to those enactments.
Schedule 36 to this Act (which contains amendments of Chapter IV of Part XVII of the Taxes Act 1988) shall have effect in relation to accounting periods of a controlled foreign company, within the meaning of that Chapter, beginning on or after 28th November 1995.
For the Table in Schedule 1 to the Inheritance Tax Act 1984 there shall be substituted— Portion of value Lower limit Upper limit Rate of tax Per cent. £ £ 0 200,000 Nil 200,000 — 40
Subsection (1) above shall apply to any chargeable transfer made on or after 6th April 1996; and section 8 of that Act (indexation of rate bands) shall not have effect as respects any difference between the retail prices index for the month of September 1994 and that for the month of September 1995.
The Inheritance Tax Act 1984 shall be amended as follows.
In section 105(1) (relevant business property for the purposes of business property relief)—
in paragraph (b) (unquoted shares and securities attracting 100 per cent. relief where they gave the transferor control of a company)—
the words “shares in or” shall be omitted; and
for the words “shares or securities owned by the transferor” there shall be substituted “securities owned by the transferor and any unquoted shares so owned”;
for paragraph (bb) (unquoted shares attracting 100 per cent. relief in other cases) there shall be substituted the following paragraph— and
paragraph (c) (unquoted shares attracting 50 per cent. relief) shall be omitted.
In section 107(4) (replacement of property with unquoted shares), for the words from the beginning to “such shares” there shall be substituted—.
In section 113A(3A)(b) (which contains a reference to shares and securities falling within paragraph (b) of section 105(1)), after “(b)” there shall be inserted “or (bb)”.
For the removal of any doubt, the following subsection shall be inserted in section 113A (provisions applying to business property relief where there is a transfer within seven years of death) after subsection (7)—
This section—
so far as it inserts a new subsection (7A) in section 113A, has effect in relation to any transfer of value on or after 28th November 1995; and
so far as it makes any other provision, has effect—
in relation to any transfer of value on or after 6th April 1996, and
for the purposes of any charge to tax by reason of an event occurring on or after 6th April 1996, in relation to transfers of value before that date.
Chapter II of Part V of the Inheritance Tax Act 1984 (agricultural property) shall be amended as follows.
In section 116 (relief for transfers of agricultural property) after subsection (5) there shall be inserted—
In consequence of subsection (2) above, subsection (2A) of that section (which made, in relation to Scotland, provision which is superseded by the subsection (5A) inserted by subsection (2) above) shall cease to have effect.
For the removal of any doubt, the following subsection shall be inserted in section 124A (provisions applying to agricultural property relief where there is a transfer within seven years of death) after subsection (7)—
Subsection (2) above—
so far as relating to subsections (5A) to (5C) of section 116 of the Inheritance Tax Act 1984, has effect in any case where the death of the tenant or, as the case may be, the sole surviving tenant, occurs on or after 1st September 1995; and
so far as relating to subsections (5D) and (5E) of that section, has effect in any case where the death of the transferor occurs on or after 1st September 1995.
Subsection (3) above has effect in any case where the death of the tenant or, as the case may be, the sole surviving tenant, occurs on or after 1st September 1995.
Subsection (4) above has effect in relation to any transfer of value on or after 28th November 1995.
Stamp duty shall not be chargeable on an instrument effecting a transfer of securities if the transferee is a member of an electronic transfer system and the instrument is in a form which will, in accordance with the rules of the system, ensure that the securities are changed from being held in certificated form to being held in uncertificated form so that title to them may become transferable by means of the system.
In this section—
“certificated form” has the same meaning as in the relevant regulations;
“member”, in relation to an electronic transfer system, means a person who is permitted by the operator of the system to transfer by means of the system title to securities held by him in uncertificated form;
“securities” means stock or marketable securities;
This section applies in relation to instruments executed on or after 1st July 1996.
This section shall be construed as one with the Stamp Act 1891.
In section 86 of the Finance Act 1986 (introduction) after subsection (3) there shall be added—
The amendment made by subsection (1) above shall have effect—
in relation to an agreement, if—
the agreement is conditional and the condition is satisfied on or after 1st July 1996; or
the agreement is not conditional and is made on or after that date; and
in relation to a transfer, issue or appropriation made or effected on or after that date.
In section 87 of the Finance Act 1986 (the principal charge) in subsection (2) (tax charged on the expiry of the period of two months beginning with the relevant day unless the first and second conditions are fulfilled before that period expires) the following shall be omitted—
the words “the expiry of the period of two months beginning with”, and
the words from “unless” to the end.
In section 88 of that Act (special cases) in subsection (1) (which provides for instruments on which stamp duty is not chargeable by virtue of certain enactments to be disregarded for the purposes of section 87(4) and (5)) before paragraph (a) there shall be inserted—.
Subsections (2) and (3) of that section (which are superseded by subsection (2) above) shall cease to have effect.
In section 92(1) of that Act (repayment or cancellation of tax where the conditions in section 87(4) and (5) are shown to have been fulfilled after the expiry of the period of two months beginning with the relevant day but before the expiry of six years so beginning)—
for “after the expiry of the period of two months (beginning with the relevant day, as defined in section 87(3))” there shall be substituted “on or after the relevant day (as defined in section 87(3))”; and
for “(so beginning)” there shall be substituted “(beginning with that day)”.
The amendments made by this section shall have effect in relation to an agreement to transfer securities if—
the agreement is conditional and the condition is satisfied on or after 1st July 1996; or
the agreement is not conditional and is made on or after that date.
In section 88 of the Finance Act 1986 (special cases) after subsection (1) there shall be inserted—
This section has effect in relation to an agreement to transfer securities if an instrument is executed on or after 1st July 1996 in pursuance of the agreement.
In section 88 of the Finance Act 1986 (special cases) after subsection (1A) there shall be inserted—
At the end of that section there shall be added—
This section has effect where the instrument on which stamp duty is not chargeable by virtue of section 42 of the Finance Act 1930 or section 11 of the Finance Act (Northern Ireland) 1954 is executed on or after 4th January 1996 in pursuance of an agreement to transfer securities made on or after that date.
After section 89A of the Finance Act 1986 (exceptions from section 87 for public issues) there shall be inserted—
This section applies in relation to agreements to transfer chargeable securities in pursuance of an arrangement entered into on or after 1st July 1996.
In consequence of section 188(1) above, subsections (4), (5) and (8) of section 87 of the Finance Act 1986 (exemption from stamp duty reserve tax where an instrument is executed etc) shall cease to have effect.
In section 88 of that Act (which provides for instruments on which stamp duty is not chargeable by virtue of certain enactments to be disregarded for the purposes of section 87(4) and (5)) in subsections (1), (1A) and (1B) for “section 87(4) and (5) above” there shall be substituted “section 92(1A) and (1B) below”.
In section 92 of that Act (repayment or cancellation of tax) in subsection (1) (which refers to the conditions in section 87(4) and (5))—
for “section 87(4) and (5)” there shall be substituted “subsections (1A) and (1B) below”; and
for “the following provisions of this section shall apply” there shall be substituted “subsections (2) to (4A) of this section shall apply”.
After that subsection, there shall be inserted—
At the end of that section there shall be added—
The amendments made by this section shall have effect in relation to an agreement to transfer securities if—
the agreement is conditional and the condition is satisfied on or after 1st July 1996; or
the agreement is not conditional and is made on or after that date.
Section 93 of the Finance Act 1986 (depositary receipts) shall be amended in accordance with the following provisions of this section.
In subsection (1) (charge to stamp duty reserve tax where certain things are done in pursuance of an arrangement) in paragraph (b) (transfer or issue to, or appropriation by, a person falling within subsection (3))—
after “transferred or issued to” there shall be inserted “the person mentioned in paragraph (a) above or”; and
for “such a person” there shall be substituted “the person mentioned in paragraph (a) above or a person falling within subsection (3) below”.
In subsection (6) (payment by instalments) in paragraph (d) (instrument received by person falling within subsection (3)) for “subsection (3)” there shall be substituted “subsection (2) or (3)”.
This section has effect—
so far as relating to the charge to tax under section 93(1) of the Finance Act 1986, where securities are transferred, issued or appropriated on or after 1st July 1996 (whenever the arrangement was made);
so far as relating to the charge to tax under section 93(10) of that Act, in relation to instalments payable on or after 1st July 1996.
In section 87 of the Finance Act 1986, in subsection (6) (which specifies the rate at which stamp duty reserve tax under that section is charged) for “50p for every £100 or part of £100” there shall be substituted “0.5 per cent.”
In section 93 of that Act (depositary receipts)—
in subsection (4) (rate of charge) for “£1.50 for every £100 or part of £100” there shall be substituted “1.5 per cent.”;
in subsection (5) (which applies subsection (4) with modifications in certain cases where the securities are transferred by a chargeable instrument) for the words from “as if “£1.50” read” onwards there shall be substituted “as if “1.5 per cent.” read “1 per cent.””; and
in subsection (10) (payment in instalments etc) in paragraph (b), for “£1.50 for every £100 or part of £100” there shall be substituted “1.5 per cent. of the amount”.
Section 94(8) of that Act (which defines “the day of The Stock Exchange reforms” for the purposes of section 93(5) and which becomes unnecessary in consequence of the amendment made by subsection (2)(b) above) shall be omitted.
In section 96 of that Act (clearance services)—
in subsection (2) (rate of charge) for “£1.50 for every £100 or part of £100” there shall be substituted “1.5 per cent.”;
in subsection (3) (which applies subsection (2) with modifications in certain cases where the securities are transferred by a chargeable instrument) for the words from “as if “£1.50” read” onwards there shall be substituted “as if “1.5 per cent.” read “1 per cent.””; and
in subsection (8) (payment in instalments etc) in paragraph (b), for “£1.50 for every £100 or part of £100” there shall be substituted “1.5 per cent. of the amount”.
Section 96(12) of that Act (which defines “the day of The Stock Exchange reforms” for the purposes of subsection (3) and which becomes unnecessary in consequence of the amendment made by subsection (4)(b) above) shall be omitted.
In section 99 of that Act (interpretation) after subsection (12) there shall be added—
Subsections (1) to (5) above have effect in accordance with the following provisions of this subsection, that is to say—
in relation to the charge to tax under section 87 of the Finance Act 1986, subsection (1) above applies where—
the agreement to transfer is conditional and the condition is satisfied on or after 1st July 1996; or
the agreement is not conditional and is made on or after 1st July 1996;
in relation to the charge to tax under section 93(1) of that Act, paragraphs (a) and (b) of subsection (2) above apply where securities are transferred, issued or appropriated on or after 1st July 1996 (whenever the arrangement was made) and subsection (3) above has effect accordingly;
in relation to the charge to tax under section 93(10) of that Act, paragraph (c) of subsection (2) above applies in relation to instalments payable on or after 1st July 1996;
in relation to the charge to tax under section 96(1) of that Act, paragraphs (a) and (b) of subsection (4) above apply where securities are transferred or issued on or after 1st July 1996 (whenever the arrangement was made) and subsection (5) above has effect accordingly;
in relation to the charge to tax under section 96(8) of that Act, paragraph (c) of subsection (4) above applies in relation to instalments payable on or after 1st July 1996.
In section 98 of the Finance Act 1986 (Treasury regulations with respect to administration etc) after subsection (1) there shall be inserted—
In section 70 of the Finance Act 1986 (clearance services) in subsection (1) (which, subject to subsection (9), makes provision with respect to stamp duty on transfers into clearance services) after “Subject to subsection (9)” there shall be inserted “and section 97A”.
In section 96 of that Act (clearance services) in subsection (1) (which, subject to subsection (5) and section 97, provides for stamp duty reserve tax to be chargeable on transfers into clearance services) for “section 97” there shall be substituted “sections 97 and 97A”.
After section 97 of that Act (exceptions) there shall be inserted—
Section 97(2) of that Act (no charge to tax under section 96 on transfers to a stock exchange nominee or to, or to a nominee of, a recognised investment exchange or recognised clearing house) shall not have effect in relation to any transfer effected on or after 1st July 1996.
In section 99(10) of that Act (interpretation of “chargeable securities” in sections 93, 94 and 96) for “and 96” there shall be substituted “, 96 and 97A”.
Subsections (1), (2), (3) and (5) above shall come into force on 1st July 1996.
The rate of interest applicable for the purposes of an enactment to which this section applies shall be the rate which for the purposes of that enactment is provided for by regulations made by the Treasury under this section.
This section applies to—
paragraphs 7 and 9 of Schedule 6 to the Finance Act 1994 (interest payable to or by the Commissioners of Customs and Excise in connection with air passenger duty);
paragraphs 21 and 22 of Schedule 7 to that Act (interest on amounts of insurance premium tax and on amounts payable by the Commissioners in respect of that tax);
sections 74 and 78 of the Value Added Tax Act 1994 (interest on VAT recovered or recoverable by assessment and interest payable in cases of official error); and
paragraphs 26 and 29 of Schedule 5 to this Act (interest payable to or by the Commissioners in connection with landfill tax).
Regulations under this section may—
make different provision for different enactments or for different purposes of the same enactment,
either themselves specify a rate of interest for the purposes of an enactment or make provision for any such rate to be determined, and to change from time to time, by reference to such rate or the average of such rates as may be referred to in the regulations,
provide for rates to be reduced below, or increased above, what they otherwise would be by specified amounts or by reference to specified formulae,
provide for rates arrived at by reference to averages or formulae to be rounded up or down,
provide for circumstances in which changes of rates of interest are or are not to take place, and
provide that changes of rates are to have effect for periods beginning on or after a day determined in accordance with the regulations in relation to interest running from before that day, as well as in relation to interest running from, or from after, that day.
The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
Where— the Commissioners of Customs and Excise shall make an order specifying the new rate and the day from which, in accordance with the regulations, it has effect.
regulations under this section provide, without specifying the rate determined in accordance with the regulations, for a new method of determining the rate applicable for the purposes of any enactment, or
the rate which, in accordance with regulations under this section, is the rate applicable for the purposes of any enactment changes otherwise than by virtue of the making of regulations specifying a new rate,
The words “the rate applicable under section 197 of the Finance Act 1996” shall be substituted—
for the words “the specified rate” in each of paragraphs 7(1) and (3) and 9(1) of Schedule 6 to the Finance Act 1994 (air passenger duty);
for the words “the prescribed rate” in each of sub-paragraphs (1) and (3) of paragraph 21 of Schedule 7 to that Act (insurance premium tax);
for the words from “such rate” onwards in sub-paragraph (2) of paragraph 22 of that Schedule; and
in the Value Added Tax Act 1994—
for the words “the prescribed rate” in each of subsections (1), (2) and (4) of section 74, and
for the words from “such rates” onwards in subsection (3) of section 78.
Subsections (1) and (6) above shall have effect for periods beginning on or after such day as the Treasury may by order made by statutory instrument appoint and shall have effect in relation to interest running from before that day, as well as in relation to interest running from, or from after, that day; and different days may be appointed under this subsection for different purposes.
Schedule 37 to this Act (which re-defines “bank” for certain purposes, and makes related amendments) shall have effect.
Schedule 38 to this Act (which contains amendments of enactments referring to the quotation or listing of securities) shall have effect.
In determining— there shall be disregarded any relevant action taken by that person (whether before, on or after that date) in connection with electoral rights.
for the purposes of inheritance tax, income tax or capital gains tax where a person is domiciled at any time on or after 6th April 1996, or
for the purposes of section 267(1)(a) of the Inheritance Tax Act 1984 (deemed UK domicile for three years after ceasing to be so domiciled) where a person was domiciled at any time on or after 6th April 1993,
Relevant action is taken by a person in connection with electoral rights where—
he does anything with a view to, or in connection with, being registered as an overseas elector; or
when registered as an overseas elector, he votes in any election at which he is entitled to vote by virtue of being so registered.
For the purposes of this section, a person is registered as an overseas elector if he is—
registered in any register mentioned in section 12(1) of the Representation of the People Act 1983 (right to be registered of persons entitled to vote at parliamentary elections) on account of any entitlement to vote conferred on him by section 1 of the Representation of the People Act 1985 (extension of parliamentary franchise to certain non-resident British citizens); or
registered under section 3 of that Act of 1985 (certain non-resident peers entitled to vote at European Parliamentary elections).
Nothing in subsection (1) above prevents regard being had, in determining the domicile of a person at any time, to any relevant action taken by him in connection with electoral rights if— and a person’s domicile determined in accordance with any such wishes shall be taken to have been so determined for the purpose only of ascertaining the liability in question.
his domicile at that time falls to be determined for the purpose of ascertaining his or any other person’s liability to any of the taxes mentioned in subsection (1)(a) above; and
the person whose liability is being ascertained wishes regard to be had to that action;
Schedule 39 to this Act has effect for the purpose of enacting certain extra-statutory concessions relating to income tax, corporation tax, capital gains tax, and stamp duty.
In section 47 of the Finance Act 1942 (Treasury regulations with respect to the transfer and registration of Government stock), after paragraph (bb) of subsection (1) there shall be inserted the following paragraphs—.
After subsection (1A) of that section (transfer of deceased persons' stocks and bonds) there shall be inserted the following subsections—
After section 2 of the National Debt (Stockholders Relief) Act 1892 (date for striking balance for a dividend on stock) there shall be inserted the following section—
In section 16 of the National Loans Act 1968 (supplemental provisions as to national debt), after subsection (4) there shall be inserted the following subsection—
The Treasury may by regulations make provision for securing that enactments and subordinate legislation which— have effect with such modifications as the Treasury may think appropriate in consequence of the making of any provision or arrangements for, or in connection with, the issue or transfer of strips of government securities or the consolidation of such strips into other securities.
apply in relation to government securities or to any description of such securities, or
for any other purpose refer (in whatever terms) to such securities or to any description of them,
Regulations under subsection (5) above may—
impose a charge to income tax, corporation tax, capital gains tax, inheritance tax, stamp duty or stamp duty reserve tax;
include provision applying generally to, or to any description of, enactments or subordinate legislation;
make different provision for different cases; and
contain such incidental, supplemental, consequential and transitional provision as the Treasury think appropriate.
The power to make regulations under subsection (5) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
Schedule 40 to this Act (which makes provision in relation to strips for taxation purposes) shall have effect.
The enactments that may be modified by regulations under this section shall include section 95 above and the enactments contained in Schedule 40 to this Act.
In this section— and expressions used in this section and in section 47 of the Finance Act 1942 have the same meanings in this section as in that section.
“subordinate legislation” has the same meaning as in the Interpretation Act 1978;
Part I of Schedule 2 to the Agriculture Act 1993 (taxation provisions applying to the reorganisation of the milk marketing boards) shall have effect, and be deemed always to have had effect, in accordance with subsections (2) to (4) below where—
any approved scheme has made provision as to the functions of a milk marketing board in the period after the transfers taking effect on the vesting day under section 11 of that Act;
regulations have been made by virtue of section 14(2) of that Act (provision following re-organisation) for giving effect to that provision; and
a transaction is or has been entered into by that board in pursuance of any obligation under those regulations to carry out those functions so far as they relate to a subsidiary of the board.
For the purposes of that Part of that Schedule—
anything done by way of entering into the transaction, or for the purpose of carrying it out, shall be deemed to have been done under and in accordance with the scheme; and
the terms and other provisions having effect in relation to that transaction by virtue of anything contained in, or anything done in exercise of powers conferred by, any regulations under section 14(2) of the Agriculture Act 1993 shall be deemed to be terms for which the scheme provided or, as the case may be, to be provisions of the scheme.
Sub-paragraph (1) of paragraph 16 of Schedule 2 to the Agriculture Act 1993 (distributions) shall have effect, and be deemed always to have had effect, in a case where the terms and provisions mentioned in subsection (2)(b) above involved or involve— as if the references to the vesting day in paragraphs (a), (c), (d) and (e) of that sub-paragraph were references to the day on which the winding up of the board is completed.
the issue or transfer of any shares in, or securities of, any body,
the conferring of any right to a distribution out of the assets of any body,
the conferring of any right to, or to acquire, shares in any body, or
the transfer to any person of any property or rights of a milk marketing board, or of the subsidiary of such a board,
Sub-paragraph (4) of paragraph 31 of Schedule 2 to the Agriculture Act 1993 (condition to be satisfied if body to be qualifying body by virtue of sub-paragraph (1)(c)) shall have effect, and be deemed always to have had effect, as if—
the reference, in relation to a company, to 90 per cent. of its ordinary share capital were a reference to 70 per cent. of its ordinary share capital; and
the references to shares having been issued to any person included references to their having been allotted to that person.
Paragraph 1 of Schedule 2 to the Agriculture Act 1993 (tax continuity with successor bodies) shall have effect, and be deemed to have had effect, in relation to any relevant transfer after 31st December 1995 to a society registered under the Industrial and Provident Societies Act 1965 of— as it has effect in relation to any transfer under section 11 of that Act to a qualifying body.
a trade, or part of a trade, of a milk marketing board, or
any property, rights or liabilities of such a board,
Paragraphs 16, 20, 25, 26, 28 and 29 of Schedule 2 to the Agriculture Act 1993 shall have effect, and be deemed to have had effect, in relation to any relevant transfer after 31st December 1995 of assets of a milk marketing board to a society registered under the Industrial and Provident Societies Act 1965 as if—
the terms and other provisions of the transaction for effecting the transfer were contained in an approved scheme;
the society were a relevant successor of that board; and
references in those paragraphs to the vesting day were references to the day on which the winding up of the board is completed.
For the purposes of subsections (5) and (6) above, a transfer of anything to a society registered under the Industrial and Provident Societies Act 1965 is a relevant transfer if—
it is a transfer in pursuance of regulations made by virtue of section 14(2) of the Agriculture Act 1993;
it is not a transfer of shares in a subsidiary of a milk marketing board; and
the condition mentioned in sub-paragraph (5) of paragraph 31 of Schedule 2 to that Act would have been met in relation to that society if the provision made as to the persons to whom the membership of the society is open were contained in an approved scheme providing for the transfer.
Paragraph 20 of Schedule 2 to the Agriculture Act 1993 (treatment of acquisition of certain shares and securities) shall not apply, and shall be deemed never to have applied, in relation to the acquisition of any security after 31st December 1995 if the indebtedness acknowledged by that security does not fall, for the purposes of the Taxation of Chargeable Gains Act 1992, to be treated as a debt on a security (as defined in section 132 of that Act of 1992).
For the purposes of Chapter II of Part IV of this Act, so far as it has effect for any accounting period ending after 31st March 1996 in relation to any creditor relationship represented by a debenture issued on or after 31st December 1995, paragraph 25 of Schedule 2 to the Agriculture Act 1993 shall have effect as if sub-paragraph (2)(a) of that paragraph (deemed consideration for issue of debenture issued under approved scheme) were omitted.
For the purposes of the Taxation of Chargeable Gains Act 1992, where any debenture to which paragraph 25 of Schedule 2 to the Agriculture Act 1993 applies has been or is issued at any time after 31st December 1995, the indebtedness acknowledged by that debenture shall be deemed (where that would not otherwise be the case) to be, and always to have been, a debt on a security (as defined in section 132 of that Act of 1992).
Expressions used in this section and in Part I of the Agriculture Act 1993 have the same meanings in this section as in that Part.
In this Act “the Taxes Act 1988” means the Income and Corporation Taxes Act 1988.
The enactments mentioned in Schedule 41 to this Act (which include spent provisions) are hereby repealed to the extent specified in the third column of that Schedule.
The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained in, or referred to, in the notes set out in that Schedule.
This Act may be cited as the Finance Act 1996.