Finance Act 1989

43Schedule D: computation

(1)Subsection (2) below applies where—

(a)a calculation is made of profits or gains which are to be charged under Schedule D and are for a period of account ending after 5th April 1989,

(b)relevant emoluments would (apart from that subsection) be deducted in making the calculation, and

(c)the emoluments are not paid before the end of the period of nine months beginning with the end of that period of account.

(2)The emoluments—

(a)shall not be deducted in making the calculation mentioned in subsection (1)(a) above, but

(b)shall be deducted in calculating profits or gains which are to be charged under Schedule D and are for the period of account in which the emoluments are paid.

(3)Subsections (4) and (5) below apply where—

(a)a calculation such as is mentioned in subsection (1)(a) above is made,

(b)the calculation is made before the end of the period of nine months beginning with the end of the period of account concerned,

(c)relevant emoluments would (apart from subsection (2) above) be deducted in making the calculation, and

(d)the emoluments have not been paid when the calculation is made.

(4)It shall be assumed for the purpose of making the calculation that the emoluments will not be paid before the end of that period of nine months.

(5)But the calculation shall be adjusted if—

(a)the emoluments are paid after the calculation is made but before the end of that period of nine months,

(b)a claim to adjust the calculation is made to the inspector, and

(c)the claim is made before the end of the period of two years beginning with the end of the period of account concerned.

(6)In the application of this section to the calculation of a person’s profits or gains as an authorised Lloyd’s underwriting agent—

(a)the references in subsections (1)(c), (3)(b), (4) and (5)(a) above to nine months shall be construed as references to three years and nine months, and

(b)the reference in subsection (5)(c) above to two years shall be construed as a reference to five years.

(7)The reference in subsection (6) above to an authorised Lloyd’s underwriting agent is to a person permitted by the Council of Lloyd’s to act as an underwriting agent at Lloyd's.

(8)In a case where the period of account mentioned in subsection (1)(a) above begins before 6th April 1989 and ends before 6th April 1990, the references in subsections (1)(c), (3)(b), (4) and (5)(a) above to nine months shall be construed as references to eighteen months.

(9)In this section “period of account” means a period for which an account is made up.

(10)For the purposes of this section “relevant emoluments” are emoluments for a period after 5th April 1989 allocated either—

(a)in respect of particular offices or employments (or both), or

(b)generally in respect of offices or employments (or both).

(11)This section applies in relation to potential emoluments as it applies in relation to relevant emoluments, and for this purpose—

(a)potential emoluments are amounts or benefits reserved in the accounts of an employer, or held by an intermediary, with a view to their becoming relevant emoluments;

(b)potential emoluments are paid when they become relevant emoluments which are paid.

(12)In deciding for the purposes of this section whether emoluments are paid at any time after 5th April 1989, section 202B of the Taxes Act 1988 (time when emoluments are treated as received) shall apply as it applies for the purposes of section 202A(1)(a) of that Act, but reading “paid” for “received” throughout.

(13)In section 436(1)(b) of the Taxes Act 1988 (profits to be computed in accordance with provisions of that Act applicable to Case I of Schedule D) the reference to that Act shall be deemed to include a reference to this section.