Part IU.K. Income Tax, Corporation Tax and Capital Gains Tax

Chapter IU.K. Profit-Related Pay

PreliminaryU.K.

1—17.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1U.K.

Chapter IIU.K. Personal Pension Schemes

18—57.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F2U.K.

Chapter IIIU.K. General

58—63.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3U.K.

64 Limitation of other reliefs in dealings involving dual resident investing companies.U.K.

(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F5

(3)In section 273 of the Taxes Act (disposals of assets within a group of companies to be on a no-gain/no-loss basis) in subsection (2) (exclusions) at the end of paragraph (c) there shall be inserted the words “or

(d)a disposal to a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987”

(4)In section 276 of the Taxes Act (replacement of business assets by members of a group) at the beginning of subsection (1) there shall be inserted the words “Subject to subsection (1A) below” and at the end of that subsection there shall be inserted the following subsection—

“(1A)Subsection (1) above does not apply where so much of the consideration for the disposal of the old assets as is applied in acquiring the new assets or the interest in them is so applied by a member of the group which is a dual resident investing company; and in this subsection—

(a)“the old assets” and “the new assets” have the same meaning as in section 115 of the M1Capital Gains Tax Act 1979; and

(b)“dual resident investing company” has the same meaning as in section 63 of the Finance (No. 2) Act 1987.”

(5)(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

(7)In this section—

(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

(b)subsections (2) and (6) above apply where the successor in question begins to carry on the trade on or after that date;

(c)subsection (3) above applies in relation to disposals on or after that date; and

(d)subsection (4) above applies where the new assets (within the meaning of section 115 of the M2Capital Gains Tax Act 1979) are acquired on or after that date.

65—68. Controlled foreign companies: acceptable distribution policy.U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F6

MiscellaneousU.K.

69 Disclosure of employment information obtained from Inland Revenue.U.K.

(1)Section 58 of the M3Finance Act 1969 (disclosure of information for statistical purposes by Board of Inland Revenue) shall be amended in accordance with this section.

(2)At the end of subsection (4) (cases in which information obtained under the section may be disclosed by officers of the Department of Employment or Manpower Services Commission to other persons) there shall be added “or

(c)to an authorised officer of any body specified in the first column of the following Table for the purposes of functions of that body under any enactment specified in relation to it in the second column of the Table.

(3)In subsection (6) for the words “or paragraph (b) of subsection (4)” there shall be substituted “ paragraph (b) or paragraph (c) of subsection (4) above ”.

70, 71.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F7U.K.

72. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F8U.K.

73 Recognised investment exchanges.U.K.

(1)The Board may by regulations make provision securing that enactments relating to . . . F9 capital gains tax and referring to The Stock Exchange have effect, for such purposes and subject to such modifications as may be prescribed by the regulations, in relation to all other recognised investment exchanges (within the meaning of the M18Financial Services Act 1986), or in relation to such of those exchanges as may be so prescribed.

(2)The power to make regulations under this section shall be exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of the House of Commons.

Chapter IVU.K. Capital Gains

Companies’ chargeable gainsU.K.

74—77. General rules.U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F10

MiscellaneousU.K.

78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F11U.K.

79 Building societies: groups of companies.U.K.

In section 272 of the Taxes Act (groups of companies: definitions) at the end of subsection (2) (references to a company) there shall be added

“and

(e)a building society within the meaning of the M19Building Societies Act 1986.”.

80 Roll-over relief not available for gains on oil licences.U.K.

(1)A licence under the M20Petroleum (Production) Act 1934 or the M21Petroleum (Production) Act (Northern Ireland) 1964 is not and, subject to subsection (2) below, shall be assumed never to have been an asset falling within any of the classes in section 118 of the M22Capital Gains Tax Act 1979 (classes of assets for the purposes of roll-over relief under section 115 of that Act).

(2)Nothing in subsection (1) above affects the determination of any Commissioners or the judgment of any court made or given before 14th May 1987.

(3)A reference in subsection (1) above to a provision of the M23Capital Gains Tax Act 1979 includes a reference to the corresponding enactment in Part III of the M24Finance Act 1965 which is re-enacted in that provision.

81 Commodity and financial futures and options.U.K.

(1)In section 72 of the M25Finance Act 1985 (commodity and financial futures and traded options) in subsection (1) for the words “traded options” and “traded option” there shall be substituted respectively “qualifying options” and “qualifying option”.

(2)In subsection (2) of that section, for paragraph (b) (definition of “traded option”) there shall be substituted—

“(b)“qualifying option” means a traded option or financial option as defined in section 137(9) of that Act.”

(3)After that subsection there shall be inserted the following subsections—

“(2A)Notwithstanding the provisions of subsection (2)(a) above, where, otherwise than in the course of dealing on a recognised futures exchange, within the meaning of the principal Act,—

(a)an authorised person or listed institution enters into a commodity or financial futures contract with another person, or

(b)the outstanding obligations under a commodity or financial futures contract to which an authorised person or listed institution is a party are brought to an end by a further contract between the parties to the futures contract,

then, except in so far as any gain or loss arising to any person from that transaction arises in the course of a trade, that gain or loss shall be regarded for the purposes of subsection (1) above as arising to him in the course of dealing in commodity or financial futures.

(2B)In subsection (2A) above—

• “authorised person” has the same meaning as in the M26Financial Services Act 1986, and

• “listed institution” has the same meaning as in section 43 of that Act.”

(4)In subsection (4) of section 137 of the Capital Gains Tax Act 1979 (options and forfeited deposits) for paragraph (aa) there shall be substituted the following paragraph—

“(aa)a traded option or financial option, or”.

(5)For subsection (9) of section 137 of the Capital Gains Tax Act 1979 (definitions) there shall be substituted the following subsections—

“(9)In subsection (4) above and sections 138 and 139 below—

(a)“quoted option” means an option which, at the time of the abandonment or other disposal, is quoted on a recognised stock exchange;

(b)“traded option” means an option which, at the time of the abandonment or other disposal, is quoted on a recognised stock exchange or a recognised futures exchange; and

(c)“financial option” means an option which is not a traded option, as defined in paragraph (b) above, but which, subject to subsection (10) below,—

(i)relates to currency, shares, securities or an interest rate and is granted (otherwise than as agent) by a member of a recognised stock exchange, by an authorised person within the meaning of the M27Financial Services Act 1986 or by a listed institution within the meaning of section 43 of that Act; or

(ii)relates to shares or securities which are dealt in on a recognised stock exchange and is granted by a member of such an exchange, acting as agent; or

(iii)relates to currency, shares, securities or an interest rate and is granted to such an authorised person or institution as is referred to in sub-paragraph (i) above and concurrently and in association with an option falling within that sub-paragraph which is granted by that authorised person or institution to the grantor of the first-mentioned option; or

(iv)relates to shares or securities which are dealt in on a recognised stock exchange and is granted to a member of such an exchange, including such a member acting as agent;

and in this subsection “recognised stock exchange” has the meaning given by section 535 of the Taxes Act.

(10)If the Treasury by order so provide, an option of a description specified in the order shall be taken to be within the definition of “financial option” in subsection (9)(c) above; and the power to make an order under this subsection shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.”

(6)In subsection (1) of section 138 of the M28Capital Gains Tax Act 1979 (application of rules as to wasting assets) for paragraph (aa) there shall be substituted the following paragraph—

“(aa)to a traded option or financial option, or”.

(7)In subsection (4) of section 138 of the M29Capital Gains Tax Act 1979 (definitions for the purpose of that section) for paragraph (a) there shall be substituted the following paragraph—

“(a)“financial option”, “quoted option” and “traded option” have the meaning given by section 137(9) above, and”.

(8)This section shall come into force on such day as the Treasury may by order made by statutory instrument appoint.

Chapter VU.K. Taxes Management Provisions

Company returnsU.K.

82 Return of profits.U.K.

(1)With respect to any notice served after the appointed day, section 11 of the Management Act (return of profits) shall be amended in accordance with this section.

(2)In subsection (1) for the words from “within the time limited by the notice” to the end there shall be substituted “not later than the final day determined under subsection (4) below a return [F12such information as may be required in pursuance of the notice together with such accounts, statements and reports as may be so required.

(1A)The information which a company may be required to supply under this section is information which is relevant to the application of the Corporation Tax Acts to the company; and the accounts, statements and reports which a company may be so required to supply are accounts, statements and reports which are so relevant.”]

(3)For subsection (2) there shall be substituted the following subsection—

“(2)A notice under this section may require a return [F13for] any period specified in the notice (in this subsection referred to as “the specified period”) but, if the specified period does not coincide with an accounting period of the company and the company is within the charge to corporation tax in the whole or some part of the specified period, then—

(a)if an accounting period of the company ends in or at the end of the specified period, the notice shall be taken to require a return for that accounting period or, if there is more than one, for each of them;

(b)if no accounting period of the company ends in or at the end of the specified period but there is a part of the specified period which does not fall within an accounting period of the company, the notice shall be taken to require a return for that part of the specified period; and

(c)if the specified period begins in or at the beginning of an accounting period of the company and ends before the end of that period, the notice shall be of no effect and, accordingly, the company shall not be required to make any return pursuant to it.”

(4)For subsections (4) to (6) there shall be substituted the following subsections—

“(4)Subject to subsection (5) below, the final day for the delivery of any return required by a notice under this section shall be whichever is the later of—

(a)the first anniversary of the last day of the period to which the return relates;

(b)the first anniversary of the last day of that period of account of the company in which falls the last day of the accounting period (if any) to which the return relates; and

(c)the end of the period of three months beginning on the day following that on which the notice was served.

(5)In paragraph (b) of subsection (4) above “period of account” has the same meaning as in the principal Act, but for the purposes of that paragraph the last day of a period of account which is longer than eighteen months shall be treated as the day on which expires the period of eighteen months beginning on the first day of the period of account.

(6)In relation to a company which—

(a)is resident in the United Kingdom throughout the period to which the return relates (in this subsection referred to as “the return period”); and

(b)is required under the M30Companies Act 1985 to prepare accounts for a period consisting of or including the return period,

the reference to accounts in subsection (1) above is a reference only to such accounts, containing such particulars and having annexed to them such documents, as are required under that Act to be so prepared.

[F14(7)The statements which may be required in pursuance of a notice under this section include statements showing the amount of tax (if any) chargeable.]

(8)Different information, accounts, statements and reports may be required in pursuance of a notice under this section in relation to different descriptions of company [F14or different descriptions of profits and losses; and, in particular, information may be so required with respect to tax recoverable by virtue of section [F15419] of the principal Act (loans to participators) as if it were corporation tax, to advance corporation tax and to corporation tax already paid.]

[F16(8A)A return under this section shall be amended by the company delivering to the inspector a document in such form, containing such information and accompanied by such statements as the Board may require.]

(9)In the application of this section to a company registered in Northern Ireland, references to the Companies Act 1985 shall be construed as references to the M31Companies (Northern Ireland) Order 1986.”

83 Failure to make return for corporation tax.U.K.

With respect to failures to deliver returns required by notices served under section 11 of the Management Act after the appointed day, for section 94 of that Act (failure to make return for corporation tax) there shall be substituted the following section—

“94 Failure to make return for corporation tax.

(1)If a company has been required by a notice served under section 11 of this Act (or under that section as extended by section 12 of this Act) to deliver a return for any period (in this section referred to as “the return period”) and the company fails to make proper delivery of the return, then, subject to subsections (3) and (5) below, the company shall be liable to a penalty which,—

(a)if the return is delivered before the expiry of the period of three months beginning on the day following the final day for the delivery of the return, shall be £100; and

(b)in any other case, shall be £200.

(2)In relation to a return required by such a notice as is referred to in subsection (1) above,—

(a)any reference in this section (however expressed) to the delivery of the return is a reference to its delivery together with the accompanying accounts, statements and reports referred to in section 11(1) of this Act; and

(b)any reference in this section to making proper delivery of the return is a reference to the delivery of the return on or before the day which (in accordance with section 11(4) of this Act) is the final day for the delivery of the return.

(3)In a case where—

(a)a company is required to deliver a return for a return period, and

(b)the return period is a period for which, under the M32Companies Act 1985, the company is required to deliver accounts to the Registrar of Companies,

the company shall not be liable to a penalty under subsection (1) above by reason of a failure to make proper delivery of the return if the return is delivered on or before the day which is the last day for the delivery to the Registrar of the accounts referred to in paragraph (b) above.

(4)In the application of this section to a company registered in Northern Ireland, the reference in subsection (3) above to the Companies Act 1985 shall be construed as a reference to the M33Companies (Northern Ireland) Order 1986 and references to the Registrar of Companies shall be construed accordingly.

(5)In any case where—

(a)a company is within the charge to corporation tax for three consecutive accounting periods, each of which is a return period, and

(b)at no time between the beginning of the first of those periods and the end of the last is the company outside the charge to corporation tax, and

(c)the company fails to make proper delivery of the return for the third of those periods, and

(d)the company was liable to a penalty under this section in respect of each of the first two of those periods,

subsection (1) above shall have effect in relation to the failure referred to in paragraph (c) above as if for “£100” there were substituted “£500” and for “£200” there were substituted “£1,000”.

(6)If a company which has been required as mentioned in subsection (1) above to deliver a return fails to deliver the return before the expiry of the period of eighteen months beginning on the day following the last day of the return period, then (without prejudice to any penalty under the preceding provisions of this section) the company shall be liable to a penalty which,—

(a)if the return is delivered before the expiry of the period of two years beginning on the day following that last day, shall be 10 per cent. of the tax unpaid at the end of the eighteen months referred to above; and

(b)in any other case, shall be 20 per cent. of the tax unpaid at the end of those eighteen months.

(7)In subsection (6) above “the tax unpaid” at any time means the amount by which the corporation tax chargeable on the profits of the company for the return period which then remains unpaid exceeds any income tax borne by deduction from payments included in those profits.

(8)In determining for the purposes of subsection (7) above how much of the corporation tax chargeable on the profits of a company for the return period remains unpaid at any time, no account shall be taken of the discharge of any liability for that tax which, pursuant to a claim under subsection (3) of [F17section 239(3) of the principal Act], is attributable to an amount of surplus advance corporation tax, as defined in that subsection, unless it is a surplus for an accounting period ending not later than two years after the end of the return period.”

84

(1)—(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F18

(4)At the end of section 70 of the Management Act (evidential certificates) there shall be inserted the following subsection—

“(5)Where an amount has been assessed by way of penalty under section 94 of this Act and either no appeal has been brought against that assessment or the amount assessed has been confirmed or varied on appeal,—

(a)a certificate of an inspector or other officer of the Board that an amount is due by way of penalty under that section, and

(b)a certificate of a collector that payment of that amount has not been made to him or, to the best of his knowledge and belief, to any other collector, or to a person acting on his behalf or on behalf of another collector,

shall be sufficient evidence that the amount mentioned in the certificates is unpaid and is due to the Crown; and any document purporting to be such a certificate as is mentioned in this subsection shall be deemed to be such a certificate unless the contrary is proved.”

(5)—(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F19

(9)This section has effect with respect to penalties incurred after the appointed day.

85 Interest on overdue corporation tax etc.U.K.

With respect to accounting periods ending after the appointed day, after section 87 of the Management Act there shall be inserted the following section—

“87A Interest on overdue corporation tax etc.

(1)Corporation tax shall carry interest at the [F20rate applicable under section 178 of the Finance Act 1989] from the date when the tax becomes due and payable (in accordance with section [F2110] of the principal Act) until payment.

(2)Subsection (1) above applies even if the date when the tax becomes due and payable (as mentioned in that subsection) is a non-business day within the meaning of section 92 of the M34Bills of Exchange Act 1882.

(3)In relation to corporation tax assessed by virtue of section [F22346(2) or 347(1) of the principal Act, section 267(3C) or 278(5) of the Income and Corporation Taxes Act 1970][F23, section 96(8) of the Finance Act 1990] or section 87(4) of the M35Capital Gains Tax Act 1979 (which enable unpaid corporation tax assessed on a company to be assessed on other persons in certain circumstances), the reference in subsection (1) above to the date when the tax becomes due and payable is a reference to the date when it became due and payable by the company.

(4)In any case where—

(a)there is in any accounting period of a company (in this subsection referred to as “the later period”) an amount of surplus advance corporation tax, as defined in subsection (3) of section [F24239 of the principal Act], and

(b)pursuant to a claim under the said subsection (3), the whole or any part of that amount is treated for the purposes of the said section [F24239] as discharging liability for an amount of corporation tax for an earlier accounting period (in this subsection referred to as “the earlier period”), and

(c)disregarding the effect of the said subsection (3), an amount of corporation tax for the earlier period would carry interest in accordance with this section,

then, in determining the amount of interest payable under this section on corporation tax unpaid for the earlier period, no account shall be taken of any reduction in the amount of that tax which results from the said subsection (3) except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (1) above).

(5)A sum assessed on a company by such an assessment as is referred to in [F25section 252(5) of the principal Act] (recovery of payment of tax credit or interest on such a payment) shall carry interest at the [F26rate applicable under section 178 of the Finance Act 1989] from the date when the payment of tax credit or interest was made until the sum assessed is paid.”

86 Supplementary provisions as to interest on overdue tax.U.K.

(1)At the end of section 69 of the Management Act (recovery of interest on tax) there shall be added the words “or, if it is interest on tax which is not in fact assessed, as if it were tax charged and due and payable under an assessment”.

(2)In section 86 of the Management Act (interest on overdue tax), subsection (2)(d) and paragraph 5 of the Table (which relate to assessed corporation tax) shall be omitted.

(3)References to section 86 of the Management Act in—

(a)sections 70(2) and 92 of that Act (evidence, and remission of interest in certain cases), and

(b)paragraph 4 of Schedule 15 to the M36Finance Act 1973 (territorial extension of tax),

shall include a reference to section 87A of the Management Act.

(4)In section 88 of the Management Act (interest on tax recovered to make good loss due to taxpayer’s fault)—

(a)in subsection (2) (exclusion of certain non-assessed tax) after the words “in relation to” there shall be inserted “corporation tax or”; and

(b)in subsection (5), paragraph (e) (which relates to corporation tax) shall be omitted.

(5)In section 91 of the Management Act (effect on interest of reliefs) after subsection (1) there shall be inserted the following subsections—

“(1A)Where interest is payable under section 87A of this Act in respect of an amount of corporation tax for an accounting period, and relief from tax is given by a discharge of any of that corporation tax—

(a)such adjustment shall be made of the amount of interest payable under that section in respect of corporation tax for that accounting period, and

(b)such repayment shall be made of any amounts of interest previously paid under that section in respect of that corporation tax,

as are necessary to secure that the total sum (if any) paid or payable under that section in respect of corporation tax for that accounting period is the same as it would have been if the tax discharged had never been charged.

(1B)Subsection (1A) above has effect subject to section 87A(4) of this Act.”

(6)At the beginning of subsection (2) of that section there shall be inserted the words “Subject to subsection (2A) below” and at the end of that subsection there shall be added the following subsection—

“(2A)In any case where—

(a)relief from corporation tax is given to any person by repayment, and

(b)that tax was paid for an accounting period ending after the day which is the appointed day for the purposes of section [F2710 of the principal Act],

that person shall be entitled to require that the amount repaid shall be treated for the purposes of this section, so far as it will go, as if it were a discharge of the corporation tax charged on him for that period.”

(7)This section has effect with respect to accounting periods ending after the appointed day.

87 Interest on tax overpaid.U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F28

88 Recovery of overpayment of tax etc.U.K.

(1)In section 30 of the Management Act (recovery of overpayment of tax etc.) after subsection (2) there shall be inserted the following subsection—

“(2A)In any case where—

(a)interest has been paid under section [F29826 of the principal Act] on a repayment of tax, and

(b)the whole or any part of that repayment has been paid to any person but ought not to have been paid to him, and

(c)interest ought not to have been paid on that repayment, either at all or to any extent,

then the amount of the repayment assessed under subsection (1) above may include an amount equal to the interest that ought not to have been paid.”

(2)After subsection (3) of that section there shall be inserted the following subsection—

“(3A)If, in a case not falling within subsection (2A) above,—

(a)interest has been paid under section [F29826 of the principal Act] on a repayment of tax, and

(b)that interest ought not to have been paid, either at all or to any extent,

then an amount equal to the interest that ought not to have been paid may be assessed and recovered as if it were unpaid corporation tax.”

(3)At the end of subsection (4) of that section there shall be added the words “and an assessment to recover—

(a)an amount of corporation tax repaid to a company in respect of an accounting period, or

(b)an amount of income tax repaid to a company in respect of a payment received by the company in any accounting period, or

(c)interest on any such repayment of tax,

shall be treated as an assessment to corporation tax for the accounting period referred to in paragraph (a) or (b) above, as the case may be, and the sum assessed shall carry interest at the prescribed rate for the purposes of section 87A of this Act from the date when the payment being recovered was made until payment.”

(4)After subsection (4) of that section there shall be inserted the following subsection—

“(4A)Where an assessment is made under this section to recover—

(a)corporation tax repaid to a company in respect of an accounting period, or

(b)income tax repaid to a company in respect of payments received by the company in an accounting period,

and more than one repayment of that tax has been made in respect of that period, any sum recovered in respect of income tax or corporation tax repaid shall as far as possible be treated as relating to a repayment of that tax made later rather than to a repayment made earlier.”

(5)(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F30

(7)Subsections (1) to (4) above have effect with respect to the recovery of—

(a)repayments of corporation tax paid for accounting periods ending after the appointed day,

(b)repayments of income tax on payments received by a company in any such accounting period, and

(c)interest on such repayments;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F31

89. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F32U.K.

MiscellaneousU.K.

90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F33U.K.

91 Close companies: loans to participators.U.K.

(1)In section 109 of the Management Act (close companies: loans to participators) subsection (2) shall be omitted.

(2)In subsection (3) of that section for “88” there shall be substituted “ 87A ” and for the words from “charged” onwards there shall be substituted “ under the said section [F34419] became due and payable shall be that determined in accordance with subsection [F34(3)] of that section ”.

(3)After subsection (3) of that section there shall be inserted the following subsection—

“(3A)If there is such a repayment of the whole or any part of a loan or advance as is referred to in subsection [F34(4)] of section [F34419] of the principal Act, interest under section 87A of this Act on so much of the tax under the said section [F34419] as is referable to the amount repaid shall not be payable in respect of any period after the date on which the repayment was made.”

(4)This section has effect with respect to loans or advances made (or treated as made) in any accounting period ending after the appointed day.

92, 93.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F35U.K.

94 Failure to do things within a limited time.U.K.

In section 118(2) of the Management Act (cases where persons are deemed not to have failed to do things which are required to be done within a limited time), after the word “deemed”, in the second place where it occurs, there shall be inserted “ not to have failed to do it unless the excuse ceased and, after the excuse ceased, he shall be deemed ”.

95 Interpretation of Chapter V and consequential and supplementary provisions.U.K.

(1)In this Chapter “the Management Act” means the M37Taxes Management Act 1970.

(2)Subject to subsection (3) below, any reference in this Chapter to the appointed day is a reference to such day as the Treasury may by order made by statutory instrument appoint, and different days may be so appointed for different provisions of this Chapter.

(3)No day may be appointed by virtue of subsection (2) above which falls earlier than 31st March 1992.

(4)The provisions of Schedule 6 to this Act shall have effect, being provisions consequential on and supplementary to the provisions of this Chapter.

Part IIU.K. Inheritance Tax etc.

96 Interests in possession.U.K.

(1)With respect to transfers of value made, and other events occurring, on or after 17th March 1987, the M38Inheritance Tax Act 1984 shall be amended in accordance with this section.

(2)In section 3A (potentially exempt transfers)—

(a)in subsection (2)(a) the words “otherwise than as settled property” shall be omitted;

(b)in subsection (2)(b) the words from “otherwise” onwards shall be omitted; and

(c)in subsection (6) after the words “this Act” there shall be inserted “ other than section 52 ”.

(3)At the end of section 3A there shall be added the following subsection—

“(7)In the application of this section to an event on the happening of which tax is chargeable under section 52 below, the reference in subsection (1)(a) above to the individual by whom the transfer of value is made is a reference to the person who, by virtue of section 3(4) above, is treated as the transferor.”

(4)In section 49 (treatment of interests in possession) subsection (3) (which was added by paragraph 14 of Schedule 19 to the M39Finance Act 1986) shall be omitted.

(5)In section 55 (reversionary interest acquired by beneficiary) in subsection (2) the words “and such a disposition is not a potentially exempt transfer” (being words added by paragraph 15 of the said Schedule 19) shall be omitted.

(6)Schedule 7 to this Act shall have effect for the purpose of making further amendments of the M40Inheritance Tax Act 1984 relating to interests in possession in settled property.

97 Acceptance in lieu: capital transfer tax and estate duty.U.K.

(1)If, under paragraph 17 of Schedule 4 to the M41Finance Act 1975, the Commissioners of Inland Revenue agree to accept property in satisfaction of an amount of capital transfer tax on terms that the value to be attributed to the property for the purposes of that acceptance is determined as at a date earlier than that on which the property is actually accepted, the terms may provide that the amount of capital transfer tax which is satisfied by the acceptance of that property shall not carry interest under paragraph 19 of that Schedule from that date.

(2)If, under any of the enactments set out in paragraphs (a) to (c) of subsection (3) of section 8 of the M42National Heritage Act 1980, the Commissioners of Inland Revenue agree to accept property in satisfaction of an amount of estate duty on terms that the value to be attributed to the property for the purposes of that acceptance is determined as at a date earlier than that on which the property is actually accepted, the terms may provide that the amount of estate duty which is satisfied by the acceptance of that property shall not carry interest under section 18 of the M43Finance Act 1896 from that date.

(3)Subsections (1) and (2) above apply in any case where the acceptance of the property in question occurs on or after 17th March 1987 and paragraph 19 of Schedule 4 to the Finance Act 1975 or, as the case may be, section 18 of the Finance Act 1896 shall have effect subject to any such terms as are referred to in subsection (1) or subsection (2) above.

(4)In this section “estate duty” and “property” have the meaning assigned by section 272 of the Inheritance Tax Act 1984.

98 Personal pension schemes.U.K.

(1)The Inheritance Tax Act 1984 shall be amended as follows.

(2)At the end of section 12(2) (dispositions by employers that are not transfers of value) there shall be added—

(c)it is a contribution under approved personal pension arrangements within the meaning of Chapter II of Part I of the Finance (No. 2) Act 1987 entered into by an employee of the person making the disposition”.

(3)In section 12(3), for the words “both paragraph (a) and (b)” there shall be substituted the words “ more than one paragraph ”, and for the word “either” there shall be substituted the words “ any one ”.

(4)In section 151 (treatment of pension rights etc.) after subsection (1) there shall be inserted—

“(1A)This section also applies to approved personal pension arrangements within the meaning of Chapter II of Part I of the Finance (No. 2) Act 1987; and references in the following provisions of this section to a scheme shall be construed accordingly.”

(5)In section 152 (cash options) for the words from “under a contract” to “annuities)” there shall be substituted the words—

“(a)under approved personal pension arrangements within the meaning of Chapter II of Part I of the Finance (No. 2) Act 1987, or

(b)under a contract or trust scheme approved by the Board under section 226 or 226A of the Taxes Act or (before the commencement of that Act) under section 22 of the M44Finance Act 1956,”.

Part IIIU.K. Miscellaneous and Supplementary

99Stamp duty: options etc.U.K.

(1)In section 50 of the Finance Act 1987 F36 (stamp duty exemption for options to acquire, and other interests in, exempt securities), in subsection (1), after the word “acquire” there shall be inserted the words “or to dispose of”.

(2)In subsection (3) of that section, after the words “the Finance Act (Northern Ireland) 1967 F37” (in both places) there shall be inserted the words “or section 79(2) of the Finance Act 1986”.

100Stamp duty reserve tax.U.K.

(1)The Finance Act 1986 shall have effect in relation to agreements to transfer securities made on or after 8th May 1987 with the insertion of the following section after section 89 —

“(89A)Section 87: exceptions for public issues.

(1)Section 87 above shall not apply as regartds an agreement to transfer securities other than units under a unit trust scheme to B or B's nominee if —

(a)the agreement is part of an arrangement, entered into by B in the ordinary course of B's business as an issuing house, under which B (as principal) is to offer the securities for sale to the public,

(b)the agreement is conditional upon the admission of the securities to the Offical List of The Stock Exchange,

(c)the consideration under the agreement for each security is the same as the price at which B is to offer the security for sale, and

(d)B sells the securities in accordance with the arrangement referred to in paragraph (a) above.

(2)Section 87 above shall not apply as regards an agreement if the securities to which the agreement relates are newly subscribed securities other than units under a unit trust scheme and —

(a)the agreement is made in pursuance of an offer to the public made by A (as principal) under an arrangement entered into in the ordinary course of A's business as an issuing house,

(b)a right of allotment in respect of, or to subscribe for, the securities has been acquired by A under an agreement which is part of the arrangement,

(c)both those agreements are conditional upon the admission of the securities to the Offical List of The Stock Exchange, and

(d)the consideration for each security is the same under both agreements;

and for the purposes of this subsection, “newly subscribed securities” are securities which, in pursuance of the arrangement referred to in paragraph (a) above, are issued wholly for new consideration.

(3)Section 87 above shall not apply as regards an agreement if the securities to which the agreement relates are registered securities other than units under a unit trusty scheme and —

(a)the agreement is made in pursuance of an offer to the public made by A,

(b)the agreement is conditional upon the admission of the securities to the Offical List of The Stock Exchange, and

(c)under the agreement A issues to B or his nominee a renounceable letter of acceptance, or similar instrument, in respect of the securities.

(4)The Treasury may by regulations amend paragraph (b) of subsection (1) above, paragraph (c) of subsection (2) above, and paragraph (b) of subsection (3) above (as they have effect for the time being); and 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.”

(2)Section 91 of the Finance Act 1986 F38 (liability to tax) shall have effect, and shall be deemed always to have had effect, with the omission of subsection (2).

101 Oil taxation.U.K.

(1)Schedule 10 to the M45Finance Act 1987 (nomination scheme for disposals and appropriations of oil) shall have effect subject to the amendments in Schedule 8 to this Act.

(2)In section 62 of the Finance Act 1987 (market value of oil to be determined on a monthly basis) subsection (6) (meaning of relevant sale of oil in relation to the additional return required by subsection (4) of that section) shall have effect subject to the following modifications—

(a)after the words “sale of oil”, in the second place where they occur, there shall be inserted the words “at arm’s length”; and

(b)in paragraph (b) after the words “sub-paragraph (3A) thereof” there shall be inserted “or otherwise”.

(3)Section 63 of the Finance Act 1987 (blends of oil from two or more fields) shall have effect with the omission from subsection (1) of the words from “and in” onwards and with the addition, at the end of that subsection, of the following subsection—

“(1A)In this section—

(a)“oil field” includes an area which is a foreign field for the purposes of section 12 of the M46Oil Taxation Act 1983;

(b)“oil” includes any substance which would be oil if the enactments mentioned in section 1(1) of the principal Act extended to such an area as is referred to in paragraph (a) above;

(c)“blended oil” means oil which has been mixed as mentioned in subsection (1) above; and

(d)“the originating fields”, in relation to any blended oil, means the oil fields from which the blended oil is derived.”

(4)In paragraph 5 of Schedule 2 to the M47Oil Taxation Act 1975 (returns by the responsible person for an oil field) after sub-paragraph (2A) there shall be inserted the following sub-paragraph—

“(2B)If in any chargeable period oil won from the oil field is mixed as mentioned in section 63 of the Finance Act 1987 so as to give rise to blended oil, within the meaning of that section, then, as respects that chargeable period, for paragraph (a) of sub-paragraph (2) above there shall be substituted the following paragraph—

’(a)state the total of the shares of the participators in the oil field of the oil won from the field during the period less so much of the oil won from the field as is not saved’.”

(5)Subsections (2) to (4) above have effect with respect to chargeable periods ending after 1st January 1987 and, subject to subsection (6) below, Schedule 8 to this Act has effect with respect to calendar months in chargeable periods beginning with March 1987.

(6)Paragraph 5 of Schedule 8 to this Act has effect with respect to chargeable periods ending after such date as the Treasury may by order made by statutory instrument appoint; but no order shall be made under this subsection unless a draft of it has been laid before and approved by a resolution of the House of Commons.

102 Government fees and charges.U.K.

(1)This section applies where a Minister of the Crown of any other person has power under any enactment (whenever passed) to require the payment of, or to determine by subordinate legislation the amount of, any fee or charge (however described) which is payable to the Minister or to any other person who is required to pay the fee or charge into the Consolidated Fund (whether the obligation is so expressed or is expressed as a requirement to make the payment into the Exchequer).

(2)In the following provisions of this section, a power falling within subsection (1) above is referred to as a “power to fix a fee” and, in relation to such a power,—

(a)“fee” includes charge;

(b)“the appropriate authority” means, if the power is exercisable by a Minister of the Crown or any Commissioners, that Minister or those Commissioners and, in any other case, such Minister of the Crown as the Treasury may determine ; and

(c)“the recipient” means the Minister or other person to whom the fee is payable.

(3)In relation to any power to fix a fee, the appropriate authority or any Minister of the Crown with the consent of the appropriate authority may, by order made by statutory instrument, specify functions, whether of the recipient or any other person and whether arising under any enactment, by virtue of the Community obligation or otherwise, the costs of which, in addition to any other matters already required to be taken into account, are to be taken into account in determing the amount of the fee.

(4)In relation to any functions of the costs of which fall to be taken into account on the exercise of any power to fix a fee (whether by virtue of subsection (3) above or otherwise), the appropriate authority or any Minister of the Crown with the consent of the appropriate authority may, by order made by statutory instrument, specify matters which, in addition to any matters already required to be taken into account, are to be taken into account in determining the those costs, and, without prejudice to the generality of the power conferred by this subsection, those matters may include deficits incurred before as well as after the exercise of that power, a requirement to secure a return on an amount of capital and depreciation of assets.

(5)No order shall be made under subsection (3) or subsection (4) above unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.

(6)An order under subsection (3) or subsection (4) above has effect in relation to any exercise of the power to fix the fee concerned after the making of the order ; but no earlier exercise of that power shall be regarded as having been invalid if, had the order been made before that exercsie of power, the exercise would have been validated by the order.

(7)In this section—

(a)“Minister of the Crown” has the same meaning as in the M48Ministers of the Crown Act 1975;

(b)“Commissioners” means the Commissioners of Customs and Excise or the Commissioners of Inland Revenue;

(c)“enactment” does not include Northern Ireland legislation, as defined in section 24(5) of the M49Interpretation Act 1978; and

(d)subject to paragraph (c) above, “subordinate legislation” has the same meaning as in the Interpretation Act 1978.

(8)An Order in Council under paragraph 1(1)(b) of Schedule 1 to the M50Northern Ireland Act 1974 (legislation for Northern Ireland in the interim period) which states that it only made for purposes corresponding to those of this section—

(a)shall not be subject to sub-paragraphs (4) and (5) of paragraph 1 of that Schedule (affirmative resolution of both House of Parliament); but

(b)shall be subject to annulment in pursuance of a resolution of either House.

103 Consumption in port of goods transhipped for use as stores etc. U.K.

(1)Subject to subsection (2) below and to any directions given by the Commissioners under section 61 of the M51Customs and Excise Management Act 1979, goods transhipped for use as stores on a ship which is not less than 40 tons register and which is to make a voyage to a country outside the United Kingdom may be used while the ship is in port without payment of duty.

(2)Subsection (1) above does not apply to—

(a)dutiable alcoholic liquor other than beer and cider ; or

(b)tobacco products;

and the reference in subsection (1) above to a country outside the United Kingdom does not include a reference to the Isle of Man.

(3)In section 1(1) of the Customs and Excise Management Act 1979, at the end of the definition of “transit of transhipment” there shall be added “ or transhipment of those goods for use as stores ”.

(4)In subsection (1) of section 61 of that Act, after paragraph (a) there shall be added—

“(aa)as to the descriptions of vessel on which goods carried as stores may be used in port without payment of duty in accordance with section 103(1) of the Finance (No. 2) Act 1987;

(ab)as to the quantity of any goods which may be carried as stores for use in port as mentioned in paragraph (aa) above and as to the time within which such goods or any specified quantities of them may be so used ; and”;

and in paragraph (b) of that subsection after the words “paragraph (a)” there shall b inserted “ or paragraph (aa) ”.

(5)In subsection (5) of the said section 61 after the words “United Kingdom”, in the first place where they occur, there shall be inserted “ or for use in port without payment of duty ”.

(6)Subsections (1) and (2) above shall be construed as one with the M52Customs and Excise Management Act 1979.

(7)Notwitstanding the generality of section 24 of the M53Value Added Tax Act 1983 (application of customs and excise enactments in relation to value added tax), subsections (1) and (2) above are excluded from the enactments to which that section applies.

104 Short title, interpretation, construction and repeals.U.K.

(1)This Act may be cited as the Finance (No. 2) Act 1987.

(2)In this Act “the Taxes Act” means the M54Income and Corporation Taxes Act 1970.

(3)Part I of this Act, so far as it relates to income tax, shall be construed as one with the Income Tax Acts, so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts and, so far as it relates to capital gains tax, shall be construed as one with the M55Capital Gains Tax Act 1979.

(4)The enactments specified in Schedule 9 to this Act (which include enactments which are spent or otherwise unnecessary) are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.

SCHEDULES

SCHEDULES 1—5U.K. . . . F39

Section 95.

SCHEDULE 6U.K. Management Provisions: Supplementary and Consequential Provisions

Companies’ capital gainsU.K.

1U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F40

2With respect to chargeable gains accruing in accounting periods ending after the appointed day, in subsection (3C) of section 267 of the Taxes Act (company reconstruction or amalgamation: transfer of assets)—

(a)for the words “when it is payable” there shall be substituted “when it is due and payable or, if later, the date when the assessment is made on the company”;

(b)for the words “the time when the tax became payable” there shall be substituted “the later of those dates”; and

(c)for the words from “a sum” onwards there shall be substituted “from the chargeable company a sum equal to that amount together with any interest paid by him under section 87A of the Taxes Management Act 1970 on that amount”.

3U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F41

4(1)Section 278 of the Taxes Act (company ceasing to be member of a group) shall be amended as follows.

(2)In subsection (3) at the beginning of the words following paragraph (b) there shall be inserted “then, subject to subsection (3A) below”, and after that subsection there shall be inserted the following subsection—

“(3A)Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the chargeable company on the sale referred to in subsection (3) above shall be treated as accruing to the chargeable company as follows—

(a)for the purposes for which the assumptions in section [F42409(2) of the Taxes Act 1988] apply, it shall be assumed to accrue in the notional or actual accounting period which ends when the company ceases to be a member of the group; and

(b)subject to paragraph (a) above, it shall be treated as accruing immediately before the company ceases to be a member of the group.”

(3)In subsection (5)—

(a)the words “of the”, in the first place where they occur, shall be omitted;

(b)for the words “the date when it becomes payable” there shall be substituted “the date determined under subsection (5A) below”;

(c)for the words “the time when the tax became payable” there shall be substituted “the said date”; and

(d)for the words “a sum” onwards there shall be substituted “from the chargeable company a sum equal to that amount together with any interest paid by the company concerned under section 87A of the Taxes Management Act 1970 on that amount”.

(4)After subsection (5) there shall be inserted the following subsection—

“(5A)The date referred to in subsection (5) above is whichever is the later of—

(a)the date when the tax becomes due and payable by the company; and

(b)the date when the assessment was made on the chargeable company.”

(5)In subsection (6) the words from the beginning to “group, and” shall be omitted.

(6)This paragraph has effect where the accounting period in which the chargeable company ceases to be a member of the group ends after the appointed day.

5(1)With respect to chargeable gains accruing in chargeable periods ending after the appointed day, section 87 of the M56Capital Gains Tax Act 1979 (restriction on application of sections 85 and 86 of that Act) shall be amended as follows.

(2)In subsection (4)—

(a)for the words “the date when it is payable” there shall be substituted “the date determined under subsection (4A) below”;

(b)for the words “the time when the tax became payable” there shall be substituted “that date”; and

(c)for the words from “a sum” onwards there shall be substituted “from the chargeable person a sum equal to that amount together with any interest paid by him under section 87A of the M57Taxes Management Act 1970 on that amount”.

(3)After subsection (4) there shall be inserted the following subsection—

“(4A)The date referred to in subsection (4) above is whichever is the later of—

(a)the date when the tax becomes due and payable by the chargeable person; and

(b)the date when the assessment was made on the chargeable person.”

Relief for unremittable incomeU.K.

6U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F43

7With respect to tax in respect of accounting periods ending after the appointed day and interest on such tax, at the end of section 85 of the Management Act (application to corporation tax of provisions of Part VIII of that Act) there shall be added the following subsection—

“(2)Subsection (2) of section 83 above shall apply—

(a)to corporation tax to which a person is chargeable in respect of a non-resident company and which has become due and payable without the making of an assessment; and

(b)to interest to which he is chargeable on such tax under section 87A below,

as it applies (by virtue of subsection (1) above) to corporation tax which has been assessed on him in respect of such a company.”

Lloyd’s underwriting agentsU.K.

8U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F44

Section 96.

SCHEDULE 7U.K. Inheritance Tax: Interests in Possession

1U.K.After section 54 of the M58Inheritance Tax Act 1984 (in this Schedule referred to as “the 1984 Act”) there shall be inserted the following sections—

“54A Special rate of charge where settled property affected by potentially exempt transfer.

(1)If the circumstances fall within subsection (2) below, this section applies to any chargeable transfer made—

(a)under section 52 above, on the coming to an end of an interest in possession in settled property during the life of the person beneficially entitled to it, or

(b)on the death of a person beneficially entitled to an interest in possession in settled property;

and in the following provisions of this section the interest in possession mentioned in paragraph (a) or paragraph (b) above is referred to as “the relevant interest”.

(2)The circumstances referred to in subsection (1) above are—

(a)that the whole or part of the value transferred by the transfer is attributable to property in which the relevant interest subsisted and which became settled property in which there subsisted an interest in possession (whether the relevant interest or any previous interest) on the making by the settlor of a potentially exempt transfer at any time on or after 17th March 1987 and within the period of seven years ending with the date of the chargeable transfer; and

(b)that the settlor is alive at the time when the relevant interest comes to an end; and

(c)that, on the coming to an end of the relevant interest, any of the property in which that interest subsisted becomes settled property in which no qualifying interest in possession (as defined in section 59 below) subsists, other than property to which section 71 below applies; and

(d)that, within six months of the coming to an end of the relevant interest, any of the property in which that interest subsisted has neither—

(i)become settled property in which a qualifying interest in possession subsists or to which section 71 below applies, nor

(ii)become property to which an individual is beneficially entitled.

(3)In the following provisions of this section “the special rate property”, in relation to a chargeable transfer to which this section applies, means the property in which the relevant interest subsisted or, in a case where—

(a)any part of that property does not fall within subsection (2)(a) above, or

(b)any part of that property does not become settled property of the kind mentioned in subsection (2)(c) above,

so much of that property as appears to the Board or, on appeal, to the Special Commissioners to be just and reasonable.

(4)Where this section applies to a chargeable transfer (in this section referred to as “the relevant transfer”), the tax chargeable on the value transferred by the transfer shall be whichever is the greater of the tax that would have been chargeable apart from this section and the tax determined in accordance with subsection (5) below.

(5)The tax determined in accordance with this subsection is the aggregate of—

(a)the tax that would be chargeable on a chargeable transfer of the description specified in subsection (6) below, and

(b)so much (if any) of the tax that would, apart from this section, have been chargeable on the value transferred by the relevant transfer as is attributable to the value of property other than the special rate property.

(6)The chargeable transfer postulated in subsection (5)(a) above is one—

(a)the value transferred by which is equal to the value transferred by the relevant transfer or, where only part of that value is attributable to the special rate property, that part of that value;

(b)which is made at the time of the relevant transfer by a transferor who has in the preceding seven years made chargeable transfers having an aggregate value equal to the aggregate of the values transferred by any chargeable transfers made by the settlor in the period of seven years ending with the date of the potentially exempt transfer; and

(c)for which the applicable rate or rates are one-half of the rate or rates referred to in section 7(1) above.

(7)This section has effect subject to section 54B below.

54B Provisions supplementary to section 54A.

(1)The death of the settlor, at any time after a chargeable transfer to which section 54A above applies, shall not increase the tax chargeable on the value transferred by the transfer unless, at the time of the transfer, the tax determined in accordance with subsection (5) of that section is greater than the tax that would be chargeable apart from that section.

(2)The death of the person who was beneficially entitled to the relevant interest, at any time after a chargeable transfer to which section 54A above applies, shall not increase the tax chargeable on the value transferred by the transfer unless, at the time of the transfer, the tax that would be chargeable apart from that section is greater than the tax determined in accordance with subsection (5) of that section.

(3)Where the tax chargeable on the value transferred by a chargeable transfer to which section 54A above applies falls to be determined in accordance with subsection (5) of that section, the amount referred to in paragraph (a) of that subsection shall be treated for the purposes of this Act as tax attributable to the value of the property in which the relevant interest subsisted.

(4)Subsection (5) below shall apply if—

(a)during the period of seven years preceding the date on which a chargeable transfer to which section 54A above applies (“the current transfer”) is made, there has been another chargeable transfer to which that section applied, and

(b)the person who is for the purposes of the current transfer the settlor mentioned in subsection (2)(a) of that section is the settlor for the purposes of the other transfer (whether or not the settlements are the same);

and in subsections (5) and (6) below the other transfer is referred to as the “previous transfer”.

(5)Where this subsection applies, the appropriate amount in relation to the previous transfer (or, if there has been more than one previous transfer, the aggregate of the appropriate amounts in relation to each) shall, for the purposes of calculating the tax chargeable on the current transfer, be taken to be the value transferred by a chargeable transfer made by the settlor immediately before the potentially exempt transfer was made.

(6)In subsection (5) above “the appropriate amount”, in relation to a previous transfer, means so much of the value transferred by the previous transfer as was attributable to the value of property which was the special rate property in relation to that transfer.

(7)In this section—

• “the relevant interest” has the meaning given by subsection (1) of section 54A above; and

• “the special rate property” has the meaning given by subsection (3) of that section.”.

2U.K.In section 56 of the 1984 Act (exclusion of certain exemptions) in subsection (5) after the word “disposition” there shall be inserted “for such consideration”.

3(1)Section 201 of the 1984 Act (liability for tax relating to settled property) shall be amended as follows.U.K.

(2)In subsection (2) after the word “death” there shall be inserted “but is not a potentially exempt transfer”.

(3)After subsection (3) there shall be inserted the following subsection—

“(3A)Subsection (1)(d) above shall not apply in relation to the tax chargeable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer in a case where the settlement was made before 17th March 1987 if the trustees were resident in the United Kingdom when the settlement was made, but have not been resident there at any time between 16th March 1987 and the death of the transferor.”

4(1)Section 216 of the 1984 Act (delivery of accounts) shall be amended as follows.U.K.

(2)In subsection (1) after paragraph (bc) there shall be inserted the following paragraph—

“(bd)is liable under section 201(1)(b), (c) or (d) above for tax on the value transferred by a potentially exempt transfer which is made under section 52 above and which proves to be a chargeable transfer, or would be so liable if tax were chargeable on that value, or”

(3)In subsection (6)(aa) of that section after the words “subsection (1)(bb)” there shall be inserted “or (bd)”.

5U.K.In section 265 of the 1984 Act (chargeable transfers affecting more than one property) after the words “subject to” there shall be inserted “section 54B(3) above and to”.

Section 101.

SCHEDULE 8U.K. Amendments of Schedule 10 to M59Finance Act 1987

1U.K.At the end of paragraph 1 (interpretation) there shall be added the following sub-paragraph—

“(3)Where an amount of oil is required to be delivered to the Secretary of State pursuant to a notice served by him, any oil which is inadvertently delivered to him in excess of the amount required shall be treated for the purposes of sub-paragraph (2) above as delivered pursuant to the notice.”.

2(1)In paragraph 5 (content of nomination) in sub-paragraph (1)(b)—U.K.

(a)for the words “except in the case of a proposed appropriation” there shall be substituted “in the case of a proposed sale”; and

(b)for the word “delivered” there shall be substituted “sold”.

(2)At the end of sub-paragraph (3) of paragraph 5 (penalty for fraudulent or negligent furnishing of information etc. in connection with a nomination) there shall be added the words “and the nomination shall not be effective”.

3(1)In paragraph 8 (revision of nominations) after sub-paragraph (2) there shall be inserted the following sub-paragraphs—U.K.

“(2A)If a participator who has made a nomination of a proposed supply, proposed appropriation or a proposed transaction falling within paragraph 2(1)(d) above fails, in whole or in part, to supply, to appropriate or otherwise to complete the proposed transaction by the delivery or appropriation of oil forming part of his equity production for the proposed delivery month, then, in accordance with regulations made by the Board, he may amend or withdraw the nomination as mentioned in sub-paragraph (2B) below.

(2B)The circumstances in which, in a case falling within sub-paragraph (2A) above, a participator may amend or withdraw a nomination are,—

(a)in the case of a nomination of a proposed supply or proposed appropriation, if the participator is of the opinion that the failure referred to in that sub-paragraph was caused by circumstances over which neither he nor any person connected or associated with him had control; or

(b)in the case of a nomination of a proposed transaction falling within paragraph 2(1)(d) above, in such circumstances as may be prescribed by regulations made by the Board; or

(c)in any case where the nomination is of a proposed supply or proposed appropriation and the participator is either the field operator or the operator of a relevant system, if the participator is of the opinion that the failure referred to in sub-paragraph (2A) above was caused by action necessarily taken by him in the interests of safety or the prevention of pollution or in accordance with good oil field practice.

(2C)In relation to such a nomination as is referred to in sub-paragraph (2B)(c) above,—

(a)a participator is the field operator if, in relation to the field specified in the nomination, he is the person having the function of organising or supervising operations for searching or boring for or getting oil in pursuance of a licence; and

(b)the expression “relevant system” is applicable only where the oil to which the nomination relates is blended oil and is a reference to any system by which blended oil (in relation to which the field specified in the nomination is one of the originating fields) is transported, treated or stored prior to its disposal or relevant appropriation; and

(c)a participator in an oil field is an operator of a relevant system, as defined above, if he is the person charged, or principally charged, with the operation of the system;

and expressions used in paragraph (b) above have the same meaning as in section 63 of this Act.”

(2)In sub-paragraph (3) of paragraph 8—

(a)for the words “sub-paragraph (2)”, in the first place where they occur, there shall be substituted “the preceding provisions of this paragraph”;

(b)in paragraph (a) after the word “above” there shall be inserted “or, where sub-paragraph (2B) above applies, that the failure was caused as mentioned in paragraph (a) or paragraph (c) of that sub-paragraph or that the circumstances prescribed for the purposes of paragraph (b) of that sub-paragraph exist”; and

(c)in paragraph (b), for the words “if sub-paragraph (2)(a)” there shall be substituted “except where sub-paragraph (2)(b) or sub-paragraph (2B)(a)”.

(3)In sub-paragraph (4) of paragraph 8 after the words “sub-paragraph (2)(b)” there shall be inserted “and sub-paragraph (2B)”.

(4)In sub-paragraph (5) of paragraph 8 for the words “preceding provisions of this Schedule” there shall be substituted “provisions of this Schedule (other than this paragraph)”.

4U.K.In paragraph 9 (effective volume for nominated transactions) for sub-paragraph (4) there shall be substituted the following sub-paragraphs—

“(4)In relation to a proposed supply or proposed appropriation where the nominal volume is expressed as mentioned in paragraph 7(5) above and oil is in fact supplied or, as the case may be, relevantly appropriated as proposed in the nomination, the effective volume is whichever is the greater of—

(a)the minimum nominal volume; and

(b)so much of the total volume of oil supplied or relevantly appropriated as does not exceed the maximum nominal volume.

(5)In relation to a proposed supply or proposed appropriation which does not fall within sub-paragraph (4) above, the effective volume is the nominal volume.”

5(1)In paragraph 11 (which defines the aggregate nominated proceeds for a month) at the beginning of paragraph (b) of sub-paragraph (1) (market value of excess of equity production over proceeds of nominated transactions) there shall be inserted the words “subject to sub-paragraph (1A) below” and at the end of that sub-paragraph there shall be inserted the following sub-paragraph—U.K.

“(1A)If for any month—

(a)a participator has made a nomination of a proposed sale, and

(b)he has an excess falling within sub-paragraph (3) below,

then for that month the reference in sub-paragraph (1)(b) above to the market value of the excess shall be construed as a reference to the market value multiplied by the designated fraction for that month.”

(2)At the beginning of sub-paragraph (2) of paragraph 11 there shall be inserted “Subject to sub-paragraph (2A) below” and at the end of that sub-paragraph there shall be inserted the following sub-paragraph—

“(2A)In the case of a nominated transaction consisting of a proposed supply or proposed appropriation, the proceeds of the transaction shall not have the meaning assigned by sub-paragraph (2) above unless the participator satisfies the Board—

(a)that the whole of the effective volume of oil has been or is to be used for refining as mentioned in paragraph 2(1)(b) above or, as the case may be, has been or is to be relevantly appropriated; or

(b)that, in so far as any of the effective volume of oil has not been or is not to be so used or appropriated, that is occasioned by circumstances over which neither the participator nor any company associated with him, as mentioned in paragraph 2(1) above, has (or had at any material time) control;

and if the Board are not so satisfied with respect to any such nominated transaction, the proceeds of that transaction means the market value (determined in accordance with Schedule 3 to the principal Act) of the effective volume of oil, multiplied by the designated fraction for the month in question.”

(3)At the end of paragraph 11 there shall be inserted the following sub-paragraphs—

“(5)For any month the designated fraction is such fraction as may be specified for the purposes of that month by order made by the Treasury.

(6)An order under sub-paragraph (5) above—

(a)shall not specify a fraction smaller than unity or greater than 3/2;

(b)may be made to have effect for any month in the chargeable period in which falls the date on which the order is made (whether that month begins before, on or after that date);

(c)if it has effect for a month earlier than the date on which it is made, may contain such transitional provisions as the Treasury consider appropriate; and

(d)shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.”

6U.K.In paragraph 12 (nominations of blended oil by a participator in two or more fields)—

(a)for the words from the beginning to “this Act” there shall be substituted “(1) If a person is a participator in two or more oil fields which, in relation to any blended oil, are or are included among the originating fields, then, in accordance with regulations made by the Board, he may make a nomination, having effect with respect to all the originating fields in which he is a participator, of a proposed sale, supply or appropriation of the blended oil”; and

(b)at the end there shall be added—

“(2)In sub-paragraph (1) above “blended oil” and “the originating fields” have the same meaning as in section 63 of this Act.”

Section 104.

SCHEDULE 9U.K. Repeals

Part IU.K. Income Tax and Corporation Tax: General

1U.K.The repeals in sections 21 and 22 of the Finance Act 1970 have effect in relation to contributions made on or after 6th April 1987.

2U.K.The repeal in section 65 of the Finance Act 1982 has effect in accordance with section 67(6) of this Act.

Part IIU.K. Capital Gains

1U.K.The repeals of section 84(2) to (4) of the Finance Act 1980, section 65 of the Finance Act 1984 and section 72(5) of the Finance Act 1985 come into force on the day appointed under section 81(8) of this Act.

2U.K.The remaining repeals have effect with respect to accounting periods beginning on or after 17th March 1987.

Part IIIU.K. Inheritance Tax

These repeals have effect in relation to transfers of value made, and other events occuring, on or after 17th March 1987.

Part IVU.K. Stamp Duty Reserve Tax

This repeal has effect in accordance with section 100(2) of this Act.

Part VU.K. Oil Taxation

This repeal has effect for chargeable periods ending after 1st January 1987.