Finance Act 1989

1989 c. 26

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance.

[27th July 1989]

X1 C1 X2Most Gracious Sovereign, WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—C81 C80

Annotations:

Editorial Information

The text of ss. 1-5, 8(2), 15-17, 28, 29, 187(1), 188, Sch.17 Pt. I was taken from SIF Group 40:1 (Customs and Excise: Customs and Excise Duties), the text of ss. 18-27, 29, 186(2), 187(1), 188, Sch. 3, Sch. 17 Pt. III was taken from SIF Group 40:2 (Customs and Excise: Value added Tax and Car Tax), the text of ss. 30-90, 91(1)(3), 92(1)(2)(4)-(7), 93-95, 96(1)(2)(4),97-121, 130, 138, 142-170, 178-180, 182, 186(1)(3), 187(1), 188, Schs. 4-13,Sch. 17 Pts IV-VI, VIII, X was taken from SIF Group 63:1 (Income, Corporation and Capital Gains Taxes: Income and Corporation Taxes), the text of ss. 91(2)(3), 92(3)-(7), 96(3), 107, 122-137, 139-141, 186(1)(3), 187, 188, Sch.12 para. 6, Schs. 14, 15, Sch. 17 Pts. VII, XIV was taken from SIF Group 63:2 (Income, Corporation and Capital Gains Taxes: Capital Gains Tax), the text of ss. 138(6)-(12), 171, 172, 178, 179(1)(d)(e)(3)(4), 180(4)(7), 186(1)(3),187(1), 188, Sch. 17 Pt. X was taken from SIF Group 65 (Inheritance Tax), the text of ss. 181, 187(1), 188, Sch. 16, Sch. 17 Pt. XI was taken from SIF Group96 (Posts and Telecommunications), the text of ss. 185, 187, 188, Sch. 17 Pt. XIV was taken from SIF Group 98:5 (Property, England and Wales: Tithe), the text of ss. 183, 187, 188, Sch. 17 Pts. XII, XIV was taken from SIF Group 99:3 (Public Finance and Economic Controls: National Debt), the text of ss. 6, 7,8(1), 9-14, 187(1), 188, Schs. 1, 2, Sch. 17 Pt. II was taken from SIF Group 107:2 (Road Traffic: Vehicle Excise Duty), the text of ss. 142(9)(10), 184,187(1), 188, Sch. 17 Pt. XIII was taken from SIF Group 110 (Savings Banks) andthe text of ss. 173-178, 179(1)(f)(4), 180(5)(7), 186(1), 187(1), 188, Sch.17 Pt. IX was taken from SIF Group 114 (Stamp Duty). This Act is presented basically in the form in which it appears in the 1990 Edition of The Taxes Acts edited by the Inland Revenue and published by HMSO (any references incommentary to volumes 1, 2, etc are to volumes of that edition). The style of editing differs from that applicable to most Acts published in Statutes in Force.

General amendments to Tax Acts, Income Tax Acts, and/or Corporation Tax Acts made by legislation after 1.2.1991 are noted against Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) but not against each Act

Modifications etc. (not altering text)

General amendments etc. to Tax Acts (or Income Tax Acts or Corporation Tax Acts as the case may be) made by Taxes Management Act 1970 (c. 9, SIF 63:1), s. 41A(7) (as added by Finance Act 1990 (c. 29, SIF 63:1), s. 95(1)(2)), British Telecommunications Act 1981 (c. 38, SIF 96), s. 82(2)(7);Telecommunications Act 1984 (c. 12, SIF 96), s. 72(3); Finance Act 1984 (c. 43, SIF 63:1), ss. 82(6), 85(2), 89(1)(7), 96(1)(7), 98(7), Sch. 9 para. 3(2)(9), Sch. 16 paras. 6, 12 and Finance Act 1985 (c. 54, SIF 63:1), ss. 72(1), 74(5), Sch. 23 para. 15(4), S.I. 1987/530, regs. 11(2), 13(1), 14, Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), ss. 4, 6, 7, 9, 32, 34, 78, 134, 135, 141, 142, 185, 191, 193, 194, 195, 200, 203, 209, 212, 213, 219, 247, 253, 272, 287, 314, 315, 317, 318, 325, 326, 327, 345, 350, 351, 368, 375, 381, 397, 414, 432, 440, 442, 446, 458, 460, 461, 463, 463(2)(3) (as added by Finance Act 1990 (c. 29, SIF 63:1), s. 50(2)), 468, 474, 475, 486, 490, 491,503, 511, 518, 524, 532, 544, 550, 556, 558, 569, 572, 582, 595, 601, 613, 617, 619, 621, 639, 656, 660, 663, 676, 689, 691, 694, 700, 701, 714, 716, 739, 743, 754, 763, 776, 780, 781, 782, 787, 789, 811, 828, 829, 832, 833, 834, 835, 837, 838, 839, 840, 841, 842, Sch. 2 para. 5, Sch. 4 para. 5, Sch. 13 para. 10, Sch. 16 para. 10, Sch. 21 para. 6, Sch. 26 para. 1, Sch. 27 para. 20, Finance Act 1988 (c. 39, SIF 63:1), ss. 66, 127(1)(6), Sch. 12 para. 6, Capital Allowances Act 1990 (c. 1, SIF 63:1), ss. 28(1), 68(8), 74, 82, 83(5),148(5), 163(4), 164(2), S.I. 1990/627 and Finance Act 1990 (c. 29, SIF 63:1), s. 25(10)

C81

Act modified (with effect in accordance with reg. 1 of the amending S.I.) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), regs. 19-26 (as amended by S.I. 2007/2146, regs. 14-18; S.I. 2007/3449, regs. 7, 8)

C80

Act modified by 1988 c. 1, Sch. 19ABA paras. 12-25 (as inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Insurance Companies (Taxation of Reinsurance Business) (Corporation Tax Acts) (Amendment) Order 2007 (S.I. 2007/3430), arts. 1(1), 3(3))

Part I Customs and Excise, Value Added Tax and Car Tax

CHAPTER I Customs and Excise

Hydrocarbon oil duties

1 Rates.

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1

2

In section 13A of that Act (rebate on unleaded petrol), for “£0.0202” there shall be substituted “£0.0272”.

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1

4

This section shall be deemed to have come into force at 6 o’clock in the evening of 14th March 1989.

2 Reliefs.

1

The following section shall be inserted after section 20A of the M1Hydrocarbon Oil Duties Act 1979—

20AA Power to allow reliefs.
1
The Commissioners may make regulations allowing reliefs as regards—
a
any duty of excise which has been charged in respect of hydrocarbon oil, petrol substitute, spirits used for making power methylated spirits, or road fuel gas;
b
any amount which has been paid to the Commissioners under section 12(2)above;
c
any amount which would (apart from the regulations) be payable to the Commissioners under section 12(2) above.
2
The regulations may include such provision as the Commissioners think fit in connection with allowing reliefs, and in particular may—
a
provide for relief to take the form of a repayment or remission;
b
provide for relief to be allowed in cases or classes of case set out in the regulations;
c
provide for relief to be allowed to the extent set out in the regulations;
d
provide for relief to be allowed subject to conditions imposed by the regulations;
e
provide for relief to be allowed subject to such conditions as the Commissioners may impose on the person claiming relief;
f
provide for the taking of samples of hydrocarbon oil in order to as certain whether relief should be allowed or has been properly allowed;
g
make provision as to administration (which may include provision requiring the making of applications for relief);
h
make different provision in relation to different cases or classes of case;
i
include such supplementary, incidental, consequential or transitional provisions as appear to the Commissioners to be necessary or expedient.
3
The conditions which may be imposed as mentioned in subsection (2)(d) or(e) above may include conditions as to the physical security of premises, the provision (by bond or otherwise) of security for payment, or such other matters as the Commissioners think fit.
4
Where a person contravenes or fails to comply with any regulation made under this section or any condition imposed by or under such a regulation—
a
he shall be liable on summary conviction to a penalty of three times the value of any goods in respect of which the contravention or failure occurred or a penalty of an amount represented by level 3 on the standard scale, whichever is the greater, and
b
any goods in respect of which the contravention or failure occurred shall be liable to forfeiture.
5
A reference in this section to a duty of excise includes a reference to any addition to such duty by virtue of section 1 of the Excise Duties (Surcharges or Rebates) Act 1979.
6
Schedule 5 to this Act shall have effect with respect to any sample of hydrocarbon oil taken in pursuance of regulations made under this section.

2

In consequence of subsection (1) above, in paragraph 6 of Schedule 5 to the M2Hydrocarbon Oil Duties Act 1979 after “section” there shall be inserted “20AA or”.

Alcoholic liquor duties

F23 Original gravity of beer.

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4 Blending made-wines etc.

1

Section 55 of the Alcoholic Liquor Duties Act 1979 (charge of excise duty on made-wine) shall be amended as follows.

2

In subsection (5) (which, where certain conditions are satisfied, lifts the requirement to hold a licence for premises where made-wine is produced),after paragraph (d) there shall be added

and
e
he does not blend or otherwise mix—
i
two or more made-wines, or
ii
one or more made-wines and one or more wines,
so as to produce made-wine the rate of duty applicable to which is higher than the rate applicable to at least one of the constituent liquors.

3

After subsection (5) there shall be inserted—

5A
For the purposes of subsection (5) above—
a
the rate of duty applicable to any made-wine is that which is or would be chargeable under subsection (1) above on its importation into the United Kingdom; and
b
the rate of duty applicable to any wine is that which is or would be chargeable under subsection (1) of section 54 above on its importation into the United Kingdom.

4

This section shall have effect in relation to the blending or other mixing of made-wines, or of made-wines and wines, on or after the day on which this Act is passed.

5 Description as beer.

Section 73 of the M3Alcoholic Liquor Duties Act 1979(which prohibits anyone from describing as beer any substance on which beer duty has not been paid) shall cease to have effect.

Vehicles excise duty

6 Rates.

F31

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F32

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3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

F35

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F56

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F37

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F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F89. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F910. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1213. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14 Dishonoured cheques.

F131

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F142

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F133

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F144

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F135

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F146

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F137

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General

F1515. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 Time limits for proceedings.

1

After section 146 of the Customs and Excise Management Act 1979 there shall be inserted—

146A Time limit for proceedings.
1
Except as otherwise provided in the customs and excise Acts, and notwithstanding anything in any other enactment, the following provisions shall apply in relation to proceedings for an offence under those Acts.
2
Proceedings for an indictable offence shall not be commenced after the end of the period of 20 years beginning with the day on which the offence was committed.
3
Proceedings for a summary offence shall not be commenced after the end of the period of 3 years beginning with that day but, subject to that, may be commenced at any time within 6 months from the date on which sufficient evidence to warrant the proceedings came to the knowledge of the prosecuting authority.
4
For the purposes of subsection (3) above, a certificate of the prosecuting authority as to the date on which such evidence as is there mentioned came to that authority’s knowledge shall be conclusive evidence of that fact.
5
In the application of this section to Scotland—
a
in subsection (3), “proceedings for an indictable offence” means proceedings on indictment;
b
in subsection (3), “proceedings for a summary offence” means summary proceedings.
6
In the application of this section to Northern Ireland—
a
“indictable offence” means an offence which, if committed by an adult, is punishable on conviction on indictment (whether only on conviction on indictment, or either on conviction on indictment or on summary conviction);
b
“summary offence” means an offence which, if committed by an adult, is punishable only on summary conviction.
7
In this section, “prosecuting authority” means the Commissioners and includes, in Scotland, the procurator fiscal.

2

Section 147(1) of that Act shall cease to have effect.

F163

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

This section shall have effect in relation to offences committed on or after the day on which this Act is passed.

17 Disbursements in Port of London.

In section 17 of the M4Customs and Excise Management Act1979 (general rule that customs and excise receipts, after deduction of disbursements, are to be paid into the Commissioners’ General Account at the Bank of England) paragraph (a) of subsection (5) (special rule that disbursements in Port of London are to be paid out of that Account) shall cease to have effect.

CHAPTER II Value Added Tax

Zero-rating etc.

F1718. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1819. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1920. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2122. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2223. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions

F2324. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2425. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2526. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter III Miscellaneous

F34327 Relief from car tax where vehicle leased to the handicapped.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28 Reliefs from duties and taxes for persons enjoying certain immunities and privileges.

1

After section 13 of the M5 Customs and Excise Duties(General Reliefs) Act 1979 there shall be inserted the following sections—

13A Reliefs from duties and taxes for persons enjoying certain immunities and privileges.
1
The Commissioners may by order make provision for conferring in respect of any persons to whom this section applies reliefs, by way of remission or repayment, from payment by them or others of duties of customs or excise, value added tax or car tax.
2
An order under this section may make any relief for which it provides subject to such conditions binding the person in respect of whom the relief is conferred and, if different, the person liable apart from the relief for payment of the tax or duty (including conditions which are to be compiled with after the time when, apart from the relief, the duty or tax would become payable) as may be imposed by or under the order.
3
An order under this section may include any of the provisions mentioned in subsection (4) below for cases where—
a
relief from payment of any duty of customs or excise, value added tax or car tax chargeable on any goods, or on the supply of any goods or services or the importation of any goods has been conferred (whether by virtue of an order under this section or otherwise) in respect of any person to whom this section applies, and
b
in the case of goods, provision for forfeiture of the goods.
4
The provisions referred to in subsection (3) above are—
a
provision for payment to the Commissioners of the tax or duty by—
i
the person liable, apart from the relief, for its payment, or
ii
any person bound by the condition, or
iii
any person who is or has been in possession of the goods or has received the benefit of the services,
or for two or more of those persons to be jointly and severally liable for such payment, and
5
An order under this section—
a
may contain such incidental and supplementary provisions as the Commissioners think necessary or expedient, and
b
may make different provision for different cases.
6
In this section and section 13C of this Act—
“duty of customs” includes any agricultural levy within the meaning of section 6 of the European Communities Act 1972 chargeable on goods imported into the United Kingdom, and
“duty of excise” means any duty of excise chargeable on goods and includes any addition to excise duty by virtue of section 1 of the Excise Duties (Surcharges or Rebates) Act 1979.
7
For the purposes of this section and section 13C of this Act, where in respect of any person to whom this section applies relief is conferred (whether by virtue of an order under this section or otherwise) in relation to the use of goods by any persons or for any purposes, the relief is to be treated as conferred subject to a condition binding on him that the goods will be used only by those persons or for those purposes.
8
Nothing in any order under this section shall be construed as authorising a person to import any thing in contravention of any prohibition or restriction for the time being in force with respect to it under or by virtue of any enactment.
13B Persons to whom section 13A applies.
1
The persons to whom section 13A of this act applies are—
a
any person who, for the purposes of any provision of the Visiting Forces Act 1952 or the International Headquarters and Defence Organisations Act 1964 is—
i
a member of a visiting force or of a civilian component of such a force or a dependant of such a member, or
ii
a headquarters, a member of a headquarters or a dependant of such a member,
b
any person enjoying any privileges or immunities under or by virtue of—
i
the Diplomatic Privileges Act 1964,
ii
the Commonwealth Secretariat Act 1966,
iii
the Consular Relations Act 1968,
iv
the International Organisations Act 1968, or
v
the Overseas Development and Co-operation Act 1980,
c
any person enjoying, under or by virtue of section 2 of the European Communities Act 1972, any privileges or immunities similiar to those enjoyedunder or by virtue of the enactments referred to in paragraph (b) above.
2
The Secretary of State may by order amend subsection (1) above to include any persons enjoying any privileges or immunities similiar to those enjoyed under or by virtue of the enactments referred to in paragraph (b) of that subsection.
3
No order shall be made under this section unless a draft of the order has been laid before and approved by resolution of each House of Parliament.
13C Offence where relieved goods used, etc., in breach of condition.
1
Subsection (2) below applies where—
a
any relief from payment of any duty of customs or excise, value added tax or car tax chargeable on, or on the supply or importation of, any goods has been conferred (whether by virtue of an order under section 13A of this Actor otherwise) in respect of any person to whom that section applies subject to any condition as to the persons by whom or the purposes for which the goods may be used, and
b
if the tax or duty has subsequently become payable, it has not been paid.
2
If any person—
a
acquires the goods for his own use, where he is not permitted by the condition to use them, or for use for a purpose that is not permitted by the condition or uses them for such a purpose, or
b
acquires the goods for use, or causes or permits them to be used, by a person not permitted by the condition to use them or by a person for a purpose that is not permitted by the condition or disposes of them to a person not permitted by the condition to use them,
with intent to evade payment of any tax or duty that has become payable or that, by reason of the disposal, acquisition or use, becomes or will become payable, he is guilty of an offence.
3
For the purposes of this section—
a
in the case of a condition as to the persons by whom goods may be used, a person is not permitted by the condition to use them unless he is a person referred to in the condition as permitted to use them, and
b
in relation to a condition as to the purposes for which goods may be used, a purpose is not permitted by the condition unless it is a purpose referred to in the condition as a permitted purpose,
and in this section “dispose” includes “lend” and “let on hire”, and “acquire” shall be interpreted accordingly.
4
A person guilty of an offence under this section may be detained and shall be liable—
a
on summary conviction, to a penalty of the statutory maximum or of three times the value of the goods (whichever is the greater), or to imprisonment for a term not exceeding six months, or to both, or
b
on conviction on indictment, to a penalty of any amount, or to imprisonment for a term not exceeding seven years, or to both.

for “£10,600” there shall be substituted “£11,400”,and

b

for “two-thirds” there shall be substituted “one half”.

10

In sections F28. . . F29257D(8) and 265(3) after paragraph (b) there shall be inserted

or
c
on account of any payments to which section 593(2) or 639(3) applies,

F3011

In section 257E(1)(b) for “80” there shall be substituted “75”.

F3012

In section 257E(2)(a) for “£3,180” there shall be substituted “£3,400”.

F3013

In section 257E(2)(b) for “£3,310” there shall be substituted “£3,540”.

Corporation tax rates etc.

34 Charge and rate of corporation tax for financial year 1989. C3

Corporation tax shall be charged for the financial year 1989 at the rate of 35 per cent.

35 Corporation tax: small companies.

C41

For the financial year 1989—

a

the small companies’ rate shall be 25 per cent., and

b

the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fortieth.

2

In section 13(3) of that Act (limits of marginal relief), in paragraphs (a) and (b)—

a

for “£100,000” there shall be substituted “£150,000”, and

b

for “£500,000” there shall be substituted “£750,000”.

C53

Subsection (2) above shall have effect for the financial year 1989 and subsequent financial years; and where by virtue of that subsection section 13of the Taxes Act 1988 has effect with different relevant maximum amounts in relation to different parts of a company’s accounting period, then for the purposes of that section those parts shall be treated as if they were separate accounting periods and the profits and basic profits of the company for that period shall be apportioned between those parts.

Receipts basis etc.

F27636 Schedule E: revised Cases.

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F27637 Schedule E: assessment on receipts basis.

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F27638 Schedule E: unpaid emoluments.

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F27639 Schedule E: unremitted emoluments.

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F27640 Schedule E: emoluments already paid.

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F276 C641 Schedule E: pensions etc.

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F27642 Schedule E: supplementary.

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43 F275Schedule D: computation

1

In calculating F344profits or gains to be charged under Schedule D for a period of account, no deduction is allowed for an amount charged in the accounts in respect of employees' remuneration, unless the remuneration is paid before the end of the period of 9 months immediately following the end of the period of account.

2

For the purposes of subsection (1) above an amount charged in the accounts in respect of employees' remuneration includes an amount F306for which provision is made in the accounts with a view to its becoming employees' remuneration.

3

Subsection (1) above applies whether the amount is in respect of particular employments or in respect of employments generally.

4

If the remuneration is paid after the end of the period of 9 months mentioned in subsection (1) above, any deduction allowed in respect of it is allowed for the period of account in which it is paid and not for any other period of account.

5

If the profits F345... are calculated before the end of the period of 9 months mentioned in subsection (1) above—

a

it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but

b

if the remuneration is subsequently paid before the end of that period, the calculation is adjusted if a claim to adjust it is made to an officer of the Board within 2 years beginning with the end of the period of account.

6

For the purposes of this section, remuneration is paid when it—

a

is treated as received by an employee for the purposes of the Income Tax (Earnings and Pensions) Act 2003 by section 18, 19, 31 or 32 of that Act (receipt of money and non-money earnings), or

b

would be so treated if it were not exempt income.

7

In this section—

“employee” includes an office-holder and “employment” correspondingly includes an office, and
“remuneration” means an amount which is or is treated as earnings for the purposes of the Income Tax (Earnings and Pensions) Act 2003.

44 F285F347Companies with investment business and insurance companies: computation

F3481

For the purposes of corporation tax, in calculating for a period of account the profits of a company with investment business, an amount charged in the accounts in respect of employees' remuneration shall not be deductible under section 75 of the Taxes Act 1988 as expenses of management unless the remuneration is paid before the end of the period of 9 months immediately following the end of the period of account.

2

For the purposes of subsection (1) above an amount charged in the accounts in respect of employees' remuneration includes an amount F307for which provision is made in the accounts with a view to its becoming employees' remuneration.

3

Subsection (1) above applies whether the amount is in respect of particular employments or in respect of employments generally.

subsection (4) above shall have effect subject to section 86 below, and

c

in construing section 86 below the remuneration shall be treated as expenses payable for that period which fall to be included at Step 1 in section 76(7) of the Taxes Act 1988.

8

In this section—

F351“company with investment business” has the same meaning as in Part 4 of the Taxes Act 1988 (see section 130 of that Act),
“employee” includes an office-holder and “employment” correspondingly includes an office,
F352. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“remuneration” means an amount which is or is treated as earnings for the purposes of Parts 2 to 7 of the Income Tax (Earnings and Pensions) Act 2003.

F28645PAYE: meaning of payment.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest

46 Relief for interest.

For the year 1989-90 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.

F41447 Close company loans: business expansion scheme.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41948 Close company loans: material interest.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefits in kind

49 Car benefits.

1

In Schedule 6 to the Taxes Act 1988 (taxation of directors and others in respect of cars) for Part I (tables of flat rate cash equivalents) there shall be substituted—

Part I Tables of Flat Rate Cash Equivalents
table Acars with an original market value up to £19,250 and having a cylinder capacity
Cylinder capacity of car in cubic centimetres
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
1400 or less
£1,400
£950
More than 1400 but not more than 2000
£1,850
£1,250
More than 2000
£2,950
£1,950
table BCars with an original market value up to £19,250 and not having a cylinder capacity
Original market value of car
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
Less than £6,000
£1,400
£950
£6,000 or more but less than £8,500
£1,850
£1,250
£8,500 or more but not more than £19,250
£2,950
£1,950
table BCars with an original market value of more than £19,250
Original market value of car
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
More than £19,250 but not more than £29,000
£3,850
£2,600
More than £29,000
£6,150
£4,100

Cylinder capacity of car in cubic centimetres	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
1400 or less	£1,400	£950
More than 1400 but not more than 2000	£1,850	£1,250
More than 2000	£2,950	£1,950

Original market value of car	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
Less than £6,000	£1,400	£950
£6,000 or more but less than £8,500	£1,850	£1,250
£8,500 or more but not more than £19,250	£2,950	£1,950

Original market value of car	Age of car at end of relevant year of assessment
	Under 4 years	4 years or more
More than £19,250 but not more than £29,000	£3,850	£2,600
More than £29,000	£6,150	£4,100

2

This section shall have effect for the year 1989-90 and subsequent years of assessment.

F27750 Security assets and services.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F27751 Assets used partly for security.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F27752 Security: supplementary.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53 Employees earning £8,500 or more and directors.

F2871

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2872

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F287a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F287b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F287c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F287d

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F287e

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f

the words “ employment to which Chapter II of Part V applies ”shall be substituted for the words from “director’s” to “section167)” in F288section 418(3)(a) of that Act;

F287g

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Medical insurance

C754F31 Relief.

1

This section applies where—

a

on or after 6th April 1990 an individual makes a payment in respect of a premium under a contract of private medical insurance (whenever issued),

b

the contract meets the requirement in subsection (2) below as to the person or persons insured,

c

at the time the payment is made the contract is an eligible contract,

d

the individual making the payment does not make it out of resources provided by another person for the purpose of enabling it to be made, and

e

the individual making the payment is not entitled to claim any relief or deduction in respect of it under any other provision of the Tax Acts.

2

The requirement mentioned in subsection (1)(b) above is that the contract insures—

a

an individual who at the time the payment is made is aged 60 or over and resident in the United Kingdom,

b

individuals each of whom at that time is aged 60 or over and resident in the United Kingdom, or

c

two individuals who are married to each other at that time, at least one of whom is aged 60 or over at that time, and each of whom is resident in the United Kingdom at that time.

F322A

In a case where—

a

a payment is made in respect of a premium under a contract at a time when the contract meets the requirement in subsection (2) above by virtue of paragraph (c) of that subsection, and

b

a

references to a premium, in relation to a contract of insurance, are to any amount payable under the contract to the insurer, and

b

references to an individual who is resident in the United Kingdom at anytime include references to an individual who is at that time performing duties which are treated by virtue of section 132(4)(a) of the Taxes Act 1988 as performed in the United Kingdom.

55F36 Eligible contracts.

1

This section has effect to determine whether a contract is at a particular time (the relevant time) an eligible contract for the purposes of section 54 above.

2

A contract is an eligible contract at the relevant time if—

a

it was entered into by an insurer who at the time it was entered into was a qualifying insurer and was approved by the Board for the purposes of this section,

b

the period of insurance under the contract does not exceed one year(commencing with the date it was entered into),

F37ba

at the relevant time the contract satisfies the conditions set out in subsection (2A) below,

bb

the contract is not one in the case of which subsection (2D) below applies,

c

the contract is not connected with any other contract at the relevant time and has not been connected with any other contract at any time since it was entered into, F38and

d

no benefit has been provided by virtue of the contract other than an approved benefit, F39and

e

the contract meets one or more of the three conditions set out below.

F402A

The conditions referred to in subsection (2)(ba) above are that—

a

the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified,

b

the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,

c

the premium under the contract is reasonable, and

d

the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.

2B

In a case where—

a

at the relevant time the contract confers a material right, or more than one such right, but

b

13

The Treasury may by order substitute for the sum for the time being specified in subsection (12) above such sum as may be specified in the order; and any such substitution shall have effect in relation to cases where the relevant time falls on or after such date as is specified in the order.

56F44 Certification of contracts.

1

The Board shall certify a contract under this section if it satisfies the conditions set out in subsection (3) below; and the certification shall be expressed to take effect from the time the conditions are satisfied, and shall take effect accordingly.

2

The Board shall revoke a certification of a contract under this section if it comes to their notice that the contract has ceased to satisfy the conditions set out in subsection (3) below; and the revocation shall be expressed to take effect from the time the conditions ceased to be satisfied, and shall take effect accordingly.

3

The conditions referred to above are that—

C9a

b

the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,

c

the premium under the contract is in the Board’s opinion reasonable, and

d

the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.

4

The certification of a contract by the Board under this section shall cease to have effect if the contract is varied; but this is without prejudice to the application of the preceding provisions of this section to the contract as varied.

5

Where the Board refuse to certify a contract under this section, or they revoke a certification, an appeal may be made to the Special Commissioners by—

a

the insurer, or

b

any person who (if the policy were certified) would be entitled to relief under section 54 above.

6

Where a contract is certified under this section, or a certification is revoked or otherwise ceases to have effect, any adjustments resulting from the certification or from its revocation or ceasing to have effect shall be made.

7

Subsection (6) above applies where a certification or revocation takes place on appeal as it applies in the case of any other certification or revocation.

8

In this section the reference to a premium, in relation to a contract of insurance, is to any amount payable under the contract to the insurer.

57F45 Medical insurance: supplementary.

C101

The Board may by regulations—

a

provide that a claim under section 54(3) or (6)(b) above shall be made in such form and manner, shall be made at such time, and shall be accompanied by such documents, as may be prescribed;

F46aa

make provision for and with respect to appeals against a decision of an officer of the Board or the Board with respect to a claim under section 54(6)(b) above;

b

make provision, in relation to payments in respect of which a person is entitled to relief under section 54 above, for the giving by insurers in such circumstances as may be prescribed of certificates of payment in such form as may be prescribed to such persons as may be prescribed;

c

provide that a person who provides (or has at any time provided) insurance under contracts of private medical insurance shall comply with any notice which is served on him by the Board and which requires him within a prescribed period to make available for the Board’s inspection documents (of a prescribed kind) relating to such contracts;

d

provide that persons of such a description as may be prescribed shall, within a prescribed period of being required to do so by the Board, furnish to the Board information (of a prescribed kind) about contracts of private medical insurance;

e

make provision with respect to the approval of insurers for the purposes of section 55 above and the withdrawal of approval for the purposes of that section;

f

make provision for and with respect to appeals against decisions of the Board with respect to the giving or withdrawal of approval of insurers for the purposes of section 55 above;

g

make provision with respect to the certification by the Board of standard forms of eligible contract and variations from standard forms of eligible contract certified by them;

h

make provision for and with respect to appeals against decisions of the Board with respect to the certification of standard forms of eligible contractor variations from standard forms of eligible contract certified by them;

i

provide that certification, or the revocation of a certification, under section 56 above shall be carried out in such form and manner as may be prescribed;

j

make provision with respect to appeals against decisions of the Board with respect to certification or the revocation of certification under section 56 above;

C10k

make provision generally as to administration in connection with sections 54 to 56 above.

2

The words “ Regulations under section 57 of the Finance Act 1989 ” shall be added at the end of each column in the Table in section 98 of the M9Taxes Management Act 1970 (penalties for failure to furnish information etc.)

3

The following provisions of the Taxes Management Act 1970, namely—

F47a

section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act;

b

section 30 (tax repaid in error etc.) F48apart from subsection (1B),

c

F49section 86 (interest), and

d

section 95 (incorrect return or accounts),

F50shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable by virtue of section 54(6)(b) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.

F513A

In the application of section 86 of the Taxes Management Act 1970 by virtue of subsection (3) above in relation to sums due and payable by virtue of an assessment made under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—

a

in a case where the person falling within section 54(6) above has made any interim claim, within the meaning of regulations made under subsection (1) and section 54(4) above, as respects some part of the year of assessment for which the assessment is made, is 1st January in that year of assessment; and

b

in any other case, is the later of the following dates, that is to say—

i

1st January in the year of assessment for which the assessment is made; or

ii

the date of the making of the payment by the Board which gives rise to the assessment.

4

In sections F52. . . 257D(8) and 265(3) of the Taxes Act 1988 after paragraph (c) there shall be inserted

or
d
on account of any payments to which section 54(5) of the Finance Act 1989 applies

5

In subsection (1) above—

“eligible contract” has the meaning given by section 55 above, and
“prescribed” means prescribed by or, in relation to form, under the regulations.

Charities

58 Payroll deduction scheme.

1

In section 202(7) of the Taxes Act 1988 (which limits to £240 the deductions attracting relief) for “£240” there shall be substituted “£480”.

2

This section shall have effect for the year 1989-90 and subsequent years of assessment.

F5359. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60 British Museum and Natural History Museum.

1

In subsection (1) of section 507 of the Taxes Act 1988 (which gives tax exemption to the National Heritage Memorial Fund and the Historic Buildings and Monuments Commission) after paragraph (b) there shall be inserted—

c
the Trustees of the British Museum;
d
the Trustees of the British Museum (Natural History);

2

In section 339(9) of that Act, for the words from “the Trustees”(where those words first occur) to “History) and” there shall be substituted the words “each of the bodies mentioned in section 507, and in subsections (1) to (5) above includes”.

F543

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

Subsection (1) above shall apply in relation to accounting periods ending on or after 14th March 1989, and F55subsection (2) above shall apply to payments due on or after that day.

Pensions etc.

F38975 Retirement benefits schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38976 Non-approved retirement benefits schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38977 Personal pension schemes.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unit trusts etc.

78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F73

F7480. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

81 Offshore funds operating equalisation arrangements.

1

In section 758 of the Taxes Act 1988 (offshore funds operating equalisation arrangements) in subsection (6) (reference to section 78 of the M11 Capital Gains Tax Act 1979 not to include reference to it as applied by section 82) for the words “but not” there shall be substituted the words “and a reference to section 78”.

2

This section shall apply where a conversion of securities occurs on or after 14th March 1989; and “conversion of securities” here has the same meaning as in section 82 of the Capital Gains Tax Act 1979.

Life assurance

C55 C7182F304Calculation of profits: bonuses etc

1

This section and sections 82A F346to F43782F below have effect where the profits of an insurance company in respect of its life assurance business are, for the purposes of the Taxes Act 1988, computed in accordance with the provisions of that Act applicable to Case I of Schedule D.

2

Any amounts which are allocated to policy holders or annuitants in respect of a period of account are allowed as a deduction in calculating the profits for the period of account.

3

For the purposes of subsection (2) above, an amount is allocated to policy holders or annuitants if (but only if)—

a

bonus payments are made to them,

b

reversionary bonuses are declared in their favour, or

c

a reduction is made in the premiums payable by them.

4

Where an amount is allocated to policy holders or annuitants for the purposes of subsection (2) above, the amount of the allocation is—

a

in the case of bonus payments, the amount of the payments,

b

in the case of declared reversionary bonuses, the amount of the liabilities assumed by the company in consequence of the declaration, and

c

in the case of a reduction in premiums, the amount of the liabilities assumed by the company in consequence of the reduction.

82ACalculation of profits: policy holders' tax

1

Tax expended on behalf of policy holders or annuitants is allowed as a deduction in calculating the profits to the extent (but only to the extent) that regulations made by the Treasury so provide.

2

The regulations may include provision for tax so expended to be so allowed even if it is not brought into account.

3

The regulations—

a

may make different provision for different cases, and

b

may include provision having effect in relation to periods of account during which they are made.

F4782A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2B

X is—

a

where the relevant period of account ends before 1st April 2007, the whole of the relevant amount;

b

where the relevant period of account ends on or after 1st April 2007 but before 1st January 2008, two-thirds of the relevant amount;

c

where the relevant period of account ends on or after 1st January 2008, one-third of the relevant amount.

2C

XA is the amount found by the applying the following formula—

(Y/12) x Z

$\frac{Y}{12} \times Z$

Here—

Y is the number of months in the period of account in question (part of a month being counted as a month); and

Z is—

a

where X is the whole of the relevant amount, one-third of X;

b

where X is two thirds of the relevant amount, one-half of X;

c

where X is one third of the relevant amount, the whole of X.

F4343

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4354

In a case falling within subsection (1)(b) above, the relevant amount shall be reduced (but not below nil) by so much (if any) of the amount shown in paragraph 4(12) of Appendix 9.4 to the periodical return as is reflected in column 1 of line 51 of the Form 14 for that period of account relating to the non-profit fund in question.

F4675

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4306

This section is subject to sections 82E and 82F below.

in the case of a transfer of part of the long-term business, the amount to be so brought into account shall be reduced by the appropriate amount mentioned in section 82F(4) below.

C7782FSection 82D: treatment of transferees under insurance business transfer schemes

1

This section applies where—

a

an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”); and

b

the transferor does not make an election under section 82E(4) above.

2

For the purposes of this section and section 82D above, where the first period of account of the transferee ending after the transfer began before the transfer, it shall be treated as beginning immediately after the transfer.

3

Section 82D above shall apply as if—

a

c

an increase in the value of linked assets, F362...

d

other income; F361or

e

business transfers-in.

and if amounts (so far as so referable) are brought into account for a period of account as a decrease in the value of non-linked assets or a decrease in the value of linked assets they shall be taken into account as an expense of the period of account.

F4382ZA

Amounts brought into account as mentioned in subsection (2) above are not to be taken into account in any other way; and this subsection applies in spite of—

a

section 80(5) of the Finance Act 1996 (taxation of loan relationships),

b

paragraph 1(2) of Schedule 26 to the Finance Act 2002 (taxation of profits from derivative contracts), and

c

paragraph 1(3) of Schedule 29 to that Act (gains and losses in respect of intangible fixed assets).

2A

But subsection (2) above does not require to be taken into account as receipts of a period of account so much of the amounts brought into account as mentioned in F363paragraphs (a) to (e) of that subsection for the period of account as—

F379a

comprises notional income for the period of account (see subsections (2AA) and (2AB)),

aa

represents an inter-fund transfer (see subsections (2AC) and (2AD)),

F440ab

comprises a business transfer-in that is not brought into account in a revenue account prepared for the purposes of Chapter 9 of the Prudential Sourcebook (Insurers) in respect of the whole of the company's long-term business,

F494ac

consists of amounts brought into account as mentioned in section 83YC(5) below;

F482b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c

consists of interest paid under section 826 of the Taxes Act 1988 (interest on tax overpaid) in respect of a repayment or payment relating to an accounting period of the company ending before 1st July 1999;

but, subject to that, the whole of the amounts so brought into account for a period of account shall be taken into account as receipts of the period of account.

F3782AA

For the purposes of subsection (2A)(a) above, an amount brought into account as mentioned in paragraphs (a) to (d) of subsection (2) above for a period of account is to be regarded as notional income for the period of account if—

a

it represents income which has not been received, and is not receivable, from another person, and

b

a corresponding notional expense of the same amount is brought into account in the period of account;

and where particular income falls to be regarded as notional income under this subsection, the notional expense by virtue of which that income falls to be so regarded may not be taken into account for determining whether any other income is to be so regarded.

2AB

In subsection (2AA) above “notional expense” means an expense which has not been paid, and is not payable, to another person and which—

a

is not deductible in computing the profits of the company in respect of its life assurance business in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D, but

b

had it represented an amount paid or payable to another person, would have been so deductible.

2AC

For the purposes of subsection (2A)(aa) above, where—

a

one or more inter-fund transfers (“transfers-in”) are made into a fund and one or more inter-fund transfers (“transfers-out”) are made out of the fund, and

b

the amount brought into account for the period of account as other income in respect of the transfers-in represents the amount by which—

i

the amount or aggregate amount of the transfers-in, exceeds

ii

the amount or aggregate amount of the transfers-out,

only the amount of that excess shall be taken to represent the transfers-in.

2AD

In this section “inter-fund transfer” means a transfer between two funds which in the company’s periodical return is shown in, or included in amounts shown in, line 14 or 33 of the Forms 58 for the funds.

2B

If any assets of the company’s long-term insurance fund are transferred by the company so that they cease to be assets of that fund, F441the fair value of the assets at the time of the transfer, reduced by any amount brought into account in respect of them (for the period of account in which the transfer takes place or any earlier period of account) as part of total expenditure or F485by being netted off against incomings in lines 11 to 15 of a revenue account , shall be deemed to be brought into account for the period of account in which the transfer takes place as an increase in the the value of the assets of that fund F486except to the extent that any of the exclusions in subsections (2C) to (2E) below apply.

F487. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2C

Assets transferred to discharge liabilities in respect of deposits received from reinsurers or arising out of insurance operations, debenture loans or amounts borrowed from credit institutions are included in subsection (2B) above only if the deposits, loans or amounts borrowed—

a

were brought into account for any period of account, but

b

were not taken into account as receipts of the period of account under subsection (2) above.

2D

Assets are excluded from subsection (2B) above if they are transferred for at least their fair value and the consideration for their transfer, when received, forms part of the company’s long-term insurance fund.

F3992DA

If—

a

assets of the company’s long-term insurance fund are transferred by the company to another person (“the transferee”),

b

the transferee assumes, as a result of the transfer, a liability representing a debenture loan which, immediately before the transfer, was a liability of that fund, and

c

the liability does not, as a result of the transfer, become a liability of any long-term insurance fund of the transferee,

so much of the fair value of the assets as does not exceed the fair value of the liability is excluded from subsection (2B) above.

F4882E

Assets transferred by an insurance business transfer scheme are excluded from subsection (2B) above.

F4893

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4894

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4895

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F489 C586

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F310 F4896A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4896B

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4896C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4897

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F768

In this section—

F490. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F490. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F309“fair value” F400—
1. a
  F439. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. b
  in relation to liabilities, means the amount which would be paid to an independent person assuming them;
F490. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

This subsection does not apply where, or to the extent that, the amount concerned—

a
would fall to be taken into account as a receipt apart from this section,
b
is otherwise taken into account under subsection (2) above, or
c
is specifically exempted from tax.

as a receipt (if it is a positive amount), or

b

as an expense (if it is a negative amount),

of the relevant period of account.

5

For the purposes of subsection (4) above “the relevant value difference”, in relation to an asset, is—

HC - AV

where—

HC is its historic cost, and

AV is its admissible value at the relevant time.

6

In subsection (4) above “the relevant period of account” means—

a

in a case within paragraph (a) of that subsection, the period of account in which the asset ceases to be a structural asset or comes to be held otherwise than in any of the company's non-profit funds, and

b

in a case within paragraph (b) of that subsection, the period of account in which the asset first comes to be held otherwise than by the company or (where the company is a member of a group) otherwise than by a company which is a member of the group;

and section 170 of the Taxation of Chargeable Gains Act 1992 (meaning of “group” etc) has effect for the interpretation of this subsection.

7

In subsection (5) above “the relevant time” means—

a

in a case where assets become structural assets held in any of the company's non-profit funds by virtue of the commencement of this section, the end of the last period of account of the company beginning before 1st January 2007, and

b

otherwise, the time when the assets become structural assets held in any of the company's non-profit funds.

8

In this section “historic cost”, in relation to an asset which is or has been held in any of the company's non-profit funds, means—

a

where the asset came to be held in any of the company's non-profit funds on acquisition from another person, the consideration given by the company for the acquisition of the asset, and

b

otherwise, its fair value when it came to be held in any of the company's non-profit funds.

9

In this section “admissible value”, in relation to an asset and a time, means the value of the asset as shown in column 1 of Form 13 of the periodical return for the period ending with that time (or as would be so shown if there were a periodical return covering a period ending with that time).

F49510

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F49611

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

Structural assets held by an insurance company in a non-profit fund are to be treated as being within paragraph (f) of subsection (4) of section 440 of the Taxes Act 1988; but no disposal or re-acquisition is to be deemed to occur by virtue of an asset ceasing to be within any other paragraph of that subsection and coming within that paragraph on becoming such a structural asset.

13

Structural assets held by an insurance company in a non-profit fund are to be treated as being “remaining” securities within section 440A(2)(e) of the Taxes Act 1988.

14

Section 432A of the Taxes Act 1988 does not have effect in relation to income arising from, or gains and losses accruing on the disposal of, structural assets held by an insurance company in a non-profit fund.

15

Regulations under subsection (3) F497... above may be made so as to have effect in relation to periods of account current when they are made (as well as periods of account beginning later).

must be made by notice to an officer of the Board on or before the end of the period of 6 months beginning with the day on which that period of account ends.

11

For the purposes of this section and section 83YB—

F481“admissible value” has the meaning given by section 83XA(9);
“amount”, in relation to line 51 of Form 14 of the company's periodical return, includes a nil amount;
F454. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C7383YBMeaning of “appropriate line 51 amount” for purposes of s.83YA

1

For the purposes of section 83YA, the appropriate line 51 amount of a non-profit company for any period of account is determined as follows.

Step 1

Find the company's basic line 51 amount for the period of account.

Step 2

Reduce that amount (but not below nil) by the amount of any unrecognised capital amount of the company for the period of account.

1

This section applies where an insurance company makes a financing-arrangement-funded transfer to shareholders (a “FAFTS”) in relation to a non-profit fund.

2

A company makes a FAFTS in relation to a non-profit fund if—

a

the company enters into a relevant financing arrangement in relation to a non-profit fund in a period of account (see subsection (4) below),

b

a positive amount is brought into account by the company as a transfer to non-technical account from the non-profit fund for that or any subsequent period of account (“the relevant period of account”), and

the contract is a financing arrangement within the meaning of paragraph 9(3) of Appendix 9.4 to the Prudential Sourcebook (Insurers), and

d

the premiums which, immediately after entering into the contract, the company is liable to pay under the contract are an insubstantial proportion of the amount of the reinsured liabilities at that time.

8

For the purposes of this section the “non-FAFTS surplus” is—

a

the amount shown in line 39 of Form 58 in relation to the non-profit fund in the periodical return for the relevant period of account, reduced (but not to below nil) by

the aggregate of the amounts which are the relevant amount for the relevant period of account or earlier periods of account of the company under section 83YD.

C8383YDFAFTS: deduction in subsequent periods of account

1

This section applies where section 83YC(3) has operated in the case of the company for one or more periods of account.

2

The relevant amount (see subsection (4) below) is to be treated for the purposes of section 83(2) as brought into account by the company as a decrease in the value of assets for any subsequent period of account in relation to which the condition in subsection (3) below is met.

3

That condition is that—

a

3

Regulations under subsection (2) above may include incidental, supplementary, consequential, transitional and savings provisions and may amend or repeal any enactment.

4

Regulations under this section—

a

may make provision in relation to periods of account current when they are made, and

b

if made before 1 January 2009, may make provision in relation to periods of account beginning on or after 1 January 2008 which have ended before they are made.

83YFFinancial reinsurance arrangements: further provision

1

This section applies where the company has entered into a financial reinsurance arrangement for the purposes of section 83YC.

2

Any reduction in the company's liabilities as a result of it doing so is not to be taken into account in calculating profits of the company's life assurance business in accordance with the provisions of Case I of Schedule D.

3

Any increase in the company's liabilities as a result of the reduction over time of the liabilities reinsured under the contract of reinsurance is not to be taken into account in calculating profits of the company's life assurance business in accordance with the provisions of Case I of Schedule D otherwise than in accordance with section 83YD.

F49883ZAContingent loans

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C50 C50 C59 C66 C69 C79 C74 83A F77 Meaning of “brought into account”.

1

F442... “ brought into account ” means brought into account in an account which is recognised for the purposes of F443sections 82A to 83ZA .

2

Subject to the following provisions of this section and to any regulations made by the Treasury, the accounts recognised for the purposes of F78those sections are—

a

a revenue account prepared for the purposes of F79Chapter 9 of the Prudential Sourcebook (Insurers) in respect of the whole of the company’s F80long-term business;

b

any separate revenue account required to be prepared F81under that Chapter in respect of a F375with-profits fund F444... .

F317...

3

Where there are prepared any such separate accounts as are mentioned in subsection (2)(b) above, reference shall be made to those accounts rather than to the account for the whole of the business.

F3743A

Where, in the case of any with-profits fund in respect of which there is prepared such a separate account (“the sub-fund”),—

a

the sub-fund forms part of another with-profits fund (“the wider fund”) in respect of which such a separate account is also prepared,

b

in the case of a company whose life assurance business is mutual business, the sub-fund and each other with-profits fund which forms part of the wider fund are 100:0 funds, and

c

the wider fund—

i

does not form part of another with-profits fund in respect of which such a separate account is also prepared, or

ii

forms part of another with-profits fund in respect of which such a separate account is also prepared and that separate account is treated by this subsection as not being a recognised account for the purposes of those sections,

the account in respect of the wider fund shall not be a recognised account for the purposes of those sections.

3B

Where, in the case of such a separate account prepared in respect of a with-profits fund,—

a

the account is not prevented from being a recognised account for the purposes of those sections by virtue of subsection (3A) above, but

b

This section applies to a company where any revenue account that is recognised for a period of account (the “new period of account”) relates to funds or business which is different from the funds or business to which a revenue account that was recognised for the preceding period of account relates.

2

Any subsection (2) excess (within the meaning of section 432F(2) of the Taxes Act 1988) which would have been available under section 432F(3) or (4) of that Act to reduce a subsection (3) figure (within the meaning of section 432F(1) of that Act) of the company in the new period of account shall be attributed between the revenue accounts that are recognised for that period of account in such manner as is appropriate.

3

In this section “recognised” means recognised, by virtue of section 83A, for the purposes of sections 82A to F49383ZA .

F49183AA Amounts added to long term insurance fund of a company in excess of that company’s loss.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F49283AB Treatment of surplus where there is a subsequent transfer of business from the company etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84 Interpretation of sections 85 to 89 and further provisions about insurance companies.

F3181

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4502

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4513

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

Chapter I of Part XII of the Taxes Act 1988 (insurance companies) shall have effect subject to the amendments in Schedule 8 to this Act, being—

a

amendments relating to franked investment income, loss relief and group relief; and

b

amendments consequential on or supplemental to sections 82 and 83 above and sections 85 to 89 below.

F4525

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4536

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

85 Charge of certain receipts of basic life assurance business.

C21 C701

Subject to subsection (2) below, where F464an insurance company is charged to tax under the I minus E basis in respect of its life assurance business, there shall be chargeable under Case VI of that Schedule any receipts referable to the company’s F83basic life assurance and general annuity business—

a

which, if F465the profits of the life assurance business were charged under Case I of Schedule D, would be taken into account in computing those profits; and

b

which would not be within the charge to tax (except under Case I of Schedule D) apart from this section;

and for the purposes of paragraph (a) above, the provisions of section 83 above as to the manner in which any item is to be taken into account shall be disregarded.

2

The receipts referred to in subsection (1) above do not include—

a

any premium; F339...

F499b

any sum received under a reinsurance contract, except for reinsurance commissions, however described, (but subject to subsection (2ZA) below) and any sum calculated to any extent by reference to expenses of the company brought into account at Step 1 in section 76(7) of the Taxes Act 1988; or

F338c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F338ca

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F338d

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

e

any sum which is not within the charge to tax (except under Case I of Schedule D) because of an exemption from taxF380; or

f

any payment received under the Financial Services Compensation SchemeF500, or from another insurance company, to enable the company to meet its obligations to policy holders.

F5012ZA

The reference in subsection (2)(b) above to reinsurance commissions does not include so much of the relevant reinsurance fraction (see subsection (9D) of section 76 of the Taxes Act 1988) of any reinsurance commissions received from the reinsurer under a fronting reinsurance contract (within the meaning of subsection (9B) of that section) as does not exceed the amount arrived at under subsection (9C) of that section in relation to the contract.

F3372A

Receipts falling within subsection (1) above are to be taken into account for the purposes of corporation tax when they are brought into account.

F462. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2B

Expenses fall to be deducted from receipts falling within subsection (1) above in accordance with the provisions of the Corporation Tax Acts applicable to Case VI of Schedule D.

C702C

For the purposes of subsection (1) above, a receipt is referable to basic life assurance and general annuity business if—

a

in the case of a repayment or refund of acquisition expenses, the acquisition expenses fell within section 86 below,

F381aa

in the case of a repayment or refund of expenses other than acquisition expenses, the expenses—

i

were attributable to basic life assurance and general annuity business for the purposes of Step 1 in subsection (7) of the new section 76 (see subsection (8) of that section), or

ii

fell to be deducted by virtue of subsection (1) of the old section 76;

and for this purpose, “the new section 76” and “the old section 76” have the same meaning as in section 44 of the Finance Act 2004 (see subsection (8) of that section),

b

in the case of a reinsurance commission, the policy or contract reinsured under the arrangement in respect of which the commission is paid constitutes basic life assurance and general annuity business, and

c

in any other case, it is income which, if it were income from an asset, would by virtue of section 432A of the Taxes Act 1988 (apportionment of insurance companies' income) be referable to basic life assurance and general annuity business.

3

This section has effect with respect to the receipts of accounting periods beginning on or after 1st January 1990 F463....

that the amount by which the charge is reduced, or (where the charge is eliminated) the amount of the charge, is instead imposed for a subsequent accounting period (or part of the amount is instead imposed for more than one subsequent accounting period).

10

Regulations under subsection (9) may include provision having effect in relation to times before they are made.

C2286 Spreading of relief for acquisition expenses.

F3291

For the purposes of this section, the acquisition expenses for any period of an insurance company carrying on life assurance business are such of the following as for that period fall to be included at Step 1 in section 76(7) of the Taxes Act 1988 (expenses of insurance companies)—

a

commissions (however described), other than commissions for persons who collect premiums from house to house,

b

any other expenses payable solely for the purpose of the acquisition of business,

c

so much of any other expenses payable partly for the purpose of the acquisition of business and partly for other purposes as are properly attributable to the acquisition of business,

reduced by the appropriate portion of the adjusted loss deduction (if any) for the purposes of Step 5 for the period.

The appropriate portion of the adjusted loss deduction is the amount which bears to the whole of that deduction the proportion which UAE bears to S1, where—

UAE is the amount of the acquisition expenses, before making the reduction required by this subsection; and

S1 is the sum of the amounts described in paragraphs (a) and (b) in Step 4.

2

The exclusion from paragraph (a) of subsection (1) above of commissions F84for persons who collect premiums from house to house shall not prevent such commissions constituting F332expenses payable for the purposes of paragraph(b) or paragraph (c) of that subsection.

F4563

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4573A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In subsection (1) above “the acquisition of business” includes

F85 a

the securing on or after 14th March 1989 of the payment of increased or additional premiums in respect of a policy of insurance issued in respect of an insurance already made (whether before, on or after that date) F86and

b

the securing, in an accounting period beginning on or after 1st January 1992, of the payment of increased or additional consideration in respect of an annuity contract already made (whether in an accounting period beginning before, or on or after, that date).

F3335

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3345A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3356

Only a portion of the acquisition expenses for any accounting period (in this section referred to as “the base period”) is to be relieved under section 76 of the Taxes Act 1988 for that period.

That portion is one-seventh of the adjusted amount of the acquisition expenses for the period.

For the purposes of this section the adjusted amount of the acquisition expenses for the period is so much of those expenses as remains after—

a

including the whole of those expenses at Step 1,

b

making any reduction in those expenses which is required at Step 2, and

c

deducting any amount of reinsurance commission or any repayment or refund (in whole or in part) that falls for the period to be charged to tax under section 85 above,

Effect is given to this subsection at Step 6 (which requires the deduction of six-sevenths of the adjusted amount of the acquisition expenses for the period).

F3367

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3308

This subsection applies in any case where, in accordance with subsection (6) above, only a fraction of the adjusted amount of the acquisition expenses for the base period is to be relieved under section 76 of the Taxes Act 1988 for that period.

In any such case—

a

a further fraction of the adjusted amount of those expenses is to be relieved under that section for each succeeding accounting period after the base period, until the whole of the adjusted amount has been relieved,

b

the fraction is one-seventh, except that for any accounting period of less than a year the fraction is to be proportionately reduced, and

c

the relief is given by including that fraction of the adjusted amount at paragraph (b) of Step 8,

but this is subject to subsection (9) below.

9

For any accounting period for which—

a

the fraction of the adjusted amount of the acquisition expenses for the base period which would otherwise fall to be relieved in accordance with subsection (8) above, exceeds

b

the balance of that adjusted amount which has not been so relieved for earlier accounting periods,

only that balance shall be so relieved.

F3319A

In this section “expenses payable” has the same meaning as in Step 1.

9B

Any reference in this section to a numbered Step is a reference to the Step so numbered in section 76(7) of the Taxes Act 1988.

10

This section has effect for accounting periods beginning on or after 1stJanuary 1990 F458....

F46987 Management expenses.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

88 Corporation tax: policy holders’ F461share of profits.

1

Subject to subsection (2) F319... below, in the case of a company carrying on life assurance business, the rate of corporation tax chargeable for any financial year on

F87a

the policy holders’ share of the relevant profits for any accounting period, or

b

where the business is mutual business, the whole of those profits,

shall be deemed to be the rate at which income tax at the F505basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned.

F4662

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5033

For the purposes of subsection (1) above the relevant profits of a company for an accounting period consist of the aggregate of—

a

the company's BLAGAB profits for the period, and

b

profits of the company chargeable under Case VI of Schedule D under section 436A of the Taxes Act 1988 (gross roll-up business) for the period.

4

In determining for the purposes of section 13 of the Taxes Act 1988 (small companies’ relief) the profits and basic profits (within the meaning of that section) of an accounting period of a company carrying on life assurance business, the policy holders’ F88share of the company’s relevant profits for that periodF89, or where the business is mutual business the whole of those profits, shall be left out of account.

5

This section has effect with respect to the profits of a company for accounting periods beginning on or after 1st January 1990 F504...

F32088A Lower corporation tax rate on certain insurance company profits.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the purposes of subsection (2) above—

a

“foreign income dividends” shall be construed in accordance with Chapter VA of Part VI;

b

the shareholders’ share of any foreign income dividends is so much of the income they represent as is the shareholders’ share.

3

For the purposes of those section “ the shareholders’ share ” in relation to any income is so much of the income as is represented by the fraction

where—

A is an amount equal to the Case I profits of the company for the period in question in respect of its life assurance business, and
B is an amount equal to the excess of the company’s relevant non-premium income and relevant gains over its relevant expenses and relevant interest for the period.

4

Where there is no such excess as is mentioned in subsection (3) above, or where the Case I profits are greater than any excess, the whole of the income shall be the shareholders’ share; and (subject to that) where there are no Case I profits, none of the income shall be the shareholders’ share.

5

In subsection (3) above the references to the relevant non-premium income, relevant gains, relevant expenses and relevant interest of a company for an accounting period are references respectively to the following items as brought into account for the period, so far as referable to the company’s life assurance business,—

a

the company’s investment income from the assets of its long-term F97insurance fund together with its other income, apart from premiums;

b

any increase in the value (whether realised or not) of those assets;

c

expenses payable by the company;

d

interest payable by the company;

and if for any period there is a reduction in the value referred to in paragraph (b) above (as brought into account for the period), that reduction shall be taken into account as an expense of the period.

6

F449... where the company’s period of account does not coincide with the accounting period, any reference to an amount brought into account for the accounting period is a reference to the corresponding amount brought into account for the period of account in which the accounting period is comprised, proportionately reduced to reflect the length of the accounting period as compared with the length of the period of account.

F987

In this section—

“Case I profits” means profits computed in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D F447; but for the purposes of subsections (1), (1A) and (2) they are to be adjusted F507in accordance with section 85A(4) in respect of losses incurred in an accounting period in which 31 December 2002 is included or any later accounting period.
F322. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4777A

In a case where—

a

the company becomes an insurance special purpose vehicle, and

b

regulations made under section 84 of the Finance Act 2005 do not apply to it,

subsection (7B) applies in the first period of account in which the company is an insurance special purpose vehicle (“the first period”).

7B

Where this subsection applies, in computing a company’s Case I profits there shall be brought into account as a trading receipt of the company the amount, if any, by which the amount shown in line 51 of Form 14 of the periodical return for the period preceding the first period exceeds—

a

the fund for future appropriations shown in the company’s IAD accounts, or

b

the unallocated divisible surplus shown in the company’s IAS accounts,

as the case may be, for that preceding period.

7C

In subsection (7B)—

“IAD accounts” means accounts drawn up in accordance with the Council Directive of 19th December 1991 on the annual accounts of insurance undertakings (No.91/674/EEC);
“IAS accounts” means accounts prepared in accordance with international accounting standards.

F5118

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F40689A Modification of sections 82 to 83A, 88 and 89 in relation to overseas life insurance companies.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F50890 Life policies etc. held by companies.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F47090AInterpretation

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Underwriters

91 Premiums trust funds: stock lending.

1

In section 725 of the Taxes Act 1988 (Lloyd’s underwriters) the following subsections shall be inserted after subsection (9)—

10
Subsection (11) below applies where the following state of affairs exists at the beginning of 1st January of any year or the end of 31st December of any year—
a
securities have been transferred by the trustees of a premiums trust fund in pursuance of an arrangement mentioned in section 129(1) or (2),
b
the transfer was made to enable another person to fulfil a contract or to make a transfer,
c
securities have not been transferred in return, and
d
section 129(3) applies to the transfer made by the trustees.
11
The securities transferred by the trustees shall be treated for the purposes of subsections (1) to (6) above as if they formed part of the premiums trust fund at the beginning of 1st January concerned or the end of 31st December concerned (as the case may be).

F992

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

This section applies where the transfer by the trustees of a premiums trust fund is made after the date specified as mentioned in section 129(6) of the Taxes Act 1988.

92 Regulations about underwriters etc.

1

In section 451(1A) of the Taxes Act 1988 (regulations about underwriters)for the words from “with respect to” to the end there shall be substituted the words “with respect to any year or years of assessment; and the year (or any of the years) may be the one in which the regulations are made or any year falling before or after that year.”

2

The following subsection shall be inserted after section 451(1A) of that Act—

1B
But the regulations may not make provision with respect to any year of assessment which precedes the next but one preceding the year of assessment in which the regulations are made.

F1003

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1014

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1015

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1016

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1017

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Securities

F10293. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10394. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10495. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

96 Securities: miscellaneous.

1

In section 452(8) of the Taxes Act 1988 (special reserve funds) for the words from “In paragraph (a) above” to the end there shall be substituted—

In paragraph (a) above “income” includes—
a
annual profits or gains chargeable to tax by virtue of section 714(2) or716(3),
b
amounts treated as income chargeable to tax by virtue of paragraph 4 of Schedule 4, and
c
amounts treated as income chargeable to tax by virtue of paragraph 5 of Schedule 11 to the Finance Act 1989.

F4152

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1053

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

The new paragraphs (b) and (c) inserted by subsection (1) above, F416... shall apply—

a

in the case of a deep discount security, where there is a disposal (within the meaning of Schedule 4 to the Taxes Act 1988) on or after 14th March 1989;

b

in the case of a deep gain security, where there is a transfer within the meaning of Schedule 11 to this Act, or a redemption, on or after 14th March1989.

Groups of companies

97F106 Set-off of ACT where companies remain in the same group.

1

In section 240 of the Taxes Act 1988 (set-off of company’s ACT against subsidiary’s liability to corporation tax) at the end of subsection (5)(set-off not to be made against subsidiary’s liability to corporation tax for any accounting period in which, or in any part of which, it was not a subsidiary of the surrendering company) there shall be added the words “unless throughout that period or part both companies were subsidiaries of a third company”.

2

This section shall have effect in relation to accounting periods ending on or after 14th March 1989.

98F107 Restriction on set-off of ACT.

1

After section 245 of the Taxes Act 1988 there shall be inserted—

245A Restriction on application of section 240 in certain circumstances.
1
This section applies if—
a
there is a change in the ownership of a company (“the relevant company”);
b
by virtue of section 240 the relevant company is treated as having paid an amount of advance corporation tax in respect of a distribution made by it at any time before the change; and
c
within the period of six years beginning three years before the change, there is a major change in the nature or conduct of a trade or business of the company which is for the purposes of section 240 the surrendering company in relation to that amount.
2
No advance corporation tax which the relevant company is treated by virtue of section 240 as having paid in respect of a distribution made by it in anaccounting period beginning before the change of ownership shall be treatedunder section 239(4) as paid by it in respect of distributions made in an accounting period ending after the change of ownership; and this subsection shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods.
3
Subsections (4) and (5) of section 245 shall apply also for the purposes of this section and as if the reference in subsection (4) of section 245 to the period of three years mentioned in subsection (1)(a) of that section were a reference to the period mentioned in subsection (1)(c) above.
4
Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax.
245B Restriction on set-off where asset transferred after change in ownership of company.
1
Subsection (4) below applies if—
a
there is a change in the ownership of a company (“the relevant company”);
b
any advance corporation tax paid by the relevant company in respect of distributions made by it in an accounting period beginning before the change is treated under section 239(4) as paid by it in respect of distributions made by it in an accounting period ending after the change;
c
after the change the relevant company acquires an asset from another company in such circumstances that section 273(1) of the Taxes Act 1970applies to the acquisition; and
d
a chargeable gain accrues to the relevant company on the disposal of the asset within the period of three years beginning with the change of ownership.
2
Subsection (1)(b) above shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods.
3
For the purposes of subsection (1)(d) above an asset acquired by the relevant company as mentioned in subsection (1)(c) above shall be treated as the same as an asset owned at a later time by that company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion.
4
In relation to the accounting period in which the chargeable gain accrues to the relevant company (“the relevant period”), section 239 shall have effect as if the limit imposed by subsection (2) of that section on the amount of advance corporation tax to be set against the relevant company’s liability to corporation tax were reduced by whichever is the lesser of—
a
the amount of advance corporation tax that would have been payable (apart from section 241) in respect of a distribution made at the end of the relevant period of an amount which, together with the advance corporation tax so payable in respect of it, is equal to the chargeable gain, and
b
the amount of surplus advance corporation tax in relation to the accounting period which by virtue of subsection (2) above is treated for the purposes of subsection (1)(b) above as ending with the change of ownership.
5
Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax.

2

This section shall have effect where the change in the ownership of the relevant company occurs on or after 14th March 1989.

F10899. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100 Change in ownership of company.

1

Section 769 of the Taxes Act 1988 (which contains rules for determining whether for the purposes of sections 245 and 768 of that Act there is a change in the ownership of a company) shall be amended in accordance with this section.

2

For subsection (6) there shall be substituted—

6
If there is a change in the ownership of a company, including a change occurring by virtue of the application of this subsection but not a change which is to be disregarded under subsection (5) above, then—
a
in a case falling within subsection (1)(a) above, the person mentioned in subsection (1)(a) shall be taken for the purposes of this section to acquire at the time of the change any relevant assets owned by the company;
b
in a case falling within subsection (1)(b) above but not within subsection(1)(a) above, each of the persons mentioned in subsection (1)(b) shall be taken for the purposes of this section to acquire at the time of the change the appropriate proportion of any relevant assets owned by the company; and
c
in any other case, each of the persons mentioned in paragraph (c) of subsection (1) above (other than any whose holding is disregarded under that paragraph) shall be taken for the purposes of this section to acquire at the time of the change the appropriate proportion of any relevant assets owned by the company.
6A
In subsection (6) above—
“the appropriate proportion”, in relation to one of two or more persons mentioned in subsection (1)(b) or (c) above, means a proportion corresponding to the proportion which the percentage of the ordinary share capital acquired by him bears to the percentage of that capital acquired by all those persons taken together; and
“relevant assets”, in relation to a company, means—
a
any ordinary share capital of another company, and
b
any property or rights which under subsection (3) above may be taken into account instead of ordinary share capital of another company.
6B
Notwithstanding that at any time a company (“the subsidiary company”) is a 75 per cent. subsidiary of another company (“theparent company”) it shall not be treated at that time as such a subsidiary for the purposes of this section unless, additionally, at that time—
a
the parent company would be beneficially entitled to not less than 75 percent. of any profits available for distribution to equity holders of the subsidiary company; and
b
the parent company would be beneficially entitled to not less than 75 percent. of any assets of the subsidiary company available for distribution to its equity holders on a winding-up.
6C
Schedule 18 shall apply for the purposes of subsection (6B) above as it applies for the purposes of section 413(7).

3

Subsection (7)(b) and (c) shall cease to have effect.

4

This section shall have effect where the change of ownership of a company would be treated as occurring on or after 14th March 1989.

101 Treatment of convertible shares or securities for purposes relating togroup relief etc.

1

Paragraph 1 of Schedule 18 to the Taxes Act 1988 (which containsdefinitions relating to group relief) shall be amended in accordance with thissection.

2

For sub-paragraph (3)(b) there shall be substituted—

b
do not carry any right either to conversion into shares or securities ofany other description except—
i
shares to which sub-paragraph (5A) below applies,
ii
securities to which sub-paragraph (5B) below applies, or
iii
shares or securities in the company’s quoted parent company,
or to the acquisition of any additional shares or securities;

3

For sub-paragraph (5)(a) there shall be substituted—

a
which does not carry any right either to conversion into shares orsecurities of any other description except—
i
shares to which sub-paragraph (5A) below applies,
ii
securities to which sub-paragraph (5B) below applies, or
iii
shares or securities in the company’s quoted parent company,
or to the acquisition of any additional shares or securities;

4

After sub-paragraph (5) there shall be inserted—

5A
This sub-paragraph applies to any shares which—
a
satisfy the requirements of sub-paragraph (3)(a), (c) and (d) above, and
b
do not carry any rights either to conversion into shares or securities ofany other description, except shares or securities in the company’s quotedparent company, or to the acquisition of any additional shares or securities.
5B
This sub-paragraph applies to any securities representing a loan of orincluding new consideration and—
a
which satisfies the requirements of sub-paragraph (5)(b) and (c) above,and
b
which does not carry any such rights as are mentioned in sub-paragraph(5A)(b) above.
5C
For the purposes of sub-paragraphs (3) and (5) to (5B) above a company(“the parent company”) is another company’s “quotedparent company” if and only if—
a
the other company is a 75 per cent. subsidiary of the parent company,
b
the parent company is not a 75 per cent. subsidiary of any company, and
c
the parent company’s ordinary shares (or, if its ordinary share capitalis divided into two or more classes, its ordinary shares of each class) arequoted on a recognised stock exchange or dealt in on the Unlisted SecuritiesMarket;
and in this sub-paragraph “ordinary shares” means sharesforming part of ordinary share capital.
5D
In the application of sub-paragraphs (3) and (5) to (5B) above indetermining for the purposes of sub-paragraph (5C)(a) above who are the equityholders of the other company (and, accordingly, whether section 413(7)prevents the other company from being treated as a 75 per cent. subsidiary ofthe parent company for the purposes of sub-paragraph (5C)(a)), it shall beassumed that the parent company is for the purposes of sub-paragraphs (3) and(5) to (5B) above the other company’s quoted parent company.

5

In sub-paragraph (6) for the words “to (5)” there shall besubstituted the words “to (5D)”.

6

This section, so far as relating to Schedule 18 of the Taxes Act 1988 inits application (by virtue of section 138 below) for the purposes ofsubsections (1D) and (1E) of section 272 of the Taxes Act 1970, shall bedeemed to have come into force on 14th March 1989.

C64102 Surrender of company tax refund etc. within group.

1

Subsection (2) below applies where—

a

there falls to be made to a company (“the surrendering company”)which is a member of a group throughout the appropriate period a tax refund relating to an accounting period of the company (“the relevant accounting period”), and

b

another company (“the recipient company”) which is a member of the same group throughout the appropriate period also has the relevant accounting period as an accounting period.

2

Where this subsection applies the two companies may, at any time before the refund is made to the surrendering company, jointly give notice to the inspector in such form as the Board may require that subsection (4) below is to have effect in relation to the refund or to any part of the refund specified in the notice.

3

In subsection (1) above—

“appropriate period” means the period beginning with the relevant accounting period and ending on the day on which the notice under subsection (2) above is given, and
“tax refund relating to an accounting period” means, in relation to a company—

a

a repayment of corporation tax paid by the company for the period,

b

a repayment of income tax in respect of a payment received by the company in the period, or

otherwise, the date on which corporation tax for the relevant accounting period became due and payable.

6

For the purpose of ascertaining the amount of any penalty to which the recipient company is liable under F112paragraph 18 of the Taxes Management Act 1970, the corporation tax which the company is treated as having paid by subsection (4)(a) above shall be treated as paid on the day on which the notice under subsection (2) above is given (and not on the relevant date).

7

A payment for a transferred tax refund—

a

shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

b

shall not for any of the purposes of the Corporation Tax Acts be regarded as a distribution F383... ;

and in this subsection “a payment for a transferred tax refund” means a payment made by the receiving company to the surrendering company in pursuance of an agreement between them as respects the giving of a notice under this section, being a payment not exceeding the amount of the refund in question.

8

For the purposes of this section two companies are members of the same group if and only if they would be for the purposes of Chapter IV of Part X of the Taxes Act 1988.

9

This section shall not apply unless the relevant accounting period ends after such day, not being earlier than 31st March 1992, as the Treasury may by order made by statutory instrument appoint.

Close companies

103 Repeal of apportionment provisions.

1

Except as provided by subsection (2) below, Chapter III of Part XI of theTaxes Act 1988 (apportionment of undistributed income etc. of close companies)shall not have effect in relation to accounting periods beginning after 31stMarch 1989.

2

Section 427(4) of the Taxes Act 1988 (which gives relief to an individualwhere income apportioned to him in an earlier accounting period of a closecompany is included in a distribution received by him in a later accountingperiod), and section 427(5) of, and Part I of Schedule 19 to, that Act so faras they relate to section 427(4), shall continue to have effect in any casewhere the subsequent distribution referred to in section 427(4) is made before1st April 1992.

104 Meaning of “close company”.

1

In section 414 of the Taxes Act 1988 for subsection (2) (further case inwhich a company is a close company for the purposes of the Tax Acts) thereshall be substituted—

2
Subject to section 415 and subsection (5) below, a company resident in theUnited Kingdom (but not falling within subsection (1)(b) above) is also aclose company if five or fewer participators, or participators who aredirectors, together possess or are entitled to acquire—
a
such rights as would, in the event of the winding-up of the company(“the relevant company”) on the basis set out in subsection (2A) below,entitle them to receive the greater part of the assets of the relevant companywhich would then be available for distribution among the participators, or
b
such rights as would in that event so entitle them if any rights which anyof them or any other person has as a loan creditor (in relation to therelevant company or any other company) were disregarded.
2A
In the notional winding-up of the relevant company, the part of the assetsavailable for distribution among the participators which any person isentitled to receive is the aggregate of—
a
any part of those assets which he would be entitled to receive in theevent of the winding-up of the company, and
b
any part of those assets which he would be entitled to receive if—
i
any other company which is a participator in the relevant company and isentitled to receive any assets in the notional winding-up were also wound upon the basis set out in this subsection, and
ii
the part of the assets of the relevant company to which the other companyis entitled were distributed among the participators in the other company inproportion to their respective entitlement to the assets of the other companyavailable for distribution among the participators.
2B
In the application of subsection (2A) above to the notional winding-up ofthe other company and to any further notional winding-up required by paragraph(b) of that subsection (or by any further application of that paragraph),references to “the relevant company” shall have effect as references tothe company concerned.
2C
In ascertaining under subsection (2) above whether five or fewerparticipators, or participators who are directors, together possess or areentitled to acquire rights such as are mentioned in paragraph (a) or (b) ofthat subsection—
a
a person shall be treated as a participator in or director of the relevantcompany if he is a participator in or director of any other company whichwould be entitled to receive assets in the notional winding-up of the relevantcompany on the basis set out in subsection (2A) above, and
b
except in the application of subsection (2A) above, no account shall betaken of a participator which is a company unless the company possesses or isentitled to acquire the rights in a fiduciary or representative capacity.
2D
Subsections (4) to (6) of section 416 apply for the purposes ofsubsections (2) and (2A) above as they apply for the purposes of subsection(2) of that section.

2

Subsection (3) of that section shall cease to have effect.

3

In subsection (5)(b) of that section for the words from “paragraph(c)” to “that paragraph” there shall be substituted the words “paragraph (a) of subsection (2) above or paragraph (c) of section 416(2)and it would not be a close company if the references in those paragraphs”.

4

This section shall be deemed to have come into force on 1st April 1989.

105 Small companies’ rate not available to certain close companies.

1

In section 13 of the Taxes Act 1988 (small companies’ relief) insubsection (1) for the words “a company resident in the United Kingdom”there shall be substituted the words

a company which—
a
is resident in the United Kingdom, and
b
is not a close investment-holding company (as defined in section 13A) atthe end of that period,

2

After that section there shall be inserted the following section—

13A Close investment-holding companies.
1
A close company is for the purposes of section 13(1) a “closeinvestment-holding company” unless it complies with subsection (2) below.
2
A company (“the relevant company”) complies with this subsection inany accounting period if throughout that period it exists wholly or mainly forany one or more of the following purposes—
a
the purpose of carrying on a trade or trades on a commercial basis,
b
the purpose of making investments in land or estates or interests in landin cases where the land is, or is intended to be, let to persons otherthan—
i
any person connected with the relevant company, or
ii
any person who is the wife or husband of an individual connected with therelevant company, or is a relative, or the wife or husband of a relative, ofsuch an individual or of the husband or wife of such an individual,
c
the purpose of holding shares in and securities of, or making loans to,one or more companies each of which is a qualifying company or a companywhich—
i
is under the control of the relevant company or of a company which hascontrol of the relevant company, and
ii
itself exists wholly or mainly for the purpose of holding shares in orsecurities of, or making loans to, one or more qualifying companies,
d
the purpose of co-ordinating the administration of two or more qualifyingcompanies,
e
the purpose of a trade or trades carried on on a commercial basis by oneor more qualifying companies or by a company which has control of the relevantcompany, and
f
the purpose of the making, by one or more qualifying companies or by acompany which has control of the relevant company, of investments as mentionedin paragraph (b) above.
3
For the purposes of subsection (2) above, a company is a “qualifying company”, in relation to the relevant company,if it—
a
is under the control of the relevant company or of a company which hascontrol of the relevant company, and
b
exists wholly or mainly for either or both of the purposes mentioned insubsection (2)(a) or (b) above.
4
Where a company is wound up, it shall not be treated as failing to complywith subsection (2) above in the accounting period that (by virtue ofsubsection (7) of section 12) begins with the time which is for the purposesof that subsection the commencement of the winding up, if it complied withsubsection (2) above in the accounting period that ends with that time.
5
In this section—
“control” shall be construed in accordance with section 416,and
“relative” has the meaning given by section 839(8).
6
Section 839 shall apply for the purposes of this section.

3

This section shall have effect in relation to accounting periods beginningafter 31st March 1989.

106F113 Restriction on payment of tax credits.

1

In section 231 of the Taxes Act 1988 (tax credits for certain recipientsof qualifying distributions) in subsection (3) after the words “made and”there shall be inserted the words “subject to subsections (3A) to (3D)below” and after that subsection there shall be inserted—

3A
Subject to subsection (3B) below, where it appears to the inspector that,in any accounting period of a company at the end of which it is a closeinvestment-holding company—
a
arrangements relating to the distribution of the profits of the companyexist or have existed the main purpose of which or one of the main purposesof which is to enable payments, or payments of a greater amount, to be madeto any one or more individuals under subsection (3) above in respect of suchan excess as is mentioned in that subsection, and
b
by virtue of those arrangements, any eligible person—
i
receives a qualifying distribution consisting of a payment made by thecompany on the redemption, repayment or purchase of its own shares, or
ii
receives any other qualifying distribution in respect of shares in orsecurities of the company, where the amount or value of the distribution isgreater than might in all the circumstances have been expected but for thearrangements,
the entitlement of the eligible person to have paid to him undersubsection (3) above all or part of a tax credit in respect of anydistribution made by the company in the period shall be restricted to suchextent as appears to the inspector to be just and reasonable.
3B
Subsection (3A) above does not apply in relation to a tax credit inrespect of a dividend paid by a company in any accounting period in respectof its ordinary share capital if—
a
throughout the period, the company’s ordinary share capital consisted ofonly one class of shares, and
b
no person waived his entitlement to any dividend which would have becomepayable by the company in the period or failed to receive any dividend whichhad become due and payable to him by the company in the period.
3C
In subsection (3A) above—
“arrangements” means arrangements of any kind whether inwriting or not,
“close investment-holding company” has the meaning given bysection 13A, and
“eligible person”, in relation to a qualifying distribution,means an individual resident in the United Kingdom who would (apart fromsubsection (3A) above) be entitled to have paid to him under subsection (3)above all or part of a tax credit in respect of the distribution.
3D
In determining under subsection (3) above whether a person is entitled tohave any excess of tax credit paid to him in a case where subsection (3A)above applies, tax credits shall be set against income tax in the order thatresults in the greatest payment in respect of the excess.

2

This section shall have effect in relation to distributions made bycompanies in accounting periods beginning after 31st March 1989.

107 Close companies: consequential amendments.

Schedule 12 to this Act (in which Part I contains administrativeprovisions relating to close companies and Part II makes amendments connectedwith section 103 above) shall have effect.

Settlements etc.

F114108. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

109 Settlements where settlor retains interest in settled property.

F1151

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1152

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1153

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3684

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F403110 Residence of trustees.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111 Residence of personal representatives.

F4111

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4112

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4113

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In section 824(9) of the Taxes Act 1988 (repayment supplements), for the words from “or, in” to “section 701)” there shall be substituted the words “or personal representatives (within the meaning of section 111 of the Finance Act 1989)”.

5

F413... this section shall apply for the year 1989-90 and subsequent years of assessment.

F4126

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4127

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4128

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

F371112 Security: trades etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F372113 Security: trades etc. (supplementary).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

114 Relief for pre-trading expenditure.

1

In section 401(1) of the Taxes Act 1988 (which gives relief forexpenditure incurred by a person within three years before he begins to carryon a trade, profession or vocation), for the word “three” there shall besubstituted the word “five”.

2

This section shall have effect where the time when the person begins tocarry on the trade, profession or vocation falls after the end of March 1989.

115 Double taxation: tax credits.

1

Where any arrangements having effect by virtue of section 788 of the TaxesAct 1988 provide —

a

for persons who are resident outside the United Kingdom and who receivedistributions from companies resident in the United Kingdom to be entitled totax credits, and

b

for the amount paid to such a person by way of tax credit to be determinedby reference to the amount to which an individual resident in the UnitedKingdom would have been entitled, subject to a deduction calculated byreference to the aggregate of the amount or value of the distribution and theamount of the tax credit paid,

the arrangements shall be construed as providing for that deduction tobe calculated by reference to the gross amount or value of the distributionand tax credit, without any allowance for the deduction itself.

2

This section shall have effect in relation to payments made before thepassing of this Act as well as those made after that time, except that itshall not affect—

a

the judgment of any court given before 25th October 1988, or

b

the law to be applied in proceedings on appeal to the Court of Appeal orthe House of Lords where the judgment of the High Court or the Court ofSession which is in issue was given before that date.

F116116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II Capital Allowances

117–120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F117

F118121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III Capital Gains

Exemptions

F119122. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123 Increase of chattel exemption.

1

In the following enactments, namely—

F120a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

section 12(2)(b) of the M13Taxes Management Act 1970(information about assets acquired), and

c

section 25(7) of that Act (information about assets disposed of),

for “£3,000”, in each place where it occurs, there shall besubstituted “£6,000”.

2

This section applies to disposals on or after 6th April 1989 andaccordingly, in relation to subsection (1)(b) above, to assets acquired on orafter that date.

Gifts

F121124. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F122125. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-residents etc.

F123126. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F124127. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F125128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F126129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F127130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F128131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F129132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F130133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F131134. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value shifting and groups of companies

F132135. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F133136. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F134137. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F135138. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

F136139. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F137140. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F138141. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV Management

Information

142 Power to call for documents and information.

1

Section 20 of the M14 Taxes Management Act 1970 (power tocall for documents of taxpayer and others) shall be amended in accordance withsubsections (2) to (8) below.

2

In subsection (1), for the words “a person” onwards there shall besubstituted the words

a person—
a
to deliver to him such documents as are in the person’s possession orpower and as (in the inspector’s reasonable opinion) contain, or may contain,information relevant to—
i
any tax liability to which the person is or may be subject, or
ii
the amount of any such liability, or
b
to furnish to him such particulars as the inspector may reasonably requireas being relevant to, or to the amount of, any such liability.

3

In subsection (2), for the words “a person” onwards there shall besubstituted the words

a person
a
to deliver to a named officer of the Board such documents as are in theperson’s possession or power and as (in the Board’s reasonable opinion)contain, or may contain, information relevant to—
i
any tax liability to which the person is or may be subject, or
ii
the amount of any such liability, or
b
to furnish to a named officer of the Board such particulars as the Boardmay reasonably require as being relevant to, or to the amount of, any suchliability.

4

In subsection (3)—

a

for the words “of the persons who in relation to the taxpayer aresubject to this subsection” there shall be substituted the words “otherperson”, and

b

at the end there shall be added the words “; and the persons who may berequired to deliver or make available a document under this subsection includethe Director of Savings.”

5

Subsections (4) and (5) shall be omitted.

6

In subsection (6)—

a

for the words “under subsections (3) and (4)” there shall besubstituted the words “for the purposes of this section”, and

b

the words “and in relation” onwards shall be omitted.

7

For subsection (8) there shall be substituted—

8
Subject to subsection (8A) below, a notice under subsection (3) aboveshall name the taxpayer with whose liability the inspector (or, where section20B(3) below applies, the Board is concerned.

8

After subsection (8B) there shall be inserted—

8C
In this section references to documents do not include—
a
personal records (as defined in section 12 of the Police and Criminal Evidence Act 1984), or
b
journalistic material (as defined in section 13 of that Act),
and references to particulars do not include particulars contained insuch personal records or journalistic material.
8D
Subject to subsection (8C) above, references in this section to documentsand particulars are to those specified or described in the notice in question;and—
a
the notice shall require documents to be delivered (or delivered or madeavailable), or particulars to be furnished, within such time (which, exceptin the case of a notice under subsection (2) above, shall not be less thanthirty days after the date of the notice) as may be specified in the notice;and
b
the person to whom they are delivered, made available or furnished maytake copies of them or of extracts from them.

9

In section 12(3) of the M15 National Savings Bank Act1971, for the words “20(4)(b)” onwards there shall be substituted thewords “20(3) of that Act (requirement to deliver or make available documentsrelating to liability of a taxpayer).”

10

This section shall apply with respect to notices given on or after the dayon which this Act is passed.

143 Power to call for papers of tax accountant.

1

In section 20A of the M16 Taxes Management Act 1970 (powerto call for papers of tax accountant) for the lasr sentence of subsection (1)there shall be substituted—

1A
The reference to documents in subsection (1) above does not include—
a
personal records (as defined in section 12 of the Police and Criminal Evidence Act 1984), or
b
journalistic material (as defined in section 13 of that Act).
1B
Subject to subsection (1A) above, the reference to documents in subsection(1) above is to those specified or described in the notice in question;and—
a
the notice shall require documents to be delivered within such time (whichshall not be less than thirty days after the date of the notice) as may bespecified in the notice; and
b
the inspector may take copies of them or of extracts from them.

2

This section shall apply with respect to notices given on or after the dayon which this Act is passed.

144 Restrictions on powers under TMA ss.20 and 20A.

1

Section 20B of the M17 Taxes Management Act 1970(restrictions on powers under sections 20 and 20A) shall be amended asfollows.

2

In subsection (1), after the word “question” there shall be insertedthe words “, or to furnish the particulars in question”.

3

After that subsection there shall be inserted—

1A
Subject to subsection (1B) below, where a notice is given to any personunder section 20(3) the inspector shall give a copy of the notice to thetaxpayer to whom it relates.
1B
If, on an application by the inspector, a General or Special Commissionerso directs, a copy of a notice under section 20(3) need not be given to thetaxpayer to whom it relates; but such a direction shall not be given unlessthe Commissioner is satisfied that the inspector has reasonable grounds forsuspecting the taxpayer of fraud.

4

In subsection (2), after the words “deliver documents”, in the firstplace where they occur, there shall be inserted the words “or furnishparticulars”.

5

In subsection (5), for the words from “if” to “or company” thereshall be substituted the words “does not oblige a person”.

6

In subsection (7), the words from “to a person” to “daughter”shall be omitted.

7

For subsection (9) there shall be substituted—

9
Subject to subsections (11) and (12) below, a notice under section 20(3)or (8A)—
a
does not oblige a person who has been appointed as an auditor for thepurposes of any enactment to deliver or make available documents which are hisproperty and were created by him or on his behalf for or in connection withthe performance of his functions under that enactment, and
b
does not oblige a tax adviser to deliver or make available documents whichare his property and consist of relevant communications.
10
In subsections (9) above “relevant communications” meanscommunications between the tax adviser and —
a
a person in relation to whose tax affairs he has been appointed, or
b
any other tax adviser of such a person,
the purpose of which is the giving or obtaining of advice about any ofthose tax affairs; and in subsection (9) above and this subsection “tax adviser” means a person appointed to give advice aboutthe tax affairs of another person (whether appointed directly by that otherperson or by another tax adviser of his).
11
Subject to subsection (13) below, subsection (9) above shall not haveeffect in relation to any document which contains information explaining anyinformation, return, accounts or other document which the person to whom thenotice is given has, as tax accountant, assisted any client of his inpreparing for, or delivering to, the inspector or the Board.
12
Subject to subsection (13) below, in the case of a notice under section20(8A) subsection (9) above shall not have effect in relation to any documentwhich contains information giving the identity or address of any taxpayer towhom the notice relates or of any person who has acted on behalf of any suchperson.
13
Subsection (9) above is not disapplied by subsection (11) or (12) abovein the case of any document if—
a
the information within subsection (11) or (12) is contained in some otherdocument, and
b
either—
i
that other document, or a copy of it, has been delivered to the inspectoror the Board, or
ii
that other document has been inspected by an officer of the Board.
14
Where subsection (9) above is disapplied by subsection (11) or (12) abovein the case of a document, the person to whom the notice is given either shalldeliver the document to the inspector or make it available for inspection byan officer of the Board or shall—
a
deliver to the inspector (or, where subsection (3) above applies, theBoard) a copy (which is photographic or otherwise by way of facsimile) of anyparts of the document which contain the information within subsection (11) or(12), and
b
if so required by the inspector (or, as the case may be, the Board), makeavailable for inspection by a named officer of the Board such parts of thedocument as contain that information;
and failure to comply with any requirement under paragraph (b) aboveshall constitute a failure to comply with the notice.

8

This section shall apply with respect to notices given on or after the dayon which this Act is passed.

145 Falsification etc. of documents.

1

After section 20B of the M18Taxes Management Act 1970there shall be inserted—

20BB Falsification etc. of documents.
1
Subject to subsections (2) to (4) below, a person shall be guilty of anoffence if he intentionally falsifies, conceals, destroys or otherwisedisposes of, or causes or permits the falsification, concealment, destructionor disposal of, a document which—
a
he has been required by a notice under section 20 or 20A above, or
b
he has been given an opportunity in accordance with section 20B(1) above,
to deliver, or to deliver or make available for inspection.
2
A person does not commit an offence under subsection (1) above if heacts—
a
with the written permission of a General or Special Commissioner, theinspector or an officer of the Board,
b
after the document has been delivered or, in a case within section 20(3)or (8A) above, inspected, or
c
after a copy has been delivered in accordance with section 20B(4) or (14)above and the original has been inspected.
3
A person does not commit an offence under subsection (1)(a) above if heacts after the end of the period of two years beginning with the date on whichthe notice is given, unless before the end of that period the inspector or anofficer of the Board has notified the person in writing that the notice hasnot been complied with to his satisfaction.
4
A person does not commit an offence under subsection (1) (b) above if heacts—
a
after the end of the period of six months beginning with the date on whichan opportunity to deliver the document was given, or
b
after an application for consent to a notice being given in relation tothe document has been refused.
5
A person guilty of an offence under subsection (1) above shall beliable—
a
on summary conviction, to a fine not exceeding the statutory maximum;
b
on conviction on indictment, to imprisonment for a term not exceeding twoyears or to a fine or to both.

2

This section shall apply to any falsification, concealment, destructionor disposal of a document occurring on or after the day on which this Act ispassed.

F474146 Entry with warrant to obtain documents.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F475147 Procedure where documents etc. are removed.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

148 Interpretation.

1

Section 20D of the M19Taxes Management Act 1970 shall beamended as follows.

2

In subsection (2), for the words “of returns or accounts to be made ordelivered by the other” there shall be substituted the words “or deliveryof any information, return, accounts or other document which he knows will be,or is or are likely to be, used”.

3

For subsection (3) there shall be substituted—

3
Without prejudice to section 127 of the Finance Act1988, in sections 20 to 20CC above “document” has, subject to sections 20(8C) and 20A(1A), thesame meaning as it has—
a
in relation to England and Wales, in Part I of the Civil Evidence Act 1968,
b
in relation to Scotland, in Part III of the Law Reform(Miscellaneous Provisions) (Scotland) Act 1968, and
c
in relation to Northern Ireland, in Part I of the Civil Evidence Act (Northern Ireland) 1971.

F4764

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assessments, claims etc.

149 Assessments founded on fraudulent or negligent conduct.

1

The following section shall be substituted for section 36 of the TaxesManagement Act 1970—

36 Fraudulent or negligent conduct.
1
An assessment on any person (in this section referred to as “theperson in default”) for the purpose of making good to the Crown aloss of tax attributable to his fraudulent or negligent conduct or thefraudulent or negligent conduct of a person acting on his behalf may be madeat any time not later than twenty years after the end of the chargeable periodto which the assessment relates.
2
Where the person in default is an individual who carried on a trade orprofession in partnership with another individual, or with other persons atleast one of whom is an individual, at any time in the year for which theassessment is made, an assessment in respect of the profits or gains of thetrade or profession for the purpose mentioned in subsection (1) above may bemade not only on the person in default but also on his partner or, as the casemay be, on any of his partners who is an individual.
3
If the person on whom the assessment is made so requires, in determiningthe amount of the tax to be charged for any chargeable period in anyassessment made for the purpose mentioned in subsection (1) above, effectshall be given to any relief or allowance to which he would have been entitledfor that chargeable period on a claim or application made within the timeallowed by the Taxes Acts.

The following sections shall be inserted after section 43 of the TaxesManagement Act 1970—

43A Further assessments: claims etc.
1
This section applies where—
a
by virtue of section 29(3) of this Act an assessment is made on any personfor a chargeable period, and
b
the assessment is not made for the purpose of making good to the Crown anyloss of tax attributable to his fraudulent or negligent conduct or thefraudulent or negligent conduct of a person acting on his behalf.
2
Without prejudice to section 43(2) above but subject to section 43B below,where this section applies—
a
any relevant claim, election, application or notice which could have beenmade or given within the time allowed by the Taxes Acts may be made or givenat any time within one year from the end of the chargeable period in which theassessment is made, and
b
any relevant claim, election, application or notice previously made orgiven may at any such time be revoked or varied—
i
in the same manner as it was made or given, and
ii
by or with the consent of the same person or persons who made, gave orconsented to it (or, in the case of any such person who has died, by or withthe consent of his personal representatives),
except where by virtue of any enactment it is irrevocable.
3
For the purposes of this section and section 43B below, a claim, election,application or notice is relevant in relation to an assessment for achargeable period if—
a
it relates to that chargeable period or is made or given by reference toan event occurring in that chargeable period, and
b
it or, as the case may be, its revocation or variation has or could havethe effect of reducing any of the liabilities mentioned in subsection (4)below.
4
The liabilities referred to in subsection (3) above are—
a
the increased liability to tax resulting from the assessment,
b
any other liability to tax of the person concerned for—
i
the chargeable period to which the assessment relates, or
ii
any chargeable period which follows that chargeable period and ends notlater than one year after the end of the chargeable period in which theassessment is made.
5
Where a claim, election, application or notice is made, given, revoked orvaried by virtue of subsection (2) above, all such adjustments shall be made,whether by way of discharge or repayment of tax or the making of assessmentsor otherwise, as are required to take account of the effect of the taking ofthat action on any person’s liability to tax for any chargeable period.
6
The provisions of this Act relating to appeals against decisions on claimsshall apply with any necessary modifications to a decision on the revocationor variation of a claim by virtue of subsection (2) above.
43B Limits on application of section 43A.
1
If the effect of the exercise by any person of a power conferred bysection 43A(2) above—
a
to make or give a claim, election, application or notice, or
b
to revoke or vary a claim, election, application or notice previously madeor given,
would be to alter the liability to tax of another person, that power maynot be exercised except with the consent in writing of that other person or,where he has died, his personal representatives.
2
Where—
a
a power conferred by subsection (2) of section 43A above is exercised inconsequence of an assessment made on a person, and
b
the exercise of the power increases the liability to tax of anotherperson,
that section shall not apply by reason of any assessment made because ofthat increased liability.
3
In any case where—
a
one or more relevant claims, elections, applications or notices are made,given, revoked or varied by virtue of the application of section 43A above inthe case of an assessment, and
b
the total of the reductions in liability to tax which, apart from thissubsection, would result from the action mentioned in paragraph (a) abovewould exceed the additional liability to tax resulting from the assessment,
the excess shall not be available to reduce any liability to tax.
4
Where subsection (3) above has the effect of limiting either the reductionin a person’s liability to tax for more than one period or the reduction inthe liability to tax of more than one person, the limited amount shall beapportioned between the periods or persons concerned—
a
except where paragraph (b) below applies, in such manner as may bespecified by the inspector by notice in writing to the person or personsconcerned, or
b
where the person concerned gives (or the persons concerned jointly give)notice in writing to the inspector within the relevant period, in such manneras may be specified in the notice given by the person or persons concerned.
5
For the purposes of paragraph (b) of subsection (4) above the relevantperiod is the period of 30 days beginning with the day on which notice underparagraph (a) of that subsection is given to the person concerned or, wheremore than one person is concerned, the latest date on which such notice isgiven to any of them.

2

This section shall apply in relation to any assessment notice of which isissued on or after the day on which this Act is passed.

151 Assessment of trustees etc.

1

Income tax chargeable in respect of income arising to the trustees of a settlement, or to the personal representatives of a deceased person, may be assessed and charged on and in the name of any one or more of the relevant trustees or, as the case may be, the relevant personal representatives.

F1402

In this section “the relevant trustees”—

a

in relation to any income, F408... means F395the trustees of the settlement in the year of assessment in which the income arises and any subsequent trustees of the settlement; F409...

F409b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and “the relevant personal representatives” has a corresponding meaning.

F4103

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

This section shall be deemed always to have had effect.

Distress and poinding etc.

152 Distress for non-payment of tax.

1

Section 61 of the M22Taxes Management Act 1970 (distress)shall be amended as follows.

2

In subsection (1), for the words “the collector shall” onwards thereshall be substituted the words “the collector may distrain upon the goods and chattels of the personcharged (in this section referred to as “the person indefault”).”

3

In subsection (2), for the words from “a collector” to “Commissioners” there shall be substituted the words “a justice of thepeace, on being satisfied by information on oath that there is reasonableground for believing that a person is neglecting or refusing to pay a sumcharged, may issue a warrant in writing authorising a collector to”.

4

In subsection (4), for the words “neglecting or refusing to pay”there shall be substituted the words “in default”.

5

In subsection (5)—

a

for the word “aforesaid” there shall be substituted the words “indefault”,

b

the words “within the said five days” shall be omitted,

c

for the words from “two or more inhabitants of the parish” to “sufficient persons” there shall be substituted the words “one or moreindependent persons appointed by the collector”, and

d

the words from “The costs” to “the collector, and” shall beomitted.

6

The following subsection shall be added after that subsection—

6
The Treasury may by regulations make provision with respect to—
a
the fees chargeable on or in connection with the levying of distress, and
b
the costs and charges recoverable where distress has been levied;
and any such regulations shall be made by statutory instrument whichshall be subject to annulment in pursuance of a resolution of the House ofCommons.

7

This section shall come into force on such day as the Treasury may byorder made by statutory instrument appoint.

153 Priority in cases of distraint by others.

1

Section 62 of the M23Taxes Management Act 1970 (priorityof claim for tax) shall be amended as follows.

2

In subsection (1)—

a

for the words from the beginning to “shall be” there shall besubstituted the words “If at any time at which any goods or chattelsbelonging to any person (in this section referred to as “the personin default”) are”,

b

for the word “unless” there shall be substituted the words “theperson in default is in arrears in respect of any such sums as are referredto in subsection (1A) below, the goods or chattels may not be so taken unlesson demand made by the collector”, and

c

for the words “arrears of tax” onwards there shall be substituted thewords “such sums as have fallen due at or before the date of seizure.”

3

The following subsection shall be inserted after that subsection—

1A
The sums referred to in subsection (1) above are—
a
sums due from the person in default on account of deductions of income taxfrom emoluments paid during the period of twelve months next before the dateof seizure, being deductions which the person in default was liable to makeunder section 203 of the principal Act (pay as you earn) less the amount ofthe repayments of income tax which he was liable to make during that period;and
b
sums due from the person in default in respect of deductions required tobe made by him for that period under section 559 of the principal Act(sub-contractors in the construction industry).

4

In subsection (2)—

a

for the words from the beginning to “the collector shall” there shallbe substituted the words “If the sums referred to in subsection (1) aboveare not paid within ten days of the date of the demand referred to in thatsubsection, the collector may”,

b

for the words “shall proceed” there shall be substituted the words “may proceed”, and

c

for the words “the tax charged and claimed” there shall besubstituted the words “those sums”.

154 Recovery of tax from debtor in Scotland.

1

Section 63 of the M24Taxes Management Act 1970 (recoveryof tax in Scotland) shall be amended as follows.

2

In subsection (3), for the words “which relates to” onwards thereshall be substituted the words

insofar as it relates to sums due in respect of—
a
deductions of income tax which any person specified in the application wasliable to make under section 203 of the principal Act (pay as you earn); or
b
deductions required to be made under section 559 of the principal Act(sub-contractors in the construction industry) by any person specified in theapplication.

3

The following subsection shall be added after that subsection—

4
In this section references to amounts of tax due and references to sumsdue in respect of deductions include references to amounts which are deemedto be—
a
amounts of tax which the person is liable to pay by virtue of the Income Tax (Employments) Regulations 1973; or
b
amounts which the person is liable to pay by virtue of the Income Tax(Sub-Contractors in the Construction Industry)Regulations 1975.

155 Priority in cases of poinding etc. by others in Scotland.

1

Section 64 of the Taxes Management Act 1970 (priority of claim for tax inScotland) shall be amended as follows.

2

In subsection (1)—

a

for the words from the beginning to “shall be” there shall besubstituted the words “If at any time at which any moveable goods andeffects belonging to any person (in this section referred to as “theperson in default”) are”,

b

for the word “unless” there shall be substituted the words “theperson in default is in arrears in respect of any such sums as are referredto in subsection (1A) below, the goods and effects may not be so taken unlesson demand made by the collector”, and

c

for the words “the tax so in arrear” onwards there shall besubstituted the words “such sums as have fallen due at or before the dateof poinding or, as the case may be, other diligence or assignation.”

3

The following subsection shall be inserted after that subsection—

1A
The sums referred to in subsection (1) above are—
a
sums due from the person in default on account of deductions of income taxfrom emoluments paid during the period of twelve months next before the dateof poinding, being deductions which the person in default was liable to makeunder section 203 of the principal Act (pay as you earn) less the amount ofthe repayments of income tax which he was liable to make during that period;and
b
sums due from the person in default in respect of deductions required tobe made by him for that period under section 559 of the principal Act(sub-contractors in the construction industry).

4

In subsection (2)—

a

for the words from the beginning to “the tax claimed shall” thereshall be substituted the words “If the sums referred to in subsection (1)above are not paid within ten days of the date of the demand referred to inthat subsection, the sums shall”, and

b

for the words “proceeding at his instance” there shall be substitutedthe word “proceedings”.

Interest etc.

156 Interest on overdue tax.

1

In section 86 of the M25Taxes Management Act 1970, forsubsection (3) and the words in subsection (4) preceding the Table there shallbe substituted—

3
For the purposes of this section—
a
the reckonable date in relation to any tax charged by an assessment toincome tax under Schedule E, and
b
subject to subsection (3A) below, the reckonable date in relation to taxcharged by any other assessment to which this section applies,
is the date on which the tax becomes due and payable.
3A
Where an appeal has been made against an assessment and any of the taxcharged by the assessment is due and payable on a date later than the dategiven by the Table in subsection (4) below, the reckonable date in relationto the tax so due and payable is the later of—
a
the date given by that Table, and
b
the date on which the tax would have been due and payable if there hadbeen no appeal against the assessment (assuming in a case where the tax wouldnot have been charged by the assessment if there had been no appeal that itwas so charged).
4
The Table referred to in subsection (3A) above is asfollows—

2

In section 55 of that Act—

a

in subsection (2), for the words “it were” onwards there shall besubstituted the words “there had been no appeal.”,

b

in subsection (6), for paragraphs (a) and (b) there shall besubstituted—

a
in the case of a determination made on an application under subsection (3)above, other than an application made by virtue of subsection (3A) above, thedate on which any tax the payment of which is not so postponed is due andpayable shall be determined as if the tax were charged by an assessment noticeof which was issued on the date of that determination and against which therehad been no appeal; and
b
in the case of a determination made on an application under subsection (4)above—
i
the date on which any tax the payment of which ceases to be so postponedis due and payable shall be determined as if the tax were charged by anassessment notice of which was issued on the date of that determination andagainst which there had been no appeal; and
ii
any tax overpaid shall be repaid.

c

for subsection (9) there shall be substituted—

9
On the determination of the appeal—
a
the date on which any tax payable in accordance with that determinationis due and payable shall, so far as it is tax the payment of which had beenpostponed, or which would not have been charged by the assessment if there hadbeen no appeal, be determined as if the tax were charged by anassessment—
i
notice of which was issued on the date on which the inspector issues tothe appellant a notice of the total amount payable in accordance with thedetermination, and
ii
against which there had been no appeal; and
b
any tax overpaid shall be repaid.

3

In section 56(9) of that Act, for the words “amount of” there shallbe substituted the words “amount charged by”.

4

This section shall apply to tax charged by any assessment notice of whichis issued after 30th July 1982.

157 Effect of certain claims on interest.

1

In relation to any tax charged by an assessment made under section 252(1)of the Taxes Act 1988 to recover corporation tax that becomes payable as aresult of the making of a claim under section 240 of that Act, the reckonabledate for the purposes of section 86 of the M26Taxes ManagementAct 1970 (in this section referred to as “section 86”) is the date which is given by paragraph 5 ofthe Table in subsection (4) of that section.

2

Subsections (3) and (4) below apply in any case where—

a

there is in any accounting period of a company (in this section referredto as “the later period”) an amount of surplus advance corporationtax, as defined in subsection (3) of section 239 of the Taxes Act 1988, and

b

pursuant to a claim under the said subsection (3), the whole or any partof that amount is treated for the purposes of the said section 239 asdischarging liability for an amount of corporation tax for an earlieraccounting period (in this section referred to as “the earlier period”), and

c

if the claim under the said subsection (3) had not been made—

i

an amount of corporation tax assessed for the earlier period would carryinterest in accordance with section 86, or

ii

an assessment could have been made under section 252(1) of that Act torecover corporation tax for the earlier period.

3

In determining the amount of interest payable under section 86 oncorporation tax unpaid for the earlier period, no account shall be taken ofany reduction in the amount of that tax which results from section 239(3) ofthe Taxes Act 1988 except so far as concerns interest for any time after theday following the expiry of nine months from the end of the later period.

4

Where, but for the claim under section 239(3) of the Taxes Act 1988, anassessment could have been made under section 252(1) of that Act to recovercorporation tax for the earlier period, interest under section 86 shall bechargeable, in relation to any time not later than the day referred to insubsection (3) above, as if the claim had not been made and such an assessmenthad been made.

5

In relation to interest charged under section 86 by virtue of subsection(4) above, section 69 of the M27Taxes Management Act 1970shall have effect with the substitution for the words following paragraph (c)of the words “as if it were tax charged and due and payable under anassessment”.

6

In this section—

a

subsection (1) above shall have effect where the claim under 240 of theTaxes Act 1988 is made on or after 14th March 1989, and

b

subsections (2) to (5) above shall have effect where the claim undersection 239(3) of that Act is made on or after that date,

in any other case, where the tax is charged by an assessment notice ofwhich is issued on or after the appointed day.

4

Paragraph (b) of that subsection shall have effect where the tax ischarged by an assessment relating to an accounting period beginning on orafter the appointed day.

5

Subsection (2) above shall have effect in relation to repayments of taxmade on or after the appointed day.

6

In this section “the appointed day” means such day as theTreasury may by order made by statutory instrument appoint; and different daysmay be appointed for different enactments or for different purposes of thesame enactment.

159F142 Interest on tax in case of failure or error.

1

Section 88 of the M30Taxes Management Act 1970 (intereston tax recovered to make good loss due to taxpayer’s fault) shall be amendedas follows.

2

In subsection (1), for the words “the fraud, wilful default or neglectof any person” there shall be substituted the words—

a
a failure to give a notice, make a return or produce or furnish a documentor other information required by or under the Taxes Acts, or
b
an error in any information, return, accounts or other document deliveredto an inspector or other officer of the Board,

3

The following subsection shall be added at the end—

7
In paragraph (a) of subsection (1) above the reference to a failure to dosomething includes, in relation to anything required to be done at aparticular time or within a particular period, a reference to a failure to doit at that time or within that period; and, accordingly, section 118(2) ofthis Act shall not apply for the purposes of that paragraph.

4

This section shall have effect in relation to failures occurring, anderrors in any information or documents delivered, on or after the day on whichthis Act is passed.

160 Determinations under TMA s. 88.

F1431

In subsection (1) of section 88 of the Taxes Management Act 1970, for thewords “shall carry” there shall be substituted the words “shall, if aninspector or the Board so determine, carry”.

F1432

The following section shall be inserted after that section—

88A Determinations under section 88.
1
Notice of a determination under section 88 above shall be served on theperson liable to pay the interest to which it relates and shall specify—
a
the date on which it is issued,
b
the amount of the tax which carries interest and the assessment by whichthat tax was charged,
c
the date when for the purposes of section 88 above that tax ought to havebeen paid, and
d
the time within which an appeal against the determination may be made.
2
After the notice of a determination under section 88 above has been servedthe determination shall not be altered except in accordance with this section.
3
A determination under section 88 above may be made at any time—
a
within six years after the end of the chargeable period for which the taxcarrying the interest is charged (or, in the case of development land tax, ofthe financial year in which the liability for that tax arose), or
b
within three years after the date of the final determination of the amountof that tax.
4
An appeal may be brought against a determination under section 88 aboveand, subject to the following provisions of this section, the provisions ofthis Act relating to appeals shall have effect in relation to an appealagainst such a determination as they have effect in relation to an appealagainst an assessment to tax.
5
On an appeal against a determination under section 88 above section 50(6)to (8) of this Act shall not apply but the Commissioners may—
a
if it appears to them that the tax carries no interest under that section,set the determination aside,
b
if the determination appears to them to be correct, confirm thedetermination, or
c
if the determination appears to them to be incorrect as to the amount oftax or the date on which the tax ought to have been paid, revise thedetermination accordingly.

3

In section 70 (certificates) of the M31Taxes ManagementAct 1970, for subsection (3) there shall be substituted—

3
A certificate of the inspector or any other officer of the Board that ithas been determined that tax carries interest under section 88 of this Act,together with a certificate of the collector that payment of the interest hasnot been made to him, or, to the best of his knowledge and belief, to anyother collector, or to any person acting on his behalf or on behalf of anothercollector, shall be sufficient evidence—
a
that interest is chargeable on the tax from the date when for the purposesof section 88 of this Act the tax ought to have been paid, and
b
that the sum mentioned in the certificate is unpaid and is due to theCrown;
and any document purporting to be such a certificate as is mentioned inthis subsection shall be deemed to be such a certificate unless the contraryis proved.

F1434

In section 113 of that Act (form of documents), the following subsectionshall be inserted after subsection (1B)—

1C
Where an officer of the Board has decided that an amount of tax carriesinterest under section 88 of this Act and has taken the decisions needed forarriving at the date when for the purposes of that section that tax ought tohave been paid, he may entrust to any other officer of the Boardresponsibility for completing the determination procedure, whether by meansinvolving the use of a computer or otherwise, including responsibility forserving notice of the determination on the person liable to the interest.

5

In section 114 of that Act (want of form not to invalidate), after theword “assessment”, in each place where it occurs, there shall be insertedthe words “or determination”.

F1446

In paragraph 5 of Schedule 3 to that Act (rules for assigning proceedingsto Commissioners), the following entry shall be inserted in the first columnafter the entry relating to an appeal against an assessment to capital gainstax— “ An appeal against a determination under section 88 of this Act. ”

161F145 Tax carrying interest under TMA ss. 86 and 88.

The following subsection shall be substituted for section 88(3) of the M32Taxes Management Act 1970—

3
Where it is finally determined that any tax carries interest under thissection, the tax shall carry no interest under section 86 or 86A above (and,accordingly, any interest under either of those sections which has been paidbefore the final determination shall be set off against the amount of theinterest under this section); and for the purposes of this subsection adetermination that tax carries interest is not final until it can no longerbe varied, whether by any Commissioners on appeal or by the order of anycourt.

Penalties

162 Failure to make return.

1

Section 93 of the Taxes Management Act 1970 (failure to comply with noticeto make return for income tax or capital gains tax) shall be amended asfollows.

2

In subsection (1) (initial and daily penalties), for paragraphs (a) and(b) there shall be substituted—

a
to a penalty not exceeding £300, and
b
if the failure continues after a penalty is imposed under paragraph (a)above, to a further penalty or penalties not exceeding £60 for each dayon which the failure continues after the day on which the penalty underparagraph (a) above was imposed (but excluding any day for which a penaltyunder this paragraph has already been imposed).

3

The following subsection shall be substituted for subsection (2)—

2
If a failure by a person to comply with a notice such as is referred toin subsection (1) above continues after the end of the year of assessmentfollowing that during which it was served then, without prejudice to anypenalty under subsection (1) above, he shall be liable to a penalty of anamount not exceeding so much of the tax with which he is charged (whether forone or for more than one year of assessment) in assessments—
a
based wholly or partly on any income or chargeable gains that ought tohave been included in the return required by the notice, and
b
made after the end of the year next following the year of assessment inwhich the notice was served,
as is attributable to the income or chargeable gains that ought to havebeen so included.

4

The following subsection shall be substituted for subsection (5)—

5
No penalty shall be imposed under subsection (1) above in respect of afailure at any time after the failure has been remedied.

5

The following subsection shall be substituted for subsection (7)—

7
If the person on whom a notice is served proves that there was no incomeor chargeable gain to be included in the return, the penalty under thissection shall not exceed £100.

6

This section shall apply in relation to any failure to comply with anotice served on or after 6th April 1989.

163 Incorrect return, accounts etc.

1

In—

F471a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

section 96(1) of that Act (incorrect return etc. for corporation tax),

the entries relating to sections 38(5) and 42 of the Taxes Act 1988 shallbe moved from the second column to the appropriate place in the first column;and

c

the entry relating to section 481(5)(k) of that Act shall be omitted fromthe first column and an entry relating to section 482(2) of that Act shall beinserted at the appropriate place in the second column.

6

In consequence of the amendment made by subsection (5)(a) above section16(6) of the Taxes Management Act 1970 shall cease to have effect.

7

This section shall apply in relation to—

a

any failure to comply with a notice or to furnish information, give acertificate or produce a document or record beginning on or after the day onwhich this Act is passed, and

b

the furnishing, giving, producing or making of any incorrect information,certificate, document, record or declaration on or after that day.

165 Special penalties in the case of certain returns.

1

The following section shall be inserted after section 98 of the TaxesManagement Act 1970—

98A Special penalties in the case of certain returns.
1
Regulations under section 203(2) (PAYE) or 566(1) (sub-contractors) of theprincipal Act may provide that this section shall apply in relation to anyspecified provision of the regulations.
2
Where this section applies in relation to a provision of regulations, anyperson who fails to make a return in accordance with the provision shall beliable—
a
to a penalty or penalties of the relevant monthly amount for each month(or part of a month) during which the failure continues, but excluding anymonth after the twelfth or for which a penalty under this paragraph hasalready been imposed, and
b
if the failure continues beyond twelve months, without prejudice to anypenalty under paragraph (a) above, to a penalty not exceeding so much of theamount payable by him in accordance with the regulations for the year ofassessment to which the return relates as remained unpaid at the end of 19thApril after the end of that year.
3
For the purposes of subsection (2)(a) above, the relevant monthly amountin the case of a failure to make a return—
a
where the number of persons in respect of whom particulars should beincluded in the return is fifty or less, is £100, and
b
where that number is greater than fifty, is £100 for each fifty suchpersons and an additional £100 where that number is not a multiple offifty.
4
Where this section applies in relation to a provision of regulations, anyperson who fraudulently or negligently makes an incorrect return of a kindmentioned in the provision shall be liable to a penalty not exceeding thedifference between—
a
the amount payable by him in accordance with the regulations for the yearof assessment to which the return relates, and
b
the amount which would have been so payable if the return had beencorrect.

F1462

In relation to a failure to make a return beginning before such day as theTreasury may by order made by statutory instrument appoint, section 98A(2)shall have effect with the substitution of the following paragraph forparagraph (a)—

a
to—
i
a penalty not exceeding twelve times the relevant monthly amount, and
ii
if the failure continues after a penalty is imposed under sub-paragraph(i) above, a further penalty or penalties of the relevant monthly amount foreach month (or part of a month) during which the failure continues, butexcluding any month after the twelfth or for which a penalty under thissub-paragraph has already been imposed,

166 Assisting in preparation of incorrect return etc.

1

The following section shall be substituted for section 99 of the M34Taxes Management Act 1970—

99 Assisting in preparation of incorrect return etc.
Any person who assists in or induces the preparation or delivery of anyinformation, return, accounts or other document which—
a
he knows will be, or is or are likely to be, used for any purpose of tax,and
b
he knows to be incorrect,
shall be liable to a penalty not exceeding £3,000.

2

This section shall apply in relation to assistance and inducementsoccurring on or after the day on which this Act is passed.

167 Determination of penalties.

The following sections shall be substituted for section 100 of the M35Taxes Management Act 1970—

100 Determination of penalties by officer of Board.
1
Subject to subsection (2) below and except where proceedings for a penaltyhave been instituted under section 100D below or a penalty has been imposedby the Commissioners under section 53 of this Act, an officer of the Boardauthorised by the Board for the purposes of this section may make adetermination imposing a penalty under any provision of the Taxes Acts andsetting it at such amount as, in his opinion, is correct or appropriate.
2
Subsection (1) above does not apply where the penalty is a penaltyunder—
a
section 93(1) above as it has effect before the amendments made by section162 of the Finance Act 1989 or section 93(1)(a) above as it has effect afterthose amendments,
b
section 94(1) above as it has effect before the substitution made bysection 83 of the Finance (No.2) Act 1987,
c
section 98(1) above as it has effect before the amendments made by section164 of the Finance Act 1989 or section 98(1)(i) above as it has effect afterthose amendments, or
d
paragraph (a)(i) of section 98A(2) above as it has effect by virtue ofsection 165(2) of the Finance Act 1989.
3
Notice of a determination of a penalty under this section shall be servedon the person liable to the penalty and shall state the date on which it isissued and the time within which an appeal against the determination may bemade.
4
After the notice of a determination under this section has been served thedetermination shall not be altered except in accordance with this section oron appeal.
5
If it is discovered by an officer of the Board authorised by the Board forthe purposes of this section that the amount of a penalty determined underthis section is or has become insufficient the officer may make adetermination in a further amount so that the penalty is set at the amountwhich, in his opinion, is correct or appropriate.
6
In any case where—
a
a determination under this section is of a penalty under section 94(6)above, and
b
after the determination has been made it is discovered by an officer ofthe Board authorised by the Board for the purposes of this section that theamount which was taken into account as the relevant amount of tax is or hasbecome excessive,
the determination shall be revised so that the penalty is set at theamount which is correct; and, where more than the correct amount has alreadybeen paid, the appropriate amount shall be repaid.
100A Provisions supplementary to section 100.
1
Where a person who has incurred a penalty has died, a determination undersection 100 above which could have been made in relation to him may be madein relation to his personal representatives, and any penalty imposed onpersonal representatives by virtue of this subsection shall be a debt due fromand payable out of his estate.
2
A penalty determined under section 100 above shall be due and payable atthe end of the period of thirty days beginning with the date of the issue ofthe notice of determination.
3
A penalty determined under section 100 above shall for all purposes betreated as if it were tax charged in an assessment and due and payable.
100B Appeals against penalty determinations.
1
An appeal may be brought against the determination of a penalty undersection 100 above and, subject to the following provisions of this section,the provisions of this Act relating to appeals shall have effect in relationto an appeal against such a determination as they have effect in relation toan appeal against an assessment to tax.
2
On an appeal against the determination of a penalty under section 100above section 50(6) to (8) of this Act shall not apply but—
a
in the case of a penalty which is required to be of a particular amount,the Commissioners may—
i
if it appears to them that no penalty has been incurred, set thedetermination aside,
ii
if the amount determined appears to them to be correct, confirm thedetermination, or
iii
if the amount determined appears to them to be incorrect, increase orreduce it to the correct amount,
b
in the case of any other penalty, the Commissioners may—
i
if it appears to them that no penalty has been incurred, set thedetermination aside,
ii
if the amount determined appears to them to be appropriate, confirm thedetermination,
iii
if the amount determined appears to them to be excessive, reduce it tosuch other amount (including nil) as they consider appropriate, or
iv
if the amount determined appears to them to be insufficient, increase itto such amount not exceeding the permitted maximum as they considerappropriate.
3
Without prejudice to section 56 of this Act, an appeal from a decision ofthe Commissioners against the amount of a penalty which has been determinedunder section 100 above or this section shall lie, at the instance of theperson liable to the penalty, to the High Court or, in Scotland, to the Courtof Session as the Court of Exchequer in Scotland; and on that appeal the courtshall have the like jurisdiction as is conferred on the Commissioners byvirtue of this section.
100C Penalty proceedings before Commissioners.
1
An officer of the Board authorised by the Board for the purposes of thissection may commence proceedings before the General or Special Commissionersfor any penalty to which subsection (1) of section 100 above does not applyby virtue of subsection (2) of that section.
2
Proceedings under this section shall be by way of information in writing,made to the Commissioners, and upon summons issued by them to the defendant(or defender) to appear before them at a time and place stated in the summons;and they shall hear and decide each case in a summary way.
3
Any penalty determined by the Commissioners in proceedings under thissection shall for all purposes be treated as if it were tax charged in anassessment and due and payable.
4
An appeal against the determination of a penalty in proceedings under thissection shall lie to the High Court or, in Scotland, the Court of Session asthe Court of Exchequer in Scotland—
a
by any party on a question of law, and
b
by the defendant (or, in Scotland, the defender) against the amount of thepenalty.
5
On any such appeal the court may—
a
if it appears that no penalty has been incurred, set the determinationaside,
b
if the amount determined appears to be appropriate, confirm thedetermination,
c
if the amount determined appears to be excessive, reduce it to such otheramount (including nil) as the court considers appropriate, or
d
if the amount determined appears to be insufficient, increase it to suchamount not exceeding the permitted maximum as the court considers appropriate.
100D Penalty proceedings before court.
1
Where in the opinion of the Board the liability of any person for apenalty arises by reason of the fraud of that or any other person, proceedingsfor the penalty may be instituted before the High Court or, in Scotland, theCourt of Session as the Court of Exchequer in Scotland.
2
Proceedings under this section which are not instituted (in England, Walesor Northern Ireland) under the Crown Proceedings Act 1947by and in the name of the Board as an authorised department for the purposesof that Act shall be instituted—
a
in England and Wales, in the name of the Attorney General,
b
in Scotland, in the name of the Lord Advocate, and
c
in Northern Ireland, in the name of the Attorney General for NorthernIreland.
3
Any proceedings under this section instituted in England and Wales shallbe deemed to be civil proceedings by the Crown within the meaning of Part IIof the Crown Proceedings Act 1947 and any such proceedings instituted inNorthern Ireland shall be deemed to be civil proceedings within the meaningof that Part of that Act as for the time being in force in Northern Ireland.
4
If in proceedings under this section the court does not find that fraudis proved but consider that the person concerned is nevertheless liable to apenalty, the court may determine a penalty notwithstanding that, but for theopinion of the Board as to fraud, the penalty would not have been a matter forthe court.

168 Amendments consequential on section 167.

1

In consequence of the amendment made by section 167 above the M36Taxes Management Act 1970 shall be amended in accordance withsubsections (2) to (8) below.

2

In section 20A (power to call for papers of tax accountant)—

a

in subsection (1), for the words “awarded against him a penalty incurredby” there shall be substituted the words “a penalty imposed on”,

b

in subsection (2), for the word “award” in the first place where itoccurs there shall be substituted the word “penalty” and for that wordin the second place where it occurs there shall be substituted the word “imposition”, and

c

in subsection (4), for the words “award against” there shall besubstituted the words “imposition on” and for the word “award” thereshall be substituted the word “penalty”.

F1473

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In section 102 (mitigation of penalties), for the words “recoverythereof” there shall be substituted the words “a penalty”.

5

In section 105 (evidence)—

a

the following paragraph shall be substituted for paragraph (a) ofsubsection (1)—

a
pecuniary settlements may be accepted instead of a penalty beingdetermined, or proceedings being instituted, in relation to any tax,

b

in paragraph (b) of subsection (2), for the words “sum” onwards thereshall be substituted the words “tax due from him”, and

c

after that paragraph there shall be inserted the words

and
c
any proceedings for a penalty or on appeal against the determination ofa penalty.

6

In section 112 (loss of documents etc.), the following subsection shallbe added at the end—

3
The references in subsection (1) above to assessments to tax includereferences to determinations of penalties; and in its application to suchdeterminations the proviso to that subsection shall have effect with theappropriate modifications.

7

In section 113 (form of documents)—

a

the following subsection shall be inserted after subsection (1C)—

1D
Where an officer of the Board has decided to impose a penalty undersection 100 of this Act and has taken all other decisions needed for arrivingat the amount of the penalty, he may entrust to any other officer of the Boardresponsibility for completing the determination procedure, whether by meansinvolving the use of a computer or otherwise, including responsibility forserving notice of the determination on the person liable to the penalty.

b

in subsection (3)—

i

after the words “Every assessment,” there shall be inserted the words “determination of a penalty,”,

ii

after the words “notice of assessment” there shall be inserted thewords “, of determination”, and

iii

after the words “levying tax” there shall be inserted the words “ordetermining a penalty”.

F1488

In paragraph 5 of Schedule 3 (rules for assigning proceedings toCommissioners), for the words “section 100(4)” there shall be substitutedthe words “section 100C or an appeal under section 100B against thedetermination of a penalty”.

9

In section 41 of the M37Development Land Tax Act 1976(administration of development land tax) the following subsection shall beinserted after subsection (1)—

1A
Nothing in sections 167 to 169 of the Finance Act 1989 shall apply topenalties relating to development land tax.

169 Time limits.

1

The following section shall be substituted for section 103 of the M38Taxes Management Act 1970—

103 Time limits for penalties.
1
Subject to subsection (2) below, where the amount of a penalty is to beascertained by reference to tax payable by a person for any period, thepenalty may be determined by an officer of the Board, or proceedings for thepenalty may be commenced before the Commissioners or a court—
a
at any time within six years after the date on which the penalty wasincurred, or
b
at any later time within three years after the final determination of theamount of tax by reference to which the amount of the penalty is to beascertained.
2
Where the tax was payable by a person who has died, and the determinationwould be made in relation to his personal representatives, subsection (1)(b)above does not apply if the tax was charged in an assessment made later thansix years after the end of the chargeable period for which it was charged.
3
A penalty under section 99 of this Act may be determined by an officer ofthe Board, or proceedings for such a penalty may be commenced before a court,at any time within twenty years after the date on which the penalty wasincurred.
4
A penalty to which neither subsection (1) nor subsection (3) above appliesmay be so determined, or proceedings for such a penalty may be commencedbefore the Commissioners or a court, at any time within six years after thedate on which the penalty was incurred or began to be incurred.

2

The amendment made by subsection (1) above shall not affect theapplication of section 103(4) of the M39Taxes Management Act1970 to proceedings under section 100 of that Act as it has effect before theamendment made by section 167 above.

170 Up-rating of certain penalties.

F1491

In section 23(8) of the Taxes Act 1988 (maximum penalty for agents failing to make certain payments on behalf of principals), for “£50” there shall be substituted “£300”.

F1502

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4233

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In—

F394a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F394b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c

section 658(5) of that Act (maximum penalty for false statements or representations relating to purchased life annuities),

for “£500” there shall be substituted “£3,000”.

5

In paragraph 2(4) of Schedule 19A to that Act and Schedule 16A to the M40Finance Act 1973 (maximum penalty for incorrect return byLloyd’s agent), for the words “£500 in the case of fraud and £250 in the case of negligence” there shall be substituted “£3,000”.

6

This section shall apply in relation to things done or omitted on or after the day on which this Act is passed.

Part III Miscellaneous and General

Inheritance tax

171 Gifts to housing associations.

1

The following section shall be inserted in the M41Inheritance Tax Act 1984 after section 24—

24A Gifts to housing associations.
1
A transfer of value is exempt to the extent that the value transferred byit is attributable to land in the United Kingdom given to a registered housingassociation.
2
In subsection (1) above “registered housing association”means a registered housing association within the meaning of the Housing Associations Act 1985 or Part VII of the Housing (Northern Ireland) Order 1981.
3
Subsections (2) to (5) of section 23 and subsection (4) of section 24above shall apply in relation to subsection (1) above as they apply inrelation to section 24(1).

2

In section 23(5) of the Inheritance Tax Act 1984 the words “or, where it is land, of a body mentioned in section 24Abelow” shall be added at the end.

3

In section 29(5) of that Act—

a

the words “or, where it is land, of a body mentioned in section24A” shall be inserted at the end of paragraph (b), and

b

after “24(3) and (4),” there shall be inserted “24A(3),”.

4

In section 161(2)(b)(ii) of that Act after “24,” there shall beinserted “24A,”.

5

In section 102(5) of the M42Finance Act 1986 afterparagraph (e) there shall be inserted—

ee
section 24A (gifts to housing associations);

6

This section shall apply to transfers of value made on or after 14th March1989.

172 Abatement of exemption where claim settled out of beneficiary’s ownresources.

1

The following section shall be inserted after section 29 of the M43Inheritance Tax Act 1984—

29A Abatement of exemption where claim settled out of beneficiary’s ownresources.
1
This section applies where—
a
apart from this section the transfer of value made on the death of anyperson is an exempt transfer to the extent that the value transferred by itis attributable to an exempt gift, and
b
the exempt beneficiary, in settlement of the whole or part of any claimagainst the deceased’s estate, effects a disposition of property not derivedfrom the transfer.
2
The provisions of this Act shall have effect in relation to the transferas if—
a
so much of the relevant value as is equal to the following amount, namelythe amount by which the value of the exempt beneficiary’s estate immediatelyafter the disposition is less than it would be but for the disposition, or
b
where that amount exceeds the relevant value, the whole of the relevantvalue,
were attributable to such a gift to the exempt beneficiary as ismentioned in subsection (3) below (instead of being attributable to a giftwith respect to which the transfer is exempt).
3
The gift referred to in subsection (2) above is a specific gift withrespect to which the transfer is chargeable, being a gift which satisfies theconditions set out in paragraphs (a) and (b) of section 38(1) below.
4
In determining the value of the exempt beneficiary’s estate for thepurposes of subsection (2) above—
a
no deduction shall be made in respect of the claim referred to insubsection (1)(b) above, and
b
where the disposition referred to in that provision constitutes a transferof value—
i
no account shall be taken of any liability of the beneficiary for any taxon the value transferred, and
ii
sections 104 and 116 below shall be disregarded.
5
Subsection (1)(b) above does not apply in relation to any claim againstthe deceased’s estate in respect of so much of any liability as is, inaccordance with this Act, to be taken into account in determining the valueof the estate.
6
In this section—
“exempt gift”, in relation to a transfer of value fallingwithin subsection (1)(a) above, means—
a
a gift with respect to which the transfer is (apart from this section)exempt by virtue of the provisions of any of sections 18 and 23 to 28 above,or
b
where (apart from this section) the transfer is so exempt with respect toa gift up to a limit, so much of the gift as is within that limit;
“the exempt beneficiary”, in relation to an exempt gift,means any of the following, namely—
a
where the gift is exempt by virtue of section 18 above, the deceased’sspouse,
b
where the gift is exempt by virtue of section 23 above, any person orbody—
i
whose property the property falling within subsection (1) of that sectionbecomes, or
ii
by whom that property is held on trust for charitable purposes,
c
where the gift is exempt by virtue of section 24, 25 or 26 above, any bodywhose property the property falling within subsection (1) of that sectionbecomes,
d
where the gift is exempt by virtue of section 24A above, any body to whomthe land falling within subsection (1) of that section is given, and
e
where the gift is exempt by virtue of section 27 or 28 above, the trusteesof any settlement in which the property falling within subsection (1) of thatsection becomes comprised;
“gift” and “specific gift” have the samemeaning as in Chapter III of this Part; and
“the relevant value”, in relation to a transfer of valuefalling within subsection (1)(a) above, means so much of the value transferredby the transfer as is attributable to the gift referred to in that provision.

2

This section shall have effect in relation to deaths occurring on or afterthe day on which this Act is passed.

Stamp duty etc.

173F151 Insurance: abolition of certain duties.

1

Stamp duty shall not be chargeable under—

a

the heading “Policy of Life Insurance” in Schedule 1 tothe M44Stamp Act 1891, or

b

paragraph (3) of the heading “Bond, Covenant, or Instrument of any kindwhatsoever” in that Schedule (superannuation annuities).

2

Subject to section 4 of the Stamp Act 1891 (separate charges oninstruments containing or relating to several distinct matters) an instrumentwhich, but for subsection (1) above, would be chargeable with stamp duty underparagraph (3) of the heading mentioned in paragraph (b) of that subsectionshall not be chargeable with stamp duty under any other provision of the StampAct 1891.

3

Section 100 of the Stamp Act 1891 (penalty for not making out policy ormaking policy not duly stamped) shall cease to have effect.

4

Section 118 of the Stamp Act 1891 (assignment of life insurance policy tobe stamped before payment of money assured) shall cease to have effect.

5

Section 47(3) of the M45Finance Act 1966 (enhanced dutywhere policy not exceeding 2 years is varied so as to exceed 2 years) andsection 5(3) of the M46Finance Act (Northern Ireland)1966 (equivalent provision for Northern Ireland) shall cease to have effect.

6

Subsections (1) and (2) above apply to instruments made after 31stDecember 1989.

7

So far as it relates to section 100(1) of the 1891 Act, subsection (3)above applies where a person receives, or takes credit for, a premium orconsideration for insurance after 30th November 1989.

8

So far as it relates to section 100(2) of the 1891 Act, subsection (3)above applies where the policy is made after 31st December 1989.

9

Subsection (4) above applies to instruments of assignment made after 31stDecember 1989.

10

Subsection (5) above applies where the policy is varied after 31stDecember 1989 (whenever it was made).

174Unit trusts.

F152. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

175Stamp duty: stock exchange nominees

1

The Treasury may by regulations provide that where —

a

circumstances would (apart from the regulations) give rise to a charge to stamp duty under F153Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) and to a charge to stamp duty reserve tax,

b

the circumstances involve a stock exchange nominee, and

c

the circumstances are such as are prescribed,

the charge to stamp duty shall be treated as not arising.

2

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.

3

In this section —

a

“prescribed” means prescribed by the regulations, and

b

“stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 [1976 c. 40.] as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section.

176Stamp duty reserve tax: stock exchange nominees

1

The Treasury may by regulations provide that where —

a

circumstances would (apart from the regulations) give rise to two charges to stamp duty reserve tax,

b

the circumstances involve a stock exchange nominee, and

c

the circumstances are such as are prescribed,

such one of the charges as may be prescribed shall be treated as not arising.

2

The Treasury may by regulations provide that where —

a

circumstances would (apart from the regulations) give rise to a charge to stamp duty reserve tax and a charge to stamp duty,

b

the circumstances involve a stock exchange nominee, and

c

the circumstances are such as are prescribed,

the charge to stamp duty reserve tax shall be treated as not arising.

3

The Treasury may by regulations provide that a provision of an Act by virtue of which there is no charge to stamp duty reserve tax shall also apply in circumstances which involve a stock exchange nominee and are such as are prescribed.

4

The Treasury may by regulations provide that a provision of an Act by virtue of which the rate at which stamp duty reserve tax is charged is less than it would be apart from the provision shall also apply in circumstances which involve a stock exchange nominee and are such as are prescribed.

5

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.

6

In this section —

a

“prescribed” means prescribed by the regulations, and

b

177Stamp duty reserve tax: information.

— Regulations under section 98(1) of the Finance Act 1986 [1986 c. 41.] (administration etc. of stamp duty reserve tax) may include —

a

provision that notice which the regulations require to be given to the Commissioners of Inland Revenue shall be given in a manner or form specified by the Commissioners;

b

provision that information which the regulations require to be supplied to the Commissioners shall be supplied in a manner or form specified by the Commissioners.

Interest etc.

C24 C76 C75178 Setting of rates of interest.

C251

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.

2

This section applies to—

F154aa

section 15A of the Stamp Act 1891;

a

section 8(9) of the M47Finance Act 1894,

b

section 18 of the M48Finance Act 1896,

c

section 61(5) of the M49Finance (1909-10) Act 1910,

d

section 17(3) of the M50Law of Property Act 1925,

F323e

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f

F155sections 59C, 86, 86A, 87, 87A, F15688, 103A of the M51TaxesManagement Act 1970,

g

paragraph 3 of Schedule 16A to the M52Finance Act 1973,

F157gg

[ F158 paragraph 6 of Schedule 1 to the Social Security Contributions and Benefits Act 1992],

F159gh

section 71(8A) of the M53 Social Security Administration Act 1992, and section 69(8A) of the M54 Social Security Administration (Northern Ireland) Act 1992, as they have effect in any case where the overpayment was made in respect of working families’ tax credit or disabled person’s tax credit;

h

paragraphs 15 and 16 of Schedule 2, and paragraph 8 of Schedule 5, to the M55Oil Taxation Act 1975,

F160i

section 283 of the M56Taxation of Chargeable Gains Act 1992;]

j

paragraph 59 of Schedule 8 to the M57Development Land TaxAct 1976,

k

sections 233 and 236(3) and (4) of the M58Inheritance TaxAct 1984,

l

section 92 of the Finance Act 1986, and

m

sections F161. . . F281... 824, 825 and 826 of, F162and paragraph 6B of Schedule 3 to and paragraph 3 of Schedule 19A to, the M59Taxes Act 1988. F163and

F164n

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F165and

o

section 14(4) of the Ports Act 1991.

F166p

paragraph 8 of Schedule 4 to the Tax Credits Act 1999., F282...

F167F280q

section 110 of the Finance Act 1999.

F168q

paragraph 8 of Schedule 1 to the Employment Act 2002.

F169r

paragraph 8 of Schedule I to the Employment (Northem Ireland) Order 2002.F279, and

s

Chapter 7 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003.

F305t

sections 87, 88 and 89 of the Finance Act 2003.

3

Regulations under this section may—

a

make different provision for different enactments or for different purposes of the same enactment,

b

either themselves specify a rate of interest for the purposes of an enactment or make provision for any such rate to be determined by referenceto such rate or the average of such rates as may be referred to in theregulations,

c

provide for rates to be reduced below, or increased above, what theyotherwise would be by specified amounts or by reference to specified formulae,

d

provide for rates arrived at by reference to averages to be rounded up ordown,

e

provide for circumstances in which alteration of a rate of interest is oris not to take place, and

f

provide that alterations of rates are to have effect for periods beginning on or after a day determined in accordance with the regulations in relationto interest running from before that day as well as from or from after thatday.

4

The power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of aresolution of the House of Commons.

5

Where—

a

the rate provided for by regulations under this section as the rateapplicable for the purposes of any enactment is changed, and

b

the new rate is not specified in the regulations,

the Board shall by order specify the new rate and the day from which ithas effect.

6

In section 828(2) of the Taxes Act 1988 (powers to make orders which arenot exercisable by statutory instrument) the words “or section 178(5)of the Finance Act 1989” shall be added at the end.

C267

Subsection (1) 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 from or from after that day; and different days may be appointed for different enactments.

In section 8(9) of the M69 Finance Act 1894, for thewords from “such interest” to “per cent.” there shall be substitutedthe words “interest at such rate not exceeding that applicable under section178 of the Finance Act 1989”.

3

In section 236(4) of the Inheritance Tax Act 1984, for the words “as ifsection 233(1)(b) above had applied” there shall be substituted the words “from the end of the period mentioned in section 233(1)(b) above”.

4

Any amendment made by subsection (1), (2) or (3) above shall have effect in relation to any period for which section 178(1) above has effect for thepurposes of the enactment concerned.

F2845

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

180 Repayment interest: period of accrual.

1

In section 48(1) of the M70 Finance Act 1975, after thewords “carry interest” there shall be inserted the words “from the dateon which the sums were paid until the order for repayment is issued”.

2

In—

a

paragraph 16 of Schedule 2 to the M71 Oil Taxation Act1975,

b

section 105(7) of the M72 Finance Act 1980,

c

paragraph 13(4) and (5) of Schedule 16 to the M73 FinanceAct 1981, and

d

paragraph 10(4) of Schedule 19 to the M74 Finance Act1982,

for the word “repayment” there shall be substituted the words “theorder for repayment is issued”.

3

In paragraph 59(1) of Schedule 8 to the M75 DevelopmentLand Tax Act 1976, after the word “later,” there shall be inserted thewords “until the order for repayment is issued”.

4

In section 235(1) of the M76 Inheritance Tax Act 1984(and paragraph 19(3) of Schedule 4 to the M77 Finance Act1975), after the word “made” there shall be inserted the words “untilthe order for repayment is issued”.

5

In section 92(2) of the M78 Finance Act 1986, for thewords “the time it was paid” there shall be substituted the words “thedate on which the payment was made until the order for repayment isissued”.

6

In section 826(1) of the Taxes Act 1988, for the words “that repaymentor payment is made” there shall be substituted the words “the order forrepayment or payment is issued”.

7

The amendments made by this section shall be deemed always to have hadeffect.

Miscellaneous

F172181 Broadcasting: additional payments by programme contractors.

1

M79The Broadcasting Act 1981 shall have effect withrespect to additional payments payable by programme contractors under that Actsubject to the amendments made by Part I, and with the substitution, forSchedule 4 to that Act, of the provisions contained in Part II, of Schedule16 to this Act.

2

The transitional provisions made by Part III of that Schedule shall haveeffect.

3

This section shall come into force on 1st January 1990.

to contributions payable by or in respect of any identifiable person, or

iii

toF274child benefit, guardian’s allowance, statutory sick pay F182, statutory maternity pay, statutory paternity pay or statutory adoption pay in respect of any identifiable person

is guilty of an offence.

5

Subsections (1) and (4) above do not apply to any disclosure ofinformation—

a

with lawful authority,

b

with the consent of any person in whose case the information is about a matter relevant to tax or duty F359, to a tax credit or to a child trust fundF183or to contributions, statutory sick pay F184, statutory maternity pay, statutory paternity pay or statutory adoption pay, or

c

which has been lawfully made available to the public before the disclosureis made.

6

For the purposes of this section a disclosure of any information is madewith lawful authority if, and only if, it is made—

a

by a Crown servant in accordance with his official duty,

b

by any other person for the purposes of the function in the exercise of which he holds the information and without contravening any restriction dulyimposed by the person responsible,

c

to, or in accordance with an authorisation duly given by, the person responsible,

d

in pursuance of any enactment or of any order of a court, or

e

b

by or with the consent of the Director of Public Prosecutions or, in Northern Ireland, the Director of Public Prosecutions for Northern Ireland.

10

In this section—

“the Board” means the Commissioners of Inland Revenue,
F360“child trust fund” has the same meaning as in the Child Trust Funds Act 2004,
“the Commissioners” means the Commissioners of Customs and Excise,
F186“contributions” means contributions under Part I of the Social Security Contributions and Benefits Act 1992 or Part I of the Social Security Contributions and Benefits (Northern Ireland) Act 1992;
“Crown servant” has the same meaning as in the M80 Official Secrets Act 1989,
F473“tax credit” means a tax credit under the Tax Credits Act 2002, and
“tax or duty” means any tax or duty within the general responsibility of the Commissioners or the Board.

F37310A

In this section, in relation to the disclosure of information “identifiable person” means a person whose identity is specified in the disclosure or can be deduced from it.

11

In this section—

a

references to the Comptroller and Auditor General include the Comptroller and Auditor General for Northern Ireland,

b

references to the National Audit Office include the Northern Ireland Audit Office, and

c

references to the Parliamentary Commissioner for Administration include the Health Service Commissioner for EnglandF385..., F328... the F187Assembly Ombudsman for Northern Ireland and the Northern Ireland Commissioner for Complaints.

F18811A

In this section, references to statutory paternity pay or statutory adoption pay include statutory pay under Northern Ireland legislation corresponding to Part 12ZA or Part 12ZB of the Social Security Contributions and Benefits Act 1992 (c. 4).

12

This section shall come into force on the repeal of section 2 of the M81 Official Secrets Act 1911.

In this section—

“the Arbitration Convention” has the meaning given by section 815B(4) of the Taxes Act 1988;
“the Board” means the Commissioners of Inland Revenue.

183 Government securities: redemption and transfer.

1

In section 47 of the M82 Finance Act 1942 (power to makeregulations about transfer and registration of Government stock)—

a

the following paragraph shall be inserted after paragraph (b) ofsubsection (1)—

bb
for the redemption of such stock and bonds;

b

the following subsection shall be inserted after that subsection—

1A
Regulations under subsection (1) of this section may make provisionauthorising the Bank of England, in such circumstances and subject to suchconditions as may be prescribed in the regulations, to transfer stock andbonds standing in their books in the name of a deceased person into the nameof another person without requiring the production of probate, confirmationor letters of administration.

2

In section 3(1) of the M83 National Debt Act 1972 (powerto make regulations about stock on the National Savings Stock Register) thefollowing paragraph shall be inserted after paragraph (b)—

bb
the redemption of stock registered in the register,

3

After section 14 of the M84 National Loans Act 1968 thereshall be inserted—

14A Redemption of securities held in Issue Department of Bank of England.
1
Any securities of Her Majesty’s Government in the United Kingdom which arefor the time being held in the Issue Department of the Bank of England may beredeemed by the Treasury before maturity at market prices determined in suchmanner as may be agreed between the Treasury and the Bank.
2
Any expensess incurred by the Treasury in connection with the redemptionof securities under subsection (1) above shall be paid out of the NationalLoans Fund.

184 National savings accounts.

1

In section 2 of the M85National Savings Bank Act 1971(general power to make regulations) after subsection (1) there shall beinserted—

1A
Regulations under this section may restrict the classes of persons who mayopen accounts with the National Savings Bank, but any such restriction shallnot apply to any account opened before the coming into force of theregulations imposing the restriction.

2

In section 5 of that Act (interest on ordinary deposits) in subsection (1)for the words from the beginning to “in any ordinary deposit account”there shall be substituted “The Director of Savings may, with the consentof the Treasury, from time to time determine the rate or rates at whichinterest is to be payable on amounts deposited in ordinary accounts or thatno interest is to be payable on such amounts, and any such determination inrelation to amounts deposited in any ordinary deposit account may be made”.

3

After subsection (1) of section 5 of that Act there shall beinserted—

1A
The Director of Savings shall give notice in the London, Edinburgh andBelfast Gazettes of any determination under subsection (1) above; and any suchdetermination may affect deposits received at or before, as well as after, thetime the determination is made.

4

Subsection (5) of section 5 of that Act (rate of interest on ordinarydeposits to be not less than 2.5 per cent per annum) shall cease to haveeffect.

5

Subsections (2) and (3) above shall come into force on 1st October 1989.

F342185 Winding up of Redemption Annuities Account.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

186 Interpretation etc.

1

In this Act “the Taxes Act 1970” means the M86Income and Corporation Taxes Act 1970 and “the Taxes Act1988” means the M87Income and Corporation Taxes Act1988.

2

Chapter II of Part I of this Act shall be construed as one with the M88Value Added Tax Act 1983.

3

Part II of this Act, so far as it relates to capital gains tax, shall beconstrued as one with the M89Capital Gains Tax Act 1979.

187 Repeals.

1

The enactments specified in Schedule 17 to this Act (which includeunnecessary enactments) are hereby repealed to the extent specified in thethird column of that Schedule, but subject to any provision at the end of anyPart of that Schedule.

C282

The repeal of the enactments specified in Part XIV of Schedule 17 shallcome into force on such day as the Treasury may appoint by order made bystatutory instrument; and different days may be appointed for differentenactments.

188 Short title.

This Act may be cited as the Finance Act 1989.

SCHEDULES

SCHEDULE 1 Vehicles Excise Duty: Rates

Section 6.

F190Part I

Annotations:

Amendments (Textual)

F190

Sch. 1 Pt. I repealed (1.9.1994) by 1994 c. 22, ss. 65, 66(1), Sch. 5 Pt. I (with s. 57(4))

Part II F191

Annotations:

Amendments (Textual)

F191

S. 6(3)(4), Sch. 1 Pt. II, Sch. 2 para. 3 repealed byFinance Act 1990 (c. 29, SIF 58), s. 132, Sch. 19 Pt. II Note 3

SCHEDULE 2 Vehicles Excise Duty: Special Machines

Section 8.

F1921

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1932

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3F194

F1954

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F196SCHEDULE 3

Annotations:

Amendments (Textual)

F196

Sch. 3 repealed (1.9.1994) by 1994 c. 23, ss. 100(2), 101(1), Sch. 15

Zero-rating

1

For Group 8 (construction of buildings etc.) of Schedule 5 (zero-rating)to the M97Value Added Tax Act 1983 there shall besubstituted—

Group 8—Construction of Dwellings, Etc.
Item No.
1
The grant by a person constructing a building—
a
designed as a dwelling or number of dwellings; or
b
intended for use solely for a relevant residential purpose or a relevantcharitable purpose,
of a major interest in, or in any part of, the building or its site.
2
The supply in the course of the construction of—
a
a building designed as a dwelling or number of dwellings or intended foruse solely for a relevant residential purpose or a relevant charitablepurpose; or
b
any civil engineering work necessary for the development of a permanentpark for residential caravans,
of any services other than the services of an architect, surveyor or anyperson acting as consultant or in a supervisory capacity.
3
The supply to a person of—
a
materials; or
b
builders’ hardware, sanitary ware or other articles of a kind ordinarilyinstalled by builders as fixtures,
by a supplier who also makes to the same person supplies within item 2 ofthis Group or Group 8A below of services which include the use of thematerials or the installation of the articles.
Notes:
1
“Grant” includes assignment.
2
“Dwelling” includes a garage constructed at the same time asa dwelling for occupation together with it.
3
Use for a relevant residential purpose means use as—
a
a home or other institution providing residential accommodation forchildren;
b
a home or other institution providing residential accommodation withpersonal care for persons in need of personal care by reason of old age,disablement, past or present dependence on alcohol or drugs or past or presentmental disorder;
c
a hospice;
d
residential accommodation for students or school pupils;
e
residential accommodation for members of any of the armed forces;
f
a monastery, nunnery or similar establishment; or
g
an institution which is the sole or main residence of at least 90 percent. of its residents,
except use as a hospital, a prison or similar institution or an hotel,inn or similar establishment.
4
Use for a relevant charitable purpose means use by a charity in either orboth of the following ways, namely—
a
otherwise than in the course or furtherance of a business;
b
as a village hall or similarly in providing social or recreationalfacilities for a local community.
5
Where part of a building is designed as a dwelling or number of dwellingsor intended for use solely for a relevant residential purpose or a relevantcharitable purpose (and part is not)—
a
a grant or other supply relating only to the part so designed or intendedfor such use (or its site) shall be treated as relating to a building sodesigned or intended for such use;
b
a grant or other supply relating only to the part neither so designed norintended for such use (or its site) shall not be so treated; and
c
in the case of any other grant or other supply relating to, or to any partof, the building (or its site), an apportionment shall be made to determinethe extent to which it is to be so treated.
6
Where all or part of a building is intended for use solely for a relevantresidential purpose or a relevant charitable purpose—
a
a supply relating to the building (or any part of it) shall not be takenfor the purposes of item 2 or 3 as relating to a building intended for suchuse unless it is made to a person who intends to use the building (or part)for such a purpose; and
b
a grant or other supply relating to the building (or any part of it) shallnot be taken as relating to a building intended for such use unless before itis made the person to whom it is made has given to the person making it acertificate in such form as may be specified in a notice published by theCommissioners stating that the grant or other supply (or a specified part ofit) so relates.
7
The grant of an interest in, or in part of, a building designed as adwelling or number of dwellings is not within item 1 if—
a
the interest granted is such that the grantee will not be entitled toreside in the building, or part, throughout the year; or
b
residence there throughout the year will be prevented by the terms of acovenant, statutory planning consent or similar permission.
8
Where the major interest referred to in item 1 is a tenancy orlease—
a
if a premium is payable, the grant falls within that item only to theextent that it is made for consideration in the form of the premium; and
b
if a premium is not payable, the grant falls within that item only to theextent that it is made for consideration in the form of the first payment ofrent due under the tenancy or lease.
9
The reference in item 2 to the construction of a building or work does notinclude a reference to—
a
the conversion, reconstruction, alteration or enlargement of an existingbuilding or work; or
b
any extension or annexation to an existing building which provides forinternal access to the existing building or of which the separate use, lettingor disposal is prevented by the terms of any covenant, statutory planningconsent or similar permission;
and the reference in item 1 to a person constructing a building shall beconstrued accordingly.
10
A caravan is not a residential caravan if residence in it throughout theyear is prevented by the terms of a covenant, statutory planning consent orsimilar permission.
11
Item 2 does not include the supply of services described in paragraph 1(1)or 5(3) of Schedule 2 to this Act.
12
The goods referred to in item 3 do not include—
a
finished or prefabricated furniture, other than furniture designed to befitted in kitchens;
b
materials for the construction of fitted furniture, other than kitchenfurniture;
c
domestic electrical or gas appliances, other than those designed toprovide space heating or water heating or both; or
d
carpets or carpeting material.
13
Section 16(3) of this Act does not apply to goods forming part of adescription of supply in this Group.

2

1

Group 8A (protected buildings) of that Schedule shall be amended asfollows.

2

In item 1, for the word “granting” there shall be substituted theword “grant”.

3

In Note (1), for the words “a building which” there shall besubstituted the words “a building which is designed to remain as or becomea dwelling or number of dwellings or is intended for use solely for a relevantresidential purpose or a relevant charitable purpose after the reconstructionor alteration and which, in either case,”.

4

After that Note there shall be inserted—

1A
Notes (1) to (8) to Group 8 above apply in relation to this Group as theyapply in relation to that Group.

5

Note (5) shall be omitted.

6

After Note (6) there shall be inserted—

6A
For the purposes of item 2 the construction of a building separate from,but in the curtilage of, a protected building does not constitute analteration of the protected building.

7

The following Note shall be substituted for Note (7)—

7
Item 2 does not include the supply of services described in paragraph 1(1)or 5(3) of Schedule 2 to this Act.

3

In Group 11 (caravans and houseboats) of that Schedule, for paragraph (b)of the Note there shall be substituted—

b
the supply of accommodation in a caravan or houseboat.

Exemptions

4

1

For Group 1 (land) of Schedule 6 (exemptions) to the M98Value Added Tax Act 1983 there shall be substituted—

Group 1 – Land
Item No.
1
The grant of any interest in or right over land or of any licence tooccupy land, other than—
a
the grant of the fee simple in—
i
a building which has not been completed and which is neither designed asa dwelling or number of dwellings nor intended for use solely for a relevantresidential purpose or a relevant charitable purpose;
ii
a new building which is neither designed as a dwelling or number ofdwellings nor intended for use solely for a relevant residential purpose ora relevant charitable purpose after the grant;
iii
a civil engineering work which has not been completed;
iv
a new civil engineering work;
b
the grant of any interest, right or licence consisting of a right to takegame or fish;
c
the provision in an hotel, inn, boarding house or similar establishmentof sleeping accommodation or of accommodation in rooms which are provided inconjunction with sleeping accommodation or for the purpose of a supply ofcatering;
d
the provision of holiday accommodation in a house, flat, caravan,houseboat or tent;
e
the provision of seasonal pitches for caravans, and the grant offacilities at caravan parks to persons for whom such pitches are provided;
f
the provision of pitches for tents or of camping facilities;
g
the grant of facilities for parking a vehicle;
h
the grant of any right to fell and remove standing timber;
i
the grant of facilities for housing, or storage of, an aircraft or formooring, or storage of, a ship, boat or other vessel;
j
the grant of any right to occupy a box, seat or other accommodation at asports ground, theatre, concert hall or other place of entertainment; and
k
the grant of facilities for playing any sport or participating in anyphysical recreation.
Notes:
1
“Grant” includes an assignment, other than an assignment ofan interest made to the person to whom a surrender of the interest could bemade.
2
A building shall be taken to be completed when an architect issues acertificate of practical completion in relation to it or it is first fullyoccupied, whichever happens first; and a civil engineering work shall be takento be completed when an engineer issues a certificate of completion inrelation to it or it is first fully used, whichever happens first.
3
Notes (2) to (6) to Group 8 of Schedule 5 to this Act apply in relationto this Group as they apply in relation to that Group.
4
A building or civil engineering work is new if it was completed less thanthree years before the grant.
5
Subject to Note (6), the grant of the fee simple in a building or workcompleted before 1st April 1989 is not excluded from this Group by paragraph(a)(ii) or (iv).
6
Note (5) does not apply where the grant is the first grant of the feesimple made on or after 1st April 1989 and the building was not fullyoccupied, or the work not fully used, before that date.
7
Where a grant of an interest in, right over or licence to occupy landincludes a valuable right to take game or fish, an apportionment shall be madeto determine the supply falling outside this Group by virtue of paragraph (b).
8
“Similar establishment” includes premises in which there isprovided furnished sleeping accommodation, whether with or without theprovision of board or facilities for the preparation of food, which are usedby or held out as being suitable for use by visitors or travellers.
9
“Houseboat” includes a houseboat within the meaning of Group11 of Schedule 5 to this Act.
10
“Holiday accommodation” includes any accommodation advertisedor held out as such.
11
A seasonal pitch is a pitch—
a
which is provided for a period of less than a year; or
b
which is provided for a year or a period longer than a year but which theperson to whom it is provided is prevented by the terms of any covenant,statutory planning consent or similar permission from occupying by living ina caravan at all times throughout the period for which the pitch is provided.
12
“Mooring” includes anchoring or berthing.
13
Paragraph (k) shall not apply where the grant of the facilities isfor—
a
a continuous period of use exceeding twenty-four hours; or
b
a series of ten or more periods, whether or not exceeding twenty-fourhours in total, where the following conditions are satisfied—
i
each period is in respect of the same activity carried on at the sameplace;
ii
the interval between each period is not less than one day and not morethan fourteen days;
iii
consideration is payable by reference to the whole series and is evidencedby written agreement;
iv
the grantee has exclusive use of the facilities; and
v
the grantee is a school, a club, an association or an organisationrepresenting affiliated clubs or constituent associations.

2

In consequence of the amendment made by sub-paragraph (1) above, inparagraph 9(1) of Schedule 4 to the M99Value Added Tax Act1983 for “(a)” there shall be substituted “(c)”.

Other provisions

5

The following section shall be substituted for section 21 (refund of taxto person constructing dwelling) of the Value Added Tax Act 1983—

21 Refund of tax to persons constructing certain buildings.
1
Subject to subsection (2) below, where tax is chargeable on the supply ofgoods to, or the importation of goods by, a person constructing a buildinglawfully and otherwise than in the course or furtherance of any business,and—
a
the goods are incorporated in the building or its site; and
b
the supply of the goods would have been zero-rated by virtue of item 3 ofGroup 8 of Schedule 5 to this Act if they had been supplied by a suppliermaking to the same person supplies within item 2 of that Group of servicesincluding their use or installation, and any required certificate had beengiven,
the Commissioners shall, on a claim made in that behalf, refund to theperson the amount of the tax so chargeable.
2
The Commissioners shall not be required to entertain a claim for a refundof tax under this section unless the claim—
a
is made within such time and in such form and manner;
b
contains such information; and
c
is accompanied by such documents, whether by way of evidence or otherwise,
as the Commissioners may by regulations prescribe.

6

1

The following section shall be inserted in the M100ValueAdded Tax Act 1983 after section 35—

35A Buildings and land.
1
Schedule 6A to this Act shall have effect with respect to buildings andland.
2
The Treasury may by order amend Schedule 6A to this Act.

2

The following Schedule shall be inserted in the Value Added Tax Act 1983after Schedule 6—

Schedule 6A Buildings and Land
Section 35A.
Residential and charitable buildings: change of use etc.
1
1
In this paragraph “relevant zero-rated supply” means a grant or other supplytaking place on or after 1st April 1989 which—
a
relates to a building intended for use solely for a relevant residentialpurpose or a relevant charitable purpose or part of such a building; and
b
is zero-rated, in whole or in part, by virtue of Group 8 of Schedule 5 tothis Act.
2
Sub-paragraph (3) below applies where—
a
one or more relevant zero-rated supplies relating to a building (or partof a building) have been made to any person;
b
within the period of ten years beginning with the day on which thebuilding is completed, the person grants an interest in, right over or licenceto occupy the building or any part of it (or the building or any part of itincluding, consisting of or forming part of the part to which the relevantzero-rated supply or supplies related); and
c
after the grant the whole or any part of the building, or of the part towhich the grant relates, (or the whole of the building or of the part to whichthe grant relates, or any part of it including, consisting of or forming partof the part to which the relevant zero-rated supply or supplies related) isnot intended for use solely for a relevant residential purpose or a relevantcharitable purpose.
3
Where this sub-paragraph applies, to the extent that the grant relates toso much of the building as—
a
by reason of its intended use gave rise to the relevant zero-rated supplyor supplies; and
b
is not intended for use solely for a relevant residential purpose or arelevant charitable purpose after the grant,
it shall be taken to be a taxable supply in the course or furtherance ofa business which is not zero-rated by virtue of Group 8 of Schedule 5 to thisAct (if it would not otherwise be such a supply).
4
Sub-paragraph (5) below applies where—
a
one or more relevant zero-rated supplies relating to a building (or partof a building) have been made to any person; and
b
within the period of ten years beginning with the day on which thebuilding is completed, the person uses the building or any part of it (or thebuilding or any part of it including, consisting of or forming part of thepart to which the relevant zero-rated supply or supplies related) for apurpose which is neither a relevant residential purpose nor a relevantcharitable purpose.
5
Where this sub-paragraph applies, his interest in, right over or licenceto occupy so much of the building as—
a
by reason of its intended use gave rise to the relevant zero-rated supplyor supplies; and
b
is used otherwise than for a relevant residential purpose or a relevantcharitable purpose,
shall be treated for the purposes of this Act as supplied to him for thepurpose of a business carried on by him and supplied by him in the course orfurtherance of the business when he first uses it for a purpose which isneither a relevant residential purpose nor a relevant charitable purpose.
6
Where sub-paragraph (5) above applies—
a
the supply shall be taken to be a taxable supply which is not zero-ratedby virtue of Group 8 of Schedule 5 to this Act (if it would not otherwise besuch a supply); and
b
the value of the supply shall be such that the amount of tax chargeableon it is equal to the amount of the tax which would have been chargeable onthe relevant zero-rated supply (or, where there was more than one such supply,the aggregate amount which would have been chargeable on them) had so much ofthe building as is mentioned in sub-paragraph (5) above not been intended foruse solely for a relevant residential purpose or a relevant charitablepurpose.
Election to waive exemption
2
1
Subject to sub-paragraphs (2) and (3) and paragraph 3 below, where anelection under this paragraph has effect in relation to any land, if and tothe extent that any grant made in relation to it at a time when the electionhas effect by the person who made the election, or where that person is a bodycorporate by that person or a relevant associate, would (apart from thissub-paragraph) fall within Group 1 of Schedule 6 to this Act, the grant shallnot fall within that Group.
2
Sub-paragraph (1) above shall not apply in relation to a grant if thegrant is made in relation to—
a
a building or part of a building intended for use as a dwelling or numberof dwellings or solely for a relevant residential purpose; or
b
a building or part of a building intended for use solely for a relevantcharitable purpose, other than as an office.
3
Sub-paragraph (1) above shall not apply in relation to a grant if—
a
the grant is made to a registered housing association and the associationhas given to the grantor a certificate stating that the land is to be used(after any necessary demolition work) for the construction of a building orbuildings intended for use as a dwelling or number of dwellings or solely fora relevant residential purpose; or
b
the grant is made to an individual and the land is to be used for theconstruction, otherwise than in the course or furtherance of a businesscarried on by him, of a building intended for use by him as a dwelling.
4
Subject to the following provisions of this paragraph, no input tax on anysupply or importation which, apart from this sub-paragraph, would be allowableby virtue of the operation of this paragraph shall be allowed if the supplyor importation took place before the first day for which the election inquestion has effect.
5
Subject to sub-paragraph (6) below, sub-paragraph (4) above shall notapply where the person by whom the election was made—
a
has not, before the first day for which the election has effect, made inrelation to the land in relation to which the election has effect any grantfalling within Group 1 of Schedule 6 to this Act; or
b
has before that day made in relation to that land a grant or grants sofalling but the grant, or all the grants,—
i
were made in the period beginning with 1st April 1989 and ending with 31stJuly 1989; and
ii
would have been taxable supplies but for the amendments made by Schedule3 to the Finance Act 1989.
6
Sub-paragraph (5) above does not make allowable any input tax on suppliesor importations taking place before 1st August 1989 unless—
a
it is attributable by or under regulations to grants made by the personon or after 1st April 1989 which would have been taxable supplies but for theamendments made by Schedule 3 to the Finance Act 1989; and
b
the election has effect from 1st August 1989.
7
Sub-paragraph (4) above shall not apply in relation to input tax on grantsor other supplies which are made in the period beginning with 1st April 1989and ending with 31st July 1989 if—
a
they would have been zero-rated by virtue of item 1 or 2 of Group 8 ofSchedule 5 to this Act or exempt by virtue of item 1 of Group 1 of Schedule6 to this Act but for the amendments made by Schedule 3 to the Finance Act1989; and
b
the election has effect from 1st August 1989.
3
1
An election under paragraph 2 above shall have effect—
a
from the beginning of the day on which the election is made or of anylater day specified in the election; or
b
where the election is made before 1st November 1989, from the beginningof 1st August 1989 or of any later day so specified.
2
An election under paragraph 2 above shall have effect in relation to anyland specified, or of a description specified, in the election.
3
Where such an election is made in relation to, or to part of, a building(or planned building), it shall have effect in relation to the whole of thebuilding and all the land within its curtilage; and for the purposes of thissub-paragraph buildings linked internally or by a covered walkway, andparades, precincts and complexes divided into separate units, shall be takento be a single building (if they otherwise would not be).
4
Where such an election is made in relation to agricultural land (includinga building on agricultural land), it shall have effect in relation to anyother agricultural land if that other land is not separated from it by—
a
land which is not agricultural land; or
b
agricultural land in separate ownership.
5
For the purposes of sub-paragraph (4) above—
a
land shall be taken not to be separated from other land if it is separatedfrom it only by a road, railway, river or something similar; and
b
land is in separate ownership from land in relation to which an electionis made if the person by whom the election is made has no interest in, rightover or licence to occupy it and, where that person is a body corporate, norelevant associate has any such interest, right or licence.
6
An election under paragraph 2 above shall be irrevocable and, except whereit is an election of a description specified in a notice published by theCommissioners, shall not have effect unless written notification of it isgiven to the Commissioners together with such information as the Commissionersmay require.
7
Except where the Commissioners otherwise allow, a notification requiredunder sub-paragraph (6) above shall be given not later than the end of theperiod of thirty days beginning with the day on which the election is made.
8
In paragraph 2 above and this paragraph “relevantassociate”, in relation to a body corporate by which an electionunder paragraph 2 above has been made in relation to any building or land,means a body corporate which under section 29 of this Act—
a
was treated as a member of the same group as the body corporate by whichthe election was made at the time when the election first had effect;
b
has been so treated at any later time when the body corporate by which theelection was made had an interest in, right over or licence to occupy thebuilding or land (or any part of it); or
c
has been treated as a member of the same group as a body corporate withinparagraph (a) or (b) above or this paragraph at a time when that bodycorporate had an interest in, right over or licence to occupy the building orland (or any part of it).
9
In paragraph 2 above “registered housing association”means a registered housing association within the meaning of the Housing Associations Act 1985 or Part VII of the Housing (Northern Ireland) Order 1981.
4
1
This paragraph has effect where rent is payable in consideration of thegrant of an interest in, right over, or licence to occupy any building or landto which an election under paragraph 2 above relates (or any part of any suchbuilding or land).
2
If—
a
the rent relates to a period beginning before and ending on or after thefirst day for which the election has effect; and
b
the grant for which the rent is consideration would, apart from thissub-paragraph, take place before that day,
the grant shall be treated as taking place on that day to the extent thatit is made for rent relating to the part of the period falling on or afterthat day.
3
If—
a
the rent relates to a period beginning on or after the first day for whichthe election has effect; and
b
the grant for which the rent is consideration would, apart from thissub-paragraph, take place before that day,
the grant shall be treated as taking place on the first day of the periodto which the rent relates.
4
If—
a
the rent relates to a period beginning before the first day for which theelection has effect; and
b
the grant for which the rent is consideration takes place on or after thatday,
tax shall not be chargeable on the grant by virtue of paragraph 2 aboveto the extent that it is made for rent relating to any time before that day.
5
Where the rent is payable by a person in relation to a period when he isin occupation of a building completed before 1st August 1989 (or part of sucha building) or land of which he was in occupation immediately before thatdate, any tax which would be chargeable by virtue of paragraph 2 above on thegrant for which the rent is consideration—
a
except in the case of a charity, shall be chargeable as if theconsideration were reduced by 50 per cent. if and to the extent that the rentrelates to or to any part of the year beginning on 1st August 1989 and endingon 31st July 1990; and
b
in the case of a charity—
i
shall be chargeable as if the consideration were reduced by 80 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1989 and ending on 31st July 1990;
ii
shall be chargeable as if the consideration were reduced by 60 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1990 and ending on 31st July 1991;
iii
shall be chargeable as if the consideration were reduced by 40 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1991 and ending on 31st July 1992; and
iv
shall be chargeable as if the consideration were reduced by 20 per cent.if and to the extent that the rent relates to or to any part of the yearbeginning on 1st August 1992 and ending on 31st July 1993.
Developers of certain non-residential buildings etc.
5
1
Paragraph 6 below shall apply on the first occasion during the periodbeginning with the day when the construction of a building or work withinsub-paragraph (2) below is first planned and ending ten years after thecompletion of the building or work on which a person who is a developer inrelation to the building or work—
a
grants an interest in, right over or licence to occupy the building orwork (or any part of it) which is an exempt supply; or
b
is in occupation of the building, or uses the work, (or any part of it)when not a fully taxable person (or, if a person treated under section 29 ofthis Act as a member of a group, when the representative member is not a fullytaxable person).
2
Subject to sub-paragraph (3) below, the buildings and works within thissub-paragraph are—
a
any building neither designed as a dwelling or number of dwellings norintended for use solely for a relevant residential purpose or a relevantcharitable purpose; and
b
any civil engineering work, other than a work necessary for thedevelopment of a permanent park for residential caravans.
3
A building or work is not within sub-paragraph (2) above if—
a
construction of it was commenced before 1st August 1989; or
b
a grant of the fee simple in it which falls within paragraph (a) (ii) or(iv) of item 1 of Group 1 of Schedule 6 to this Act has been made before theoccasion concerned.
4
For the purposes of this paragraph a taxable person is, in relation to anybuilding or work, a fully taxable person throughout a prescribed accountingperiod if—
a
at the end of that period he is entitled to credit for input tax on allsupplies to, and importations by, him in the period (apart from any on whichinput tax is excluded from credit by virtue of section 14(10) of this Act);or
b
the building or work is not used by him at any time during the period in,or in connection with, making any exempt supplies of goods or services.
5
Subject to sub-paragraph (6) below, in this paragraph and paragraph 6below “developer”, in relation to a building or work, meansany person who—
a
constructs it;
b
orders it to be constructed; or
c
finances its construction,
with a view to granting an interest in, right over or licence to occupyit (or any part of it) or to occupying or using it (or any part of it) for hisown purposes.
6
Where—
a
a body corporate treated under section 29 of this Act as a member of agroup is a developer in relation to a building or work; and
b
it grants an interest in, right over or licence to occupy the building orwork (or any part of it) to another body corporate which is treated under thatsection as a member of the group,
then, for the purposes of this paragraph and paragraph 6 below, as fromthe time of the grant any body corporate such as is mentioned in sub-paragraph(7) below shall be treated as also being a developer in relation to thebuilding or work.
7
The bodies corporate referred to in sub-paragraph (6) above are any whichunder section 29 of this Act—
a
was treated as a member of the same group as the body corporate making thegrant at the time of the grant;
b
has been so treated at any later time when the body corporate by which thegrant was made had an interest in, right over or licence to occupy thebuilding or work (or any part of it); or
c
has been treated as a member of the same group as a body corporate withinparagraph (a) or (b) above or this paragraph at a time when that bodycorporate had an interest in, right over or licence to occupy the building orwork (or any part of it).
6
1
Where this paragraph applies the interest in, right over or licence tooccupy the building or work (or any part of it) held by the developer shallbe treated for the purposes of this Act as supplied to the developer for thepurpose of a business carried on by him and supplied by him in the course orfurtherance of the business on the last day of the prescribed accountingperiod during which it applies or, if later, of the prescribed accountingperiod during which the building or work becomes substantially ready foroccupation or use.
2
The supply treated as made by sub-paragraph (1) above shall be taken tobe a taxable supply and the value of the supply shall be the aggregateof—
a
the value of grants relating to the land on which the building or work isconstructed made or to be made to the developer, other than any grants to bemade for consideration in the form of rent the value of which cannot beascertained by the developer when the supply is treated as made; and
b
the value of all the taxable supplies of goods and services, other thanany that are zero-rated, made or to be made for or in connection with theconstruction of the building or work.
3
Where the value of a supply which, apart from this sub-paragraph, wouldbe treated as made by sub-paragraph (1) above would be less than£100,000, no supply shall be treated as made by that sub-paragraph.
General
7
Where the benefit of the consideration for the grant of an interest in,right over or licence to occupy land accrues to a person but that person isnot the person making the grant—
a
the person to whom the benefit accrues shall for the purposes of this Actbe treated as the person making the grant; and
b
to the extent that any input tax of the person actually making the grantis attributable to the grant it shall be treated as input tax of the personto whom the benefit accrues.
8
The Notes to Group 8 of Schedule 5 to this Act and Group 1 of Schedule 6to this Act apply in relation to this Schedule as they apply in relation totheir respective Groups but subject to any appropriate modifications.

7

In section 42 (adjustment of consideration on changes in tax) of the M101Value Added Tax Act 1983—

a

the following subsection shall be inserted after subsection (1)—

1A
Subsection (1) above shall apply in relation to a tenancy or lease as itapplies in relation to a contract except that a term of a tenancy or leaseshall not be taken to provide that the rule contained in that subsection isnot to apply in the case of the tenancy or lease if the term does not referspecifically to value added tax or this section.

b

in subsection (2), the words “(including a change attributable tothe making of an election under paragraph 2 of Schedule 6A to thisAct)” shall be added at the end.

8

In section 45(4) (orders etc.) of the M102Value Added TaxAct 1983, there shall be added after paragraph (c)—

d
an order under section 35A above, except one making only such amendmentsas are necessary or expedient in consequence of provisions of an order underthis Act which—
i
vary Schedule 5 or Schedule 6 to this Act; but
ii
are not within paragraph (c) above.

9

In section 48 (interpretation) of the Value Added Tax Act 1983, after thedefinition of “Commissioners” there shall be inserted—

“fee simple”—
a
in relation to Scotland, means the estate or interest of the proprietorof the dominium utile or, in the case of land not held on feudal tenure, theestate or interest of the owner;
b
in relation to Northern Ireland, includes the estate of a person who holdsland under a fee farm grant;

10

In Schedule 1 (registration) to the Value Added Tax Act 1983—

a

in paragraph 1 there shall be added at the end—

6
Where, apart from this sub-paragraph, an interest in, right over orlicence to occupy any land would under sub-paragraph (5) above be disregardedfor the purposes of sub-paragraph (1) above, it shall not be if it is suppliedon a taxable supply which is not zero-rated.

b

in paragraph 2 there shall be added at the end—

4
Where, apart from this sub-paragraph, an interest in, right over orlicence to occupy any land would under sub-paragraph (3) above be disregardedfor the purposes of sub-paragraph (1) above, it shall not be if it is suppliedon a taxable supply which is not zero-rated.

11

In Schedule 2 (supplies of goods and services) to the Value Added Tax Act1983—

a

in paragraph 4, for the word “granting” there shall be substitutedthe word “grant”,

b

in paragraph 5(1), for the words “the goods” there shall besubstituted the word “goods”, and

c

there shall be added at the end—

8
1
Subject to sub-paragraphs (2) and (3) below, paragraphs 5 to 7 above haveeffect in relation to land forming part of the assets of, or held or used forthe purposes of, a business as if it were goods forming part of the assets of,or held or used for the purposes of, a business.
2
In the application of those paragraphs by virtue of sub-paragraph (1)above, references to transfer, disposition or sale shall have effect asreferences to the grant or assignment of any interest in, right over orlicence to occupy the land concerned.
3
Except in relation to—
a
the grant or assignment of a major interest; or
b
a grant or assignment otherwise than for a consideration,
in the application of paragraph 5(1) above by virtue of sub-paragraph (1)above the reference to a supply of goods shall have effect as a reference toa supply of services.

Commencement

12

1

Subject to sub-paragraphs (2) and (3) and paragraph 13 below, theamendments made by paragraphs 1 to 4 of this Schedule shall have effect inrelation to grants, assignments and other supplies made on or after 1st April1989.

2

Note 4(b) to Group 8 of Schedule 5 to the M103Value AddedTax Act 1983 shall have effect in relation to grants, assignments and othersupplies made on or after 1st August 1989.

3

In relation to grants and assignments made on or after 1st April 1989 butbefore 1st August 1989—

a

that Group shall have effect as if the Notes to it included a Note in thesame terms as Note (1) to that Group as it had effect before the substitutionmade by paragraph 1 above, and

b

Group 8A of that Schedule shall have effect as if the Notes to it includeda Note in the same terms as Note (5) to that Group as it had effect before theamendments made by paragraph 2 above.

4

Paragraphs 5, 7, 8, 11 and 13(6) and (7) of this Schedule and paragraph6, so far as relating to section 35A(2) of, and paragraphs 2 to 7 of Schedule6A to, the Value Added Tax Act 1983, shall come into force on 1st August 1989.

5

Subject to the preceding provisions of this paragraph, this Schedule shallcome into force on 1st April 1989.

planning permission for the construction of the building was grantedbefore that date,

except where that person does not make a grant or assignment of a majorinterest in, or in any part of, the building or its site before 21st June1993.

7

If the Commissioners so require, proof of any of the matters specified insub-paragraph (6)(a), (b) or (c)(i) above shall be given to their satisfactionby the production of documents made before 21st June 1988.

F197SCHEDULE 4

Annotations:

Amendments (Textual)

F197

Sch. 4 repealed (19.3.1997 with effect as mentioned in Sch. 18 Pt. VI(3) notes 1, 2 of the amending Act) by 1997 c. 16, ss. 61(2)(3), 113, Sch. 18 Pt. VI(3)

1

The Taxes Act 1988 shall be amended in accordance with the followingprovisions of this Schedule.

2

1

In section 171(4) (limit on pay of which half may be exempt from tax) for “£3,000” there shall be substituted “£4,000”.

2

This paragraph shall have effect in relation to profit-related pay paidby reference to profit periods beginning on or after 1st April 1989.

3

After section 177 there shall be inserted—

177A Death of scheme employer.
1
Where a scheme employer has died, his personal representatives may makea written application to the Board under this section for the amendment of theregistration of the scheme.
2
If on receiving an application under this section the Board are satisfiedthat, apart from the death of the scheme employer, there would be no groundsfor cancelling the registration of the scheme, the Board shall amend theregistration of the scheme by substituting the personal representatives forthe deceased scheme employer.
3
An application under this section shall be made before the end of theperiod of one month beginning with the date of the grant of probate or lettersof administration or, in Scotland, confirmation of executors.
4
Where the Board amend the registration of a scheme under this section,this Chapter shall (subject to any necessary modifications) have effect as ifthe personal representatives had been the scheme employer throughout.
5
The Board shall give notice to the personal representatives if they refusean application under this section.
177B Alteration of scheme’s terms.
1
The alteration of the terms of a registered scheme shall not of itselfinvalidate the registration of the scheme.
2
Subsection (1) above is without prejudice to the power of cancellationconferred on the Board by section 178(3A); but the power conferred by section178(3A) shall not be exercisable by virtue of an alteration registered inaccordance with this section.
3
Where the terms of a registered scheme have been altered, the schemeemployer may apply to the Board for the registration of the alteration.
4
An application under subsection (3) above—
a
shall be in such form as the Board may prescribe;
b
shall be made within the period of one month beginning with the day onwhich the alteration is made;
c
shall contain a declaration by the applicant that the alteration is withinsubsection (8) below and that the scheme as altered complies with therequirements of Schedule 8 (either as that Schedule had effect when the schemewas registered, or as it then had effect but subject to one or more subsequentamendments specified in the declaration);
d
shall be accompanied by a report by an independent accountant, in a formprescribed by the Board, to the effect that in his opinion the alteration iswithin subsection (8) below and the scheme as altered complies with therequirements of Schedule 8 (either as that Schedule had effect when the schemewas registered, or as it then had effect but subject to one or more subsequentamendments specified in the report).
5
The Board shall not more than three months after the day on which theyreceive an application under subsection (3) above either register thealteration or refuse the application; and in either case they shall givenotice of their decision to the applicant.
6
Subject to subsection (7) below, the Board shall register an alterationon an application under subsection (3) above.
7
The Board may refuse an application under subsection (3) above if they arenot satisfied—
a
that the application complies with the requirements of subsection (4)above, or
b
that the declaration referred to in subsection (4)(c) above is true.
8
An alteration is within this subsection if—
a
it relates to a term which is not relevant to the question whether thescheme complies with the requirements of Schedule 8; or
b
it relates to a term identifying any person (other than the schemeemployer) who pays the emoluments of employees to whom the scheme relates; or
c
it consists of the addition of a term making provision for an abbreviatedprofit period of the kind referred to in paragraph 10(3) of Schedule 8; or
d
it amends the provisions by reference to which the employees to whom thescheme relates may be identified, and does so only for the purposes of profitperiods which begin after the date on which the alteration is made; or
e
it relates to a provision of a kind referred to in paragraph 13(4) or (5)or 14(3), (4) or (5) of Schedule 8 (as those provisions have effect at thetime of the application for registration of the alteration), and has effectonly for the purposes of profit periods beginning after the date on which thealteration is made; or
f
it amends the provisions as to when payments will be made to employees,and does so only for the purposes of profit periods beginning after the dateon which the alteration is made; or
g
the scheme did not comply with the requirements of Schedule 8 when it wasregistered, and the alteration—
i
is made in order to bring the scheme into compliance with the requirementsof that Schedule (either as it had effect when the scheme was registered oras it has effect at the time of the application for registration of thealteration), and
ii
is made for the purposes of the first and any subsequent profit period towhich the scheme relates, and
iii
is made within two years of the beginning of the first profit period, and
iv
does not invalidate (in whole or in part) any payment of profit-relatedpay already made under the scheme.

4

1

Section 178 (cancellation of registration) shall be amended as follows.

2

In subsection (1) for the words “subsection (5)” there shall besubstituted the words “subsections (5) and (5A)”.

3

After subsection (3) there shall be inserted—

3A
Where the terms of a registered scheme have been altered, then, subjectto section 177B(2), the Board may cancel the registration of the scheme witheffect from the beginning of the profit period during which the alterationtook effect or with effect from the beginning of any later profit period.
3B
If after an alteration of the terms of a scheme has been registered undersection 177B it appears to the Board—
a
that the application for registration of the alteration did not complywith the requirements of subsection (4) of that section, or
b
that the declaration referred to in subsection (4)(c) of that section wasfalse,
the Board may cancel the registration of the scheme with effect from thebeginning of the profit period during which the alteration took effect or witheffect from the beginning of any later profit period.

4

After subsection (5) there shall be inserted—

5A
Where—
a
the scheme employer has died, and
b
his personal representatives by notice request the Board to cancel theregistration of the scheme with effect from the date of death,
then, if the notice is given before the end of the period of one monthbeginning with the date of the grant of probate or letters of administrationor, in Scotland, confirmation of executors, the Board shall comply with therequest.

5

At the end of section 179 (recovery of tax) there shall be added—

3
Where—
a
the scheme employer has died, but
b
his personal representatives have not been substituted for him as thescheme employer by virtue of section 177A,
the reference in subsection (2) above to the scheme employer shall beconstrued as a reference to the personal representatives.
4
Where—
a
a payment to which this section applies was made by a person other thanthe scheme employer, and
b
the scheme employer is not resident in the United Kingdom,
then in relation to that payment the reference in subsection (2) aboveto the scheme employer shall include a reference to the person by whom thepayment was made.

6

At the end of section 180 (annual returns) there shall be added—

5
Where—
a
the scheme employer has died, but
b
his personal representatives have not been substituted for him as thescheme employer by virtue of section 177A,
the reference in subsection (1) above to the scheme employer shall beconstrued as a reference to the personal representatives.

7

At the end of section 181 (information) there shall be added—

4
Where the scheme employer has died, his personal representatives shallinform the Board of his death by notice given before the end of the period ofone month beginning with the date of the grant of probate or letters ofadministration or, in Scotland, confirmation of executors.

8

1

Section 182 (appeals) shall be amended as follows.

2

In subsection (1) after paragraph (b) there shall be inserted—

bb
against a refusal by the Board of an application under section 177B(3);

3

After subsection (1) there shall be inserted—

1A
An appeal to the Special Commissioners may be made by the personalrepresentatives of a scheme employer against a refusal by the Board of anapplication under section 177A.

4

In subsection (2) for the words “scheme employer” there shall besubstituted the word “appellant”.

9

1

Paragraph 7 of Schedule 8 (no payments for employees with materialinterest in company) shall be amended as follows.

2

In sub-paragraph (1), the words “, or is an associate of a person who has,” shall be omitted.

3

In sub-paragraph (3), after the words “section 417(3) and (4)” thereshall be inserted the words “, but subject to sub-paragraph (4) below”.

4

The following sub-paragraphs shall be added at the end—

4
For the purposes of this paragraph, where an employee of a company has aninterest in shares or obligations of the company as a beneficiary of anemployee benefit trust, the trustees shall not be regarded as associates ofhis by reason only of that interest unless sub-paragraph (8) below applies inrelation to him.
5
A trust is an employee benefit trust for the purposes of this paragraphif—
a
all or most of the employees of the company are eligible to benefit underit, and
b
none of the property subject to it has been disposed of on or after 14thMarch 1989 (whether by sale, loan or otherwise) except in the ordinary courseof management of the trust or in accordance with sub-paragraph (6) below.
6
Property is disposed of in accordance with this sub-paragraph if—
a
it is applied for the benefit of—
i
individual employees or former employees of the company,
ii
spouses, former spouses, widows or widowers of employees or formeremployees of the company,
iii
relatives, or spouses of relatives, of persons within sub-paragraph (i)or (ii) above, or
iv
dependants of persons within sub-paragraph (i) above,
b
it is applied for charitable purposes, or
c
it is transferred to the trustees of an approved profit sharing scheme(within the meaning of section 187), of another employee benefit trust, or ofa qualifying employee share ownership trust (within the meaning of Schedule5 to the Finance Act 1989),
and the property applied or transferred consists of any of the ordinaryshare capital of the company or of money paid outright.
7
In sub-paragraph (6)(a)(iii) above “relative” means parent or remoter forebear, child or remoterissue, brother, sister, uncle, aunt, nephew or niece.
8
This sub-paragraph applies in relation to an employee if at any time onor after 14th March 1989—
a
the employee, either on his own or with any one or more of his associates,or
b
any associate of his, with or without other such associates,
has been the beneficial owner of, or able (directly or through the mediumof other companies or by any other indirect means) to control, more than 25per cent. of the ordinary share capital of the company.
9
Where—
a
on or after 14th March 1989 an employee of a company, or an associate ofhis, receives a payment (“the relevant payment”) from the trustees of anemployee benefit trust, and
b
at any time during the period of three years ending with the day on whichthe relevant payment is received, the property subject to the trust consistsof or includes any part of the ordinary share capital of the company,
the employee or associate shall be treated for the purposes ofsub-paragraph (8) above as if he were the beneficial owner of the appropriatepercentage of the ordinary share capital of the company on the day on whichthe relevant payment is received (in addition to any percentage of that sharecapital of which he is actually the beneficial owner on that day).
10
For the purposes of sub-paragraph (9) above, the appropriate percentageis—
$\frac{A x 100}{B}$
where—
A is the smaller of—
(a) the aggregate of the relevant payment and any other paymentsreceived by the employee or associates of his from the trustees of the trustduring the period of 12 months ending with the day on which the relevant payment is received, and
(b) the aggregate of the distributions made to the trustees of the trustby the company in respect of its ordinary share capital during the period ofthree years ending with the day on which the relevant payment is received; and
B is the aggregate of—
(a) any distributions made by the company in respect of its ordinaryshare capital during the period of 12 months ending with the day on which therelevant payment is received,
(b) any distributions so made during the period of 12 months immediatelypreceding that mentioned in paragraph (a) above, and
(c) any distributions so made during the period of 12 months immediately preceding that mentioned in paragraph (b) above,
divided by the number of the periods mentioned in paragraphs (a) to(c) above in which distributions were so made.
11
Where—
a
an employee or associate is treated by sub-paragraph (9) above as if hewere the beneficial owner of a percentage of the ordinary share capital of acompany by reason of receiving the relevant payment from the trustees of atrust, and
b
that employee, or an associate of his, has, during the period of 12 monthsending with the day on which the relevant payment is received, received oneor more payments from trustees of another employee benefit trust or trustssatisfying the requirement in paragraph (b) of sub-paragraph (9) above,
that sub-paragraph shall have effect in relation to the employee orassociate mentioned in paragraph (a) above as if he had received the paymentfrom the trustees of the trust or of each of the trusts mentioned in paragraph(b) above (or where more than one payment has been received from the trusteesof a trust, the last of the payments) on the day on which the relevant paymentis received.
12
In sub-paragraphs (8) to (11) above “associate”, in relation to an employee, does not include thetrustees of an employee benefit trust by reason only that the employee has aninterest in shares or obligations of the trust.

10

1

Paragraphs 13(2) and 14(2) of Schedule 8 (which provide for a scheme’sdistributable pool to be at least 5 per cent. of the pay of all the employeesto whom the scheme relates if profits remain unchanged) shall be omitted.

2

In consequence of sub-paragraph (1) above—

a

the following provisions shall be omitted—

section 175(3);
in section 176(1), the words “(but not more than six months)”;
section 178(2)(b);
in paragraph 13(1) of Schedule 8, the word “fixed”;
paragraph 13(3) of that Schedule;
paragraph 14(7) of that Schedule.

b

in paragraph 13 of Schedule 8—

i

after sub-paragraph (1) there shall be inserted—

1A
That percentage must be a fixed percentage specified in the scheme and,if the scheme relates to more than one period, must be the same for eachperiod.

ii

in sub-paragraph (4)(a), for the words “the base year referred to insub-paragraph (3) above” there shall be substituted the words “a baseyear specified in the scheme”;

iii

in sub-paragraph (5), for the words “must be” onwards there shall besubstituted the words “must not exceed the profits for a base year specifiedin the scheme”;

iv

for sub-paragraph (6), there shall be substituted—

6
The base year referred to in sub-paragraph (4)(a) and sub-paragraph (5)above must be a period of 12 months ending at a time within the period of twoyears immediately preceding the profit period, or the first of the profitperiods, to which the scheme relates

c

in paragraph 14(5) of that Schedule, for the words “must be” onwardsthere shall be substituted the words “must not exceed the profits in theperiod of 12 months immediately preceding the first or only profit period towhich the scheme relates”.

11

At the end of paragraph 13 of Schedule 8 (calculation of distributablepool by method A) there shall be added—

7
Any provision included in a scheme by virtue of sub-paragraph (4) or (5)above may take effect either from the scheme’s first profit period or from anylater profit period determined in accordance with the scheme.

12

In paragraph 14 of Schedule 8 (calculation of distributable pool by methodB), in sub-paragraph (5) the words “specified in, or” shall be omitted.

13

At the end of paragraph 14 of Schedule 8 there shall be added—

8
Any provision included in a scheme by virtue of sub-paragraph (3)(b), (4)or (5) above may take effect either from the scheme’s first profit period orfrom any later profit period determined in accordance with the scheme.

14

1

Paragraph 19 of Schedule 8 (profit and loss account for purposes ofprofit-related pay scheme) shall be amended as follows.

2

After sub-paragraph (4) (account to make no allowance for remuneration ofpersons excluded from scheme) there shall be inserted—

4A
In sub-paragraph (4) above “remuneration”, in relation to a person, includes fees andpercentages, any sums paid by way of expenses allowance (insofar as those sumsare charged to income tax), any contributions paid in respect of him under anypension scheme and the estimated value of any other benefits received by himotherwise than in cash.

3

In sub-paragraph (6) (items which may be left out of account in arrivingat profits or losses) for paragraph (f) there shall be substituted—

f
profit-related pay payable under the scheme, and profit-related paypayable under any other registered scheme if it is one to which paragraph 21below applies;
ff
secondary Class 1 contributions under Part I of the Social Security Act 1975 or Part I of the SocialSecurity (Northern Ireland) Act 1975 in respect of profit-related pay payableunder the scheme;

15

After paragraph 20 of Schedule 8 there shall be inserted—

Parts of undertakings
21
1
This paragraph shall apply to a scheme if the employment unit is a partof an undertaking, and the scheme states that the profits or losses of theunit are for the purposes of the scheme to be taken to be equivalent to thoseof the whole undertaking (which must be identified by the scheme).
2
Where this paragraph applies to a scheme, this Schedule shall have effectas if any reference to the profits or losses of the employment unit were areference to the profits or losses of the undertaking of which it forms part.
22
1
Where paragraph 21 above applies to a scheme, the scheme must containprovisions ensuring that no payments are made under it by reference to aprofit period unless, at the beginning of that profit period,—
a
there is at least one other registered scheme which relates to employeesemployed in the same undertaking as that of which the employment unit formspart, and
b
the number of the employees to whom the scheme relates does not exceed 33per cent. of the number of the employees to whom that other scheme relates (orif there is more than one other scheme, the aggregate number of the employeesto whom they relate).
2
Another registered scheme shall be disregarded for the purposes ofsub-paragraph (1) above—
a
if paragraph 21 above applies to it, or
b
if, by virtue of provisions of the kind described in paragraph 6 above,no payments could be made under it by reference to the profit periodconcerned.
3
Where paragraph 21 above applies to two or more schemes relating toemployment units which are parts of the same undertaking, an employee to whomanother scheme relates shall not be counted for the purposes of sub-paragraph(1)(b) above in connection with more than one of those schemes.

C46SCHEDULE 5 Employee Share Ownership Trusts

Section 74.

Annotations:

Modifications etc. (not altering text)

C46

Sch. 5 applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the applying Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 228(7), 235(8), 289 (with ss. 60, 101(1), 171, 201(3))

Qualifying trusts

C291

A trust is a qualifying employee share ownership trust at the time it isestablished if the conditions set out in paragraphs 2 to 11 below aresatisfied in relation to the trust at that time.

General

C302

F1985

This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed.

F1993A

Where a trust is established after the day on which the Finance Act 1994 was passed, the trust deed must make provision as mentioned in one of paragraphs (a) to (c) below—

a

provision for the establishment of a body of trustees and complying with paragraph 3(2) to (4) above;

b

provision for the establishment of a body of trustees and complying with paragraph 3B(2) to (9) below;

c

provision that at any time while the trust subsists there must be a single trustee.

the trustee is not then an employee or director of any company then falling within the founding company’s group, and

c

the director is not then an employee of any company then falling within the founding company’s group,

c

the director is not then a director of any such company (other than the trust company), and

d

the director meets the requirements of sub-paragraph (6) below;

and for the purposes of this paragraph a director is a non-professional director at a particular time if the director is not then a professional director for those purposes.

6

A director meets the requirements of this sub-paragraph if—

a

he was appointed as an initial director and, before being appointed as director, was selected by (and only by) the persons who later became the non-professional initial directors, or

b

he was appointed as a replacement or additional director and, before being appointed as director, was selected by (and only by) the persons who were the non-professional directors at the time of the selection.

7

Directors are selected in accordance with this sub-paragraph if the process of selection is one under which—

b

if they are securities acquired by the trustees as a result of areorganisation, and the original shares the securities represent are sharesin the founding company (construing “reorganisation” and “originalshares” in accordance with section F209126 of that Act).

Position after trust’s establishment

C4112

A trust which was at the time it was established a qualifying employeeshare ownership trust shall continue to be one, except that it shall not besuch a trust at any time when the requirements mentioned in paragraph 3(3)(a)to (f) above are not satisfied. F218This paragraph applies in relation to trusts established on or before the day on which the Finance Act 1994 was passed.

F21912A

1

Subject to sub-paragraphs (2) and (3) below, a trust which was at the time it was established a qualifying employee share ownership trust shall continue to be one.

2

If the trust deed makes provision under paragraph 3A(a) above, the trust shall not be a qualifying employee share ownership trust at any time when the requirements mentioned in paragraph 3(3)(a) to (f) above are not satisfied.

3

If the trust deed makes provision under paragraph 3A(b) above, the trust shall not be a qualifying employee share ownership trust at any time when the conditions mentioned in paragraph 3B(4)(a) to (e) above are not satisfied.

4

If the trust deed makes provision under paragraph 3A(c) above, the trust shall not be a qualifying employee share ownership trust at any time when—

a

there is not a single trustee,

b

the trustee is not a company which is resident in the United Kingdom and controlled by the founding company, or

c

the conditions mentioned in paragraph 3C(4)(a) to (e) above are not satisfied as regards the directors of the trustee.

5

This paragraph applies in relation to trusts established after the day on which the Finance Act 1994 was passed.

C4213

A trust is an employee share ownership trust at a particular time (therelevant time) if it was a qualifying employee share ownership trust at thetime it was established; and it is immaterial whether or not it is aqualifying employee share ownership trust at the relevant time.

Interpretation

C4314

For the purposes of this Schedule the following are securities—

a

shares;

b

debentures.

C4415

For the purposes of this Schedule, the question whether one company is controlled by another shall be construed in accordance with F425section 995 of the Income Tax Act 2007.

any associate of his, with or without other such associates,

has been the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control, more than 5 percent. of the ordinary share capital of the company.

6

Sub-paragraphs (9) to (12) of paragraph 7 of Schedule 8 to the Taxes Act1988 shall apply for the purposes of sub-paragraph (5) above as they apply for the purposes of that paragraph.

F22017

For the purposes of this Schedule a trust is established when the deed under which it is established is executed.

F27818

For the purposes of this Schedule “SAYE option scheme” has the same meaning as in the SAYE code (see section 516 of the Income Tax (Earnings and Pensions) Act 2003 (approved SAYE option schemes)).

F387SCHEDULE 6 Retirement Benefits Schemes

Section 75.

Annotations:

Amendments (Textual)

F387

Sch. 6 repealed (6.4.2006) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3 (with Sch. 36)

F387Part I Amendments of Taxes Act

F387 Preliminary

F3871

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Amendments

F3872

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3873

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3874

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3875

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3876

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3877

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3878

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3879

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38710

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38711

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38712

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38713

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38714

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38715

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38716

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38717

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Effect of amendments

F38718

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387Part II Approved Schemes: General

F387 Preliminary

F38719

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Remuneration

F38720

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38721

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38722

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Accelerated accrual

F38723

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38724

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Associated employments

F38725

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Connected schemes

F38726

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Augmentation

F38727

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Centralised schemes

F38728

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Election

F38729

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Supplementary

F38730

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387Part III Approved Schemes: Additional Voluntary Contributions

F387 Preliminary

F38731

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Abatement of benefits

F38732

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Return of surplus funds

F38733

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38734

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F387 Supplementary

F38735

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F388SCHEDULE 7 Personal Pension Schemes

Section 77.

Annotations:

Amendments (Textual)

F388

Sch. 7 repealed (6.4.2006) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3 (with Sch. 36)

F388Part I Amendments of Taxes Act

F3881

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3882

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3883

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3884

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3885

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3886

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3887

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3888

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3889

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F388Part II Schemes Approved Before Passing of This Act

F388 Interpretation

F38810

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F388 Lump sum to member

F38811

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F38812

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 8 Amendments of Chapter I of Part XII of Taxes Act 1988 (InsuranceCompanies)

Section 84.

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F221

2

Section 433 (profits reserved for policy holders or annuitants) shallcease to have effect.

3

1

In section 434 (franked investment income etc.), for subsection (3) thereshall be substituted the following subsections—

3
Subject to sections 437 and 438, the policy holders’ fraction of thefranked investment income from investments held in connection with a company’slife assurance business shall not be used under Chapter V of Part VI to frankdistributions made by the company and, accordingly, for the purposes of thatChapter (other than the application of franked investment income under section241), in relation to any unrelieved income of a company falling withinsubsection (1) above, the surplus of franked investment income for anyaccounting period means the aggregate of—
a
the policy holders’ fraction of that franked investment income; and
b
the amount determined under section 241(3) on the basis that the referencetherein to franked investment income is a reference only to the shareholders’fraction of that income.
3A
The policy holders’ fraction of the franked investment income frominvestments held in connection with a company’s life assurance business shallbe left out of account in determining, under subsection (7) of section 13, thefranked investment income forming part of the company’s profits for thepurposes of that section.

2

Subsections (4) and (5) of that section shall be omitted.

3 F2224

In subsection (7) of that section for “(4)” there shall besubstituted “(3)” and after the words “against which” there shallbe inserted “disregarding relief under section 242”.

F2234

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

Section 435 (taxation of gains reserved for policy holders and annuitants)shall cease to have effect.

F4726

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F224

F405SCHEDULE 8A Modification of sections 82 TO 83A, 88 and 89 in relation to overseas life insurance companies

Section 89A.

Annotations:

Amendments (Textual)

F405

Sch. 8A repealed (with effect in accordance with reg. 1 of the amending S.I.) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), reg. 1, Sch. Pt. 1

F4051

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4051ZA

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4051ZB

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4051A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4051AA

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4051B

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4051C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4051D

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4052

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F510SCHEDULE 9 Life Policies Etc. Held by Companies

Section 90.

Annotations:

Amendments (Textual)

F510

Sch. 9 omitted (with effect in accordance with Sch. 14 para. 18 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 14 para. 17(a)

F5101

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5102

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5103

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5104

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5105

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5106

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5107

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5108

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F225SCHEDULE 10

Annotations:

Amendments (Textual)

F225

Sch. 10 repealed (29.4.1996) by 1996 c. 8, s. 205, Sch. 41 Pt. V(3) (with savings in Pt. IV Ch. II (ss. 80-105))

1

Schedule 4 to the Taxes Act 1988 (deep discount securities) shall beamended as mentioned in the following provisions of this Schedule.

2

1

Paragraph 1 shall be amended as follows.

2

The following paragraph shall be inserted after sub-paragraph(1)(d)—

dd
“a deep discount security” also means any redeemable security whichhas been issued by a public body (at whatever time) at a deep discount, otherthan—
i
a security such as is mentioned in paragraph (d)(ii) above;
ii
a security falling within sub-paragraph (5), (6) or (7) below;

3

In sub-paragraph (1)(g) after the words “the company” there shall beinserted the words “or the public body”.

4

The following shall be inserted at the end of sub-paragraph (2)— “ This sub-paragraph applies only in the case of securities issued by acompany. ”

5

The following sub-paragraphs shall be inserted after sub-paragraph(3)—

4
For the purposes of this Schedule a public body is any of the followingwhich is not a company—
a
a government, whether of the United Kingdom or elsewhere;
b
a public or local authority, whether in the United Kingdom or elsewhere.
5
A security falls within this sub-paragraph if it is a gilt-edged securityand—
a
it was issued before 14th March 1989, or
b
it was issued on or after that date but was issued under the sameprospectus as any gilt-edged security issued before that date.
6
A security falls within this sub-paragraph if it is a gilt-edged securityand—
a
it was issued under a prospectus under which no securities were issuedbefore 14th March 1989,
b
it was issued otherwise than on the occasion of the original issue underthe prospectus, and
c
all the securities issued on the occasion of the original issue under theprospectus are gilt-edged securities which are not deep discount securities.
7
A security falls within this sub-paragraph if it is not a gilt-edgedsecurity and was issued (at whatever time) under the same prospectus as anyother security which was issued before the security in question and which isnot a deep discount security.
8
For the purposes of this Schedule “gilt-edged security”has the same meaning as it has for the purposes of the 1979 Act.

3

The following sub-paragraph shall be inserted after paragraph 4(7)—

8
In the case of a deep discount security issued by a public body, thisparagraph applies where a disposal is made on or after 14th March 1989(whatever the date of acquisition).

4

In paragraph 11(1) after the words “deep discount security” thereshall be inserted the words “issued by a company”.

5

The following paragraph shall be inserted after paragraph 11—

11A
Where any deep discount security issued by a public body is redeemedbefore the redemption date by the body which issued it, paragraph 4 aboveshall have effect subject to paragraph 11(2) above (ignoring the wordsfollowing paragraph (b)).

6

The following sub-paragraph shall be inserted after paragraph 13(2)—

3
Every public body which issues deep discount securities on or after 1stAugust 1989 shall cause to be shown on the certificate of each such securitythe income element for each income period between the date of issue of thesecurity and the redemption date.

7

The following shall be inserted after paragraph 14—

15 Retirement benefit schemes
1
In a case where—
a
paragraph 4 above would apply (apart from this paragraph) to a disposalof a security, and
b
immediately before the disposal was made the security was held for thepurposes of an exempt approved scheme (within the meaning of Chapter I of PartXIV),
that paragraph shall not apply to the disposal.
2
Sub-paragraph (1) above shall not apply unless the disposal is made on orafter 14th March 1989.
16 Stock lending
1
In a case where—
a
a security is the subject of a transfer which falls within section 129(3),and
b
the transfer constitutes a disposal to which (apart from this paragraph)paragraph 4 above would apply,
that paragraph shall not apply to the disposal.
2
Sub-paragraph (1) above shall not apply unless the disposal is made on orafter 14th March 1989.
17 Trustees
1
Where on the disposal by trustees of a deep discount security an amountis treated as income chargeable to tax by virtue of paragraph 4(1) above, therate at which it is chargeable shall be a rate equal to the sum of the basicrate and the additional rate for the year of assessment in which the disposalis made.
2
Where the trustees are trustees of a scheme to which section 469 applies,sub-paragraph (1) above shall not apply if or to the extent that the amountis treated as income in the accounts of the scheme.
3
Sub-paragraph (1) above shall not apply unless the disposal is made on orafter 14th March 1989.
18 Underwriters
1
An underwriting member of Lloyd’s shall be treated for the purposes ofthis Schedule as absolutely entitled as against the trustees to the securitiesforming part of his premiums trust fund, his special reserve fund (if any) andany other trust fund required or authorised by the rules of Lloyd’s, orrequired by the underwriting agent through whom his business or any part ofit is carried on, to be kept in connection with the business.
2
Sub-paragraph (1) above applies where a disposal is made on or after 14thMarch 1989 (whatever the date of acquisition).
3
Where a security forms part of a premiums trust fund at the end of 31stDecember of any relevant year, for the purposes of this Schedule the trusteesof the fund shall be deemed to dispose of the security at that time; and forthis purpose relevant years are 1989 and subsequent years.
4
Where a security forms part of a premiums trust fund at the beginning of1st January of any relevant year, for the purposes of this Schedule thetrustees of the fund shall be deemed to acquire the security at that time; andfor this purpose relevant years are 1990 and subsequent years.
5
Sub-paragraph (6) below applies where the following state of affairsexists at the beginning of 1st January of any year or the end of 31st Decemberof any year—
a
securities have been transferred by the trustees of a premiums trust fundin pursuance of an arrangement mentioned in section 129(1) or (2),
b
the transfer was made to enable another person to fulfil a contract or tomake a transfer,
c
securities have not been transferred in return, and
d
section 129(3) applies to the transfer made by the trustees.
6
The securities transferred by the trustees shall be treated for thepurposes of sub-paragraphs (3) and (4) above as if they formed part of thepremiums trust fund at the beginning of 1st January concerned or the end of31st December concerned (as the case may be).
7
Paragraph 7 above shall have effect subject to sub-paragraph (3) above.
8
Paragraph 7(2) above shall not apply where—
a
the deceased was an underwriting member of Lloyd’s who died on or after14th March 1989, and
b
immediately before his death the security concerned formed part of apremiums trust fund, a special reserve fund or any other trust fund requiredor authorised by the rules of Lloyd’s, or required by the underwriting agentthrough whom the deceased’s business or any part of it was carried on, to bekept in connection with the business.
9
In a case where an amount treated as income chargeable to tax by virtueof paragraph 4(1) above constitutes profits or gains mentioned in section450(1)—
a
section 450(1)(b) shall apply; and
b
paragraph 4(1)(b) above shall not apply.
10
For the purpose of computing income tax for the year 1987–88sub-paragraph (9) above shall have effect as if—
a
the reference to section 450(1) were to paragraph 2 of Schedule 16 to theFinance Act 1973, and
b
the reference to section 450(1)(b) were to paragraph 2(b) of thatSchedule.
11
In this paragraph “business” and “premiums trustfund” have the meanings given by section 457.
19 Gilts: special rules
1
In a case where—
a
securities have been issued by a public body under a prospectus underwhich no securities were issued before 14th March 1989,
b
some of the securities issued under the prospectus are gilt-edgedsecurities which are would-be deep discount securities,
c
some of the securities issued under the prospectus are gilt-edgedsecurities which are not would-be deep discount securities, and
d
there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities falling within paragraph (c) above (at that time),
sub-paragraph (2) below shall apply in relation to any gilt-edgedsecurity which has been or is issued under the prospectus at any time (whetherbefore, at or after the time mentioned in paragraph (d) above).
2
As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(d) above, paragraphs 4, 7, 8, 11A, 12 and 14to 18 above shall have effect as if—
a
the security were a deep discount security,
b
it had been issued as such (whatever the time it was issued), and
c
it had been acquired as such (whatever the time it was acquired).
3
For the purposes of sub-paragraph (1) above a would-be deep discountsecurity is a security which would be a deep discount security apart fromparagraph 1(6) above.
4
For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a disposal for the purposes of the1979 Act, the death of a person competent to dispose of the security, adisposal mentioned in paragraph 18(3) above, and an acquisition mentioned inparagraph 18(4) above.
20 Non-gilts: special rules
1
In a case where—
a
all the securities issued by a public body on the occasion of the originalissue under a particular prospectus (whatever the time of the issue) areneither gilt-edged securities nor deep discount securities,
b
some of the securities issued under the prospectus are not gilt-edgedsecurities but are new would-be deep discount securities, and
c
there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities which (looking at the state of affairs at that time) havebeen issued under the prospectus and are neither gilt-edged securities nor newwould-be deep discount securities,
sub-paragraph (2) below shall apply in relation to any security which isnot a gilt-edged security but which has been or is issued under the prospectusat any time (whether before, at or after the time mentioned in paragraph (c)above).
2
As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(c) above, paragraphs 4, 7, 8, 11A, 12 and 14to 18 above shall have effect as if—
a
the security were a deep discount security,
b
it had been issued as such (whatever the time it was issued), and
c
it had been acquired as such (whatever the time it was acquired).
3
For the purposes of sub-paragraph (1) above a new would-be deep discountsecurity is a security which—
a
would be a deep discount security apart from paragraph 1(7) above, and
b
was issued on or after 14th March 1989.
4
For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a disposal for the purposes of the1979 Act, the death of a person competent to dispose of the security, adisposal mentioned in paragraph 18(3) above, and an acquisition mentioned inparagraph 18(4) above.

F226SCHEDULE 11

Annotations:

Amendments (Textual)

F226

Sch. 11 repealed (29.4.1996) by 1996 c. 8, ss. 104, 205, Sch. 14 para. 57, Sch. 41 Pt. V(3) (with savings in Pt. IV Ch. II (ss. 80-105))

Deep gain securities

1 C481

For the purposes of this Schedule a deep gain security is a redeemable security (whenever issued) which fulfils the first and second conditions.

2

The first condition is that, taking the security at the time it is issuedand assuming redemption, the amount payable on redemption might constitute adeep gain; and if the security is capable of redemption on one of a number ofoccasions, this condition is fulfilled if it is fulfilled as regards any oneof them.

3

For the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity only at the option of the person who issued the security(and no other person).

F2463A

In the case of a security issued before 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity otherwise than in pursuance of the exercise by the person who holds the security for the time being of an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur.

3B

In the case of a security issued on or after 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity otherwise than at the option of the person who holds the security for the time being and as regards which the following conditions are fulfilled (judged at the time of the security’s issue)—

a

the event occasioning redemption is such that, if it occurred and there was no provision for redemption, the interests of the person holding the security at the time of the occurrence might be adversely affected,

b

the event occasioning redemption is neither certain nor likely to occur,

c

the event occasioning redemption is not one of a number of events occasioning or allowing redemption before maturity at least one of which is certain or likely to occur, and

d

the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might be expected to accrue from the provision for redemption.

3C

The condition set out in sub-paragraph (3B)(a) above is fulfilled if it is fulfilled by reference to any one potential holder, whether or not it is fulfilled by reference to other potential holders.

(3D) In a case where—

a

the security is one which under the terms of issue can be converted into or exchanged for a security of a different kind, and

b

it falls to be decided whether the condition set out in paragraph (b) or (c) of sub-paragraph (3B) above is fulfilled,

the condition concerned shall not be treated as fulfilled unless it is fulfilled having regard only to circumstances in which (judged at the time of the security’s issue) the right to convert or exchange cannot be or is unlikely to be exercised.

3E

In the case of a security issued on or after 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity at the option of the person who holds the security for the time being and as regards which the following conditions are fulfilled (judged at the time of the security’s issue)—

a

the event allowing the option to be exercised is such that, if it occurred and there was no provision for redemption, the interests of the person holding the security at the time of the occurrence might be adversely affected,

b

the event allowing the option to be exercised is neither certain nor likely to occur,

c

the event allowing the option to be exercised is not one of a number of events occasioning or allowing redemption before maturity at least one of which is certain or likely to occur, and

d

the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might be expected to accrue from the provision for redemption.

3F

the terms of issue contain provision for the amount payable on redemptionin any of the qualifying circumstances (set out in sub-paragraph (13) below)to be not less than an amount stated in the terms, and

b

the security was issued before 9th June 1989,

the provision shall not prevent the fourth condition being fulfilled.

F25012A

In a case where—

a

the terms of issue contain provision for the amount payable on redemptionin any of the qualifying circumstances (set out in sub-paragraph (13) below)to be not more than the issue price, and

b

the security was issued on or after 9th June 1989,

each of paragraphs (a) and (b) above is satisfied (though not necessarilyas regards the same time).

3

For the purposes of sub-paragraph (2) above the qualifying period is theperiod of one month beginning with the day on which the security was issued.

4

For the purposes of sub-paragraph (2) above relevant share capital isshare capital in the company into whose share capital the security can beconverted or for whose share capital the security can be exchanged; andrelevant share capital need not be share capital into or for which thesecurity can be converted or exchanged.

5

References in this paragraph to share capital are to share capital bywhatever name called.

F264Issue price

Annotations:

Amendments (Textual)

F264

Sch. 11 para. 3A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 54, Sch. 12 para.4.

3A

1

This paragraph applies where—

a

securities (old securities) of a particular kind are issued by way of the original issue of securities of that kind,

b

on a later occasion securities (new securities) of the same kind are issued,

c

a sum (the extra return) is payable in respect of each new security, by the person issuing it, to reflect the fact that interest is accruing on the old securities,

d

the issue price of each new security includes an element (whether or not separately identified) representing payment for the extra return, and

e

the extra return is equal to the amount of interest payable for the relevant period on each old security.

2

In such a case, the issue price of each new security shall be deemed for the purposes of paragraph 1(9) above to be its actual issue price less an amount equal to the extra return payable in respect of the security.

3

For the purposes of this paragraph securities are of the same kind if they are treated as being of the same kind by the practice of a recognised stock exchange or would be so treated if dealt with on such a stock exchange.

4

For the purposes of this paragraph the relevant period is the period beginning with the day following the relevant day and ending with the day on which the new securities are issued.

5

For the purposes of this paragraph the relevant day is—

a

the last (or only) interest payment day to fall in respect of the old securities before the day on which the new securities are issued, or

b

the day on which the old securities were issued, in a case where no interest payment day fell in respect of them before the day on which the new securities are issued;

and an interest payment day, in relation to the old securities, is a day on which interest is payable under them.

Meaning of transfer etc.

4

Amendments (Textual)

F265

Sch. 11 para. 5A and crossheading inserted (27.7.1993) by 1993 c. 34, s. 170, Sch. 18 para.7

F2665A

Death

2

For the purposes of paragraph 5 above—

a

the person making the transfer shall be treated as obtaining in respectof it an amount equal to the market value of the security at the time of thetransfer, and

b

the person to whom the transfer is made shall be treated as paying inrespect of his acquisition of the security an amount equal to that marketvalue.

Underwriters

F25410. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustees

11

1

Where on a transfer or redemption of a security by trustees an amount istreated as income chargeable to tax by virtue of paragraph 5 above, the rateat which it is chargeable shall be F255the rate applicable to trusts for the year of assessment in which the transfer ismade.

2

Where the trustees are trustees of a scheme to which section 469 of theTaxes Act 1988 applies, sub-paragraph (1) above shall not apply if or to theextent that the amount is treated as income in the accounts of the scheme.

Foreign currency

12

b

immediately before the transfer or redemption was made the security washeld by a charity, and

c

the amount which would (apart from this paragraph) be treated as incomeby virtue of paragraph 5 above is applicable and applied for charitablepurposes,

that paragraph shall not apply to the transfer or redemption.

2

In this paragraph “charity” has the same meaning as in section 506 of the TaxesAct 1988.

Stock lending

16

In a case where—

a

a security is the subject of a transfer which falls within section 129(3)of the Taxes Act 1988, and

b

paragraph 5 above would apply to the transfer (apart from this paragraph),

that paragraph shall not apply to the transfer.

Accrued income scheme

17

In a case where—

a

a security is the subject of a transfer to which paragraph 5 aboveapplies, and

b

apart from this paragraph, the transfer would be a transfer for thepurposes of sections 710 to 728 of the Taxes Act 1988,

the transfer shall not be a transfer for those purposes.

Other provisions excluded

18

In a case where paragraph 5 above applies to the redemption of a security,sections 123 and 348 to 350 of the Taxes Act 1988 shall not apply to anyproceeds of the redemption.

Identification of securities

19

Section F256108 of the M106Taxation of Chargeable Gains Act 1992 shall apply to theidentification, for the purposes of this Schedule, of deep gain securitiestransferred or redeemed as it applies to the identification, for the purposesof capital gains tax, of deep discount securities disposed of.

F257Early redemption: special rules

Annotations:

Amendments (Textual)

F257

Sch. 11 para 19A and cross heading inserted (retrospectively and deemed always to have had effect) by Finance (No. 2) Act 1992 (c. 48), s. 33, Sch. 7 paras4, 7, 8

c

some of the securities issued under the prospectus are gilt-edgedsecurities which are not would-be deep gain securities, and

d

there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities falling within paragraph (c) above (at that time),

sub-paragraph (2) below shall apply in relation to any gilt-edgedsecurity which has been or is issued under the prospectus at any time (whetherbefore, at or after the time mentioned in paragraph (d) above).

2

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(d) above, paragraphs 5 to 19 above shall haveeffect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (1) above a would-be deep gain securityis a security which would be a deep gain security apart from paragraph 1(6)above.

4

In sub-paragraph (1) above “gilt-edged security” has the same meaning as in paragraph1 above.

5

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

Non-gilts: special rules

21

1

In a case where—

a

all the securities issued on the occasion of the original issue under aparticular prospectus (whatever the time of the issue) are neither gilt-edgedsecurities nor deep gain securities,

b

some of the securities issued under the prospectus are not gilt-edgedsecurities but are new would-be deep gain securities, and

c

there is a time when the aggregate nominal value of the securities fallingwithin paragraph (b) above (at that time) exceeds the aggregate nominal valueof the securities which (looking at the state of affairs at that time) havebeen issued under the prospectus and are neither gilt-edged securities nor newwould-be deep gain securities,

sub-paragraph (2) below shall apply in relation to any security which isnot a gilt-edged security but which has been or is issued under the prospectusat any time (whether before, at or after the time mentioned in paragraph (c)above).

2

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (1)(c) above, paragraphs 5 to 19 above shall haveeffect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (1) above F259, and subject to paragraph 21A below, a new would-be deep gain security is a security which—

a

would be a deep gain security apart from paragraph 1(7) above, and

b

was issued on or after 14th March 1989.

4

In sub-paragraph (1) above “gilt-edged security” has the same meaning as in paragraph1 above.

5

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

F26021A

1

A security which (apart from this paragraph) would be a new would-be deep gain security for the purposes of paragraph 21(1) above is not such a security if the following three conditions are fulfilled.

2

The first condition is that all the securities issued on the occasion of the original issue were issued before 13th November 1991.

3

The second condition is that the security is issued on or after 13th November 1991.

4

The third condition is that, even if paragraph 1(7) above did not prevent the security being a deep gain security, it would nevertheless not be a deep gain security if for the purposes of paragraph 1(2) above “redemption” did not include any redemption which may be made before maturity otherwise than in pursuance of the exercise by the person who holds the security for the time being of an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur.

Indexed securities: special rules

22

1

Sub-paragraph (2) below applies where—

a

a qualifying indexed security has been issued,

b

the person by whom it was issued and the person for the time being holdingit make an agreement, on or after 14th March 1989, varying the terms underwhich it is held, and

c

the terms as varied are such that, had the security been issued on thoseterms, it would be a deep gain security.

2

As regards any event occurring in relation to the security after theagreement is made, paragraphs 5 to 19 above shall have effect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

3

For the purposes of sub-paragraph (2) above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

4

In this paragraph “qualifying indexed security” has the meaning given byparagraph 2 above.

F261 Convertible securities: special rules (1)

Annotations:

Amendments (Textual)

F261

Finance Act 1990 (c. 29), s. 56, Sch. 10 paras. 27(3), 29(4)on and after 9 June 1989

22A

then (subject to sub-paragraph(3) below) the security shall be treated,at the time of its issue and at all subsequent times, as not being a deep gainsecurity.

2

Sub-paragraph (3) below applies where—

a

sub-paragraph (1) above applies in the case of a security, and

b

at a time after its issue it ceases to be a qualifying convertiblesecurity for the purposes of Schedule 10 to the Finance Act 1990.

3

As regards any event occurring in relation to the security after the timementioned in sub-paragraph (2)(b) above, paragraphs 5 to 19 above shall haveeffect as if—

a

the security were a deep gain security, and

b

it had been acquired as such (whatever the time it was acquired).

4

For the purposes of sub-paragraph (3)above events, in relation to asecurity, include anything constituting a transfer or acquisition for thepurposes of this Schedule.

F262No particular redemption date: special rule

Annotations:

Amendments (Textual)

F262

Sch. 11 para 22C and cross heading inserted (retrospectively and deemed always to have had effect) by Finance (No. 2) Act 1992 (c. 48), s. 33, Sch. 7 paras6, 7, 8

F26322C

F369c

section 397 of the Income Tax (Trading and Other Income) Act 2005, and

d

Chapter 6 of Part 4 of that Act.

Provision of information by company

“loan creditor” has the same meaning as in Part XI of theTaxes Act 1988, and
“securities” includes shares, stock, bonds, debentures anddebenture stock and also any promissory note or other instrument evidencingindebtedness to a loan creditor of the company.

Part II Amendments Connected with Repeal of Chapter III of Part XI of Taxes Act1988

The Taxes Management Act 1970 (c.9)

5

In the first column of the Table in section 98 of the Taxes Management Act1970 (penalty for failure to give particulars etc.) there shall be added atthe end— “ Paragraphs 2 to 4 of Schedule 12 to the Finance Act 1989. ”

The Capital Gains Tax Act 1979 (c.14)

F2276

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Income and Corporation Taxes Act 1988 (c.1)

7

In section 13 of the Taxes Act 1988 (small companies’ rate) in subsection(9) for the words “paragraph 17 of Schedule 19” there shall besubstituted the words “paragraphs 2 to 4 of Schedule 12 to the Finance Act1989”.

F2978

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

1

In section 187(3) of the Taxes Act 1988 (cases in which a person has amaterial interest in a company for the purposes of sections 185 to 187 of, andSchedules 9 and 10 to, that Act) for the words from “in a company” to theend of paragraph (b) there shall be substituted—

in a company if he, either on his own or with one or more associates,or if any associate of his with or without such other associates,—
a
is the beneficial owner of, or able, directly or through the medium ofother companies, or by any other indirect means to control, more than 25 percent., or in the case of a share option scheme which is not a savings-relatedshare option scheme more than 10 per cent., of the ordinary share capital ofthe company, or
b
where the company is a close company, possesses, or is entitled toacquire, such rights as would, in the event of the winding-up of the companyor in any other circumstances, give an entitlement to receive more than 25 percent., or in the case of a share option scheme which is not a savings-relatedshare option scheme more than 10 per cent., of the assets which would then beavailable for distribution among the participators.

2

This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.

10

1

In section 214 of the Taxes Act 1988 (chargeable payments connected withexempt distributions) in subsection (1)(c) for the words from “338(2)(a)”to “Schedule 19” there shall be substituted the words “and338(2)(a)”.

2

This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989, except in any case where section 427(4) ofthe Taxes Act 1988 has effect by virtue of section 103(2) of this Act.

11

In section 234 of the Taxes Act 1988 (information relating todistributions) in subsection (9) for the words from “paragraph 17” to “that Schedule” there shall be substituted the words “paragraphs 2 to4 of Schedule 12 to the Finance Act 1989 for the purposes of the relevantprovisions (as defined in paragraph 1 of that Schedule)”.

12 F4261

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4262

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4263

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

This paragraph shall have effect in relation to interest paid on or afterthe day on which this Act is passed (and, accordingly, the conditions ofsection 424(4) of the Taxes Act 1988 shall continue to have effect for thepurposes of section 360 of that Act in relation to interest paid before thatday).

13 F4271

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4272

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4273

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.

14

1

In section 576 of the Taxes Act 1988 (which relates to relief for losseson certain unquoted shares) in subsection (5), for paragraph (a) of thedefinition of “trading company” there shall be substituted—

a
a company whose business consists wholly or mainly of the carrying on ofa trade or trades

2

This paragraph shall have effect in relation to disposals made after 31stMarch 1989.

F39615

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F39716

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F42817

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18

1

Paragraph 7 of Schedule 8 to the Taxes Act 1988 (cases in which a personhas a material interest in a company for the purposes of a profit-related payscheme) shall be amended in accordance with this paragraph.

2

In sub-paragraph (2) for the words from “in a company” onwards thereshall be substituted—

in a company if he, either on his own or with one or more associates,or if any associate of his with or without such other associates,—
a
is the beneficial owner of, or able, directly or through the medium ofother companies, or by any other indirect means to control, more than 25 percent. of the ordinary share capital of the company, or
b
in the case of a close company, possesses, or is entitled to acquire, suchrights as would, in the event of the winding-up of the company or in any othercircumstances, give an entitlement to receive more than 25 per cent. of theassets which would then be available for distribution among the participators

3

In sub-paragraph (3) the second “and” shall be omitted and after thedefinition of “control” there shall be inserted

and
“participator” has the meaning given by section 417(1)

4

This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.

SCHEDULE 13 Capital Allowances: Miscellaneous Amendments

Section 121.

1–26

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F228

Patent rights

F22927

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28–30

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F230

F237SCHEDULE 14

Annotations:

Amendments (Textual)

F237

Sch. 14 repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 22, 26(2), 27)

Gifts of business assets

F2311

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2322

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2333

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gifts on which inheritance tax is chargeable etc.

F2344

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of tax by instalments

F2355

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Minor and consequential amendments

F2366

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F243SCHEDULE 15

Annotations:

Amendments (Textual)

F243

Sch. 15 repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 22, 26(2), 27)

Postponed charges etc.: pre-1st April 1982 events

F2381

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2392

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reduction of 1982 value in certain cases

F2403

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No gain/no loss disposals

F2414

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Elections

F2425

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F244SCHEDULE 16 Broadcasting: Additional Payments by Programme Contractors

Section 181.

Annotations:

Amendments (Textual)

F244

S. 181, Sch. 16 repealed (prosp. as mentioned in S.I. 1990/2347, art. 3(3)) by Broadcasting Act 1990 (c. 42, SIF 96), ss. 127-129, 134, 203(3), 204(2), Schs. 9-12, Sch. 21

Part I Amendments of the Principal Sections

1

Section 32 of the M92Broadcasting Act 1981 (rentalpayments by programme contractors) shall be amended as follows.

2

In subsection (1)(b), after the word “amounts” there shall beinserted the words “in respect of profits and in respect of advertisingrevenue”.

3

In subsection (2)(b), after the word “amounts” there shall beinserted the words “in respect of profits”.

4

In subsection (4), for the word “Table”, where it first occurs, thereshall be substituted the word “Tables” and the following Tables shall besubstituted for the Table in that subsection—

TABLE A RATES OF ADDITIONAL PAYMENTS IN RESPECT OF ADVERTISING REVENUE
Rate for determining amount of additional payments
For so much of the advertising revenue for the accounting period as does not exceed the free slice for advertising revenue.
Nil
For so much of the advertising revenue for the accounting period as exceedsthe free slice for advertising revenue.
The relevant revenue rate except where the rate is nil
For the purposes of this Table—
a
a nil rate, instead of the relevant revenue rate, is applicable in thecase of persons who are DBS programme contractors or DBS teletext contractors;
b
the relevant revenue rate is 10 per cent; and
c
the free slice for advertising revenue is £15 million or, in thecase of a TV programme contractor, that amount with the addition of thepayments payable by him in pursuance of section 13(2).
TABLE B RATES OF ADDITIONAL PAYMENTS IN RESPECT OF PROFITS
For so much of the profits for the accounting period after deducting anyamount payable under Table A as does not exceed the free slice for profits.
Nil
For so much of the profits for the accounting period after deducting anyamount payable under Table A as exceeds the free slice for profits.
The relevant profits rate except where the rate is nil.
For the purposes of this Table—
a
a nil rate, instead of the relevant profits rate, is applicable in thecase of—
i
programme contractors who provide local sound broadcasts, and
ii
DBS programme contractors or DBS teletext contractors;
b
the relevant profits rate is 25 per cent; and
c
the free slice for profits is £2 million.

	Rate for determining amount of additional payments
For so much of the advertising revenue for the accounting period as does not exceed the free slice for advertising revenue.	Nil
For so much of the advertising revenue for the accounting period as exceedsthe free slice for advertising revenue.	The relevant revenue rate except where the rate is nil

5

Subsection (4A) shall be omitted.

6

In subsection (5), for the words “relevant sum mentioned in subsection(4A)” there shall be substituted the words “relevant sum mentioned in theTables above”.

7

In subsection (7), after the words “additional payments” there shallbe inserted the words “in respect of profits”.

8

In subsection (8), for the words “any of the provisions of subsections(4), (4A)” there shall be substituted the words “any of the provisionsof subsections (4)”.

9

For subsection (9) there shall be substituted the followingsubsections—

9
The power of the Secretary of State under subsection (8) shall includepower to amend the provisions in question as there mentioned—
a
only in their application in relation to the additional payments mentionedin subsection (1)(b); or
b
only in their application in relation to the additional payments mentionedin subsection (2)(b); or
c
differently in their application as mentioned in paragraphs (a) and (b)respectively; or
d
only in their application in relation to additional payments in respectof advertising revenue; or
e
only in their application in relation to additional payments in respectof profits; or
f
differently in their application as mentioned in paragraphs (d) and (e)respectively.
9A
In the application of the provisions mentioned in subsection (8) inrelation to the additional payments mentioned in subsection (1)(b), the powerof the Secretary of State under subsection (8) shall also include power toamend those provisions as mentioned in subsection (8)—
a
only in relation to persons who are TV programme contractors (includingpersons who are both TV programme contractors and teletext contractors); or
b
only in relation to persons who are DBS programme contractors (includingpersons who are both DBS programme contractors and teletext contractors); or
c
only in relation to persons who are teletext contractors (other than DBSteletext contractors) but are not TV or DBS programme contractors; or
d
only in relation to persons who are DBS teletext contractors but are notTV or DBS programme contractors; or
e
differently in relation to persons within paragraphs (a), (b), (c) and (d)respectively.

2

1

Section 33 of the M93Broadcasting Act 1981 (supplementalprovisions) shall be amended as follows.

2

In subsection (1), for the words “advertising receipts” there shallbe substituted the words “advertising revenue”.

3

In subsection (2), for the words “advertising receipts” there shallbe substituted the words “advertising revenue” and for the words “thosereceipts derive” there shall be substituted the words “the revenuederives”.

4

In subsection (3)(c), for the words “advertising receipts” thereshall be substituted the words “advertising revenue” and for the word “derive” there shall be substituted the word “derives”.

3

1

Section 34 of the Broadcasting Act 1981 (instalments payable on accountby programme contractors for their accounting periods) shall be amended asfollows.

2

In subsection (3)(c), for the words “receipts are” there shall besubstituted the words “revenue is”.

4

1

Section 35 of the M94Broadcasting Act 1981 (provision forsupplementing additional payments) shall be amended as follows.

2

In subsection (1)—

a

in paragraph (a), after the words “additional payments” there shallbe inserted the words “in respect of profits”;

b

in paragraph (b)(ii), the words “in the case of second categoryprofits,” shall be omitted; and

c

at the end, there shall be added the words “in respect of profits of hisfor that period”.

Part II Provisions Inserted as Schedule 4 to the Broadcasting Act 1981

Schedule 4 Rental Payments
Advertising revenue
1
1
The advertising revenue of a programme contractor for an accounting periodshall be computed in accordance with this paragraph.
2
Advertising revenue shall consist of the payments received or to bereceived by the programme contractor in consideration of the insertion ofadvertisements in programmes provided by the programme contractor andbroadcast in the United Kingdom by the Authority.
3
In the application of this Schedule in relation to the additional paymentsmentioned in section 32(1)(b), the advertising revenue of a programmecontractor other than a teletext contractor who is not a TV programmecontractor includes payments received or to be received by him inconsideration of the insertion of programmes consisting of advertisementsprovided by him for broadcasting on the Fourth Channel and so broadcast.
4
If, in connection with the insertion of advertisements which are paid forby payments constituting advertising revenue, any payments are made to theprogramme contractor to meet any additional payments, those payments shall beregarded as made in consideration of the insertion of the advertisements inquestion.
5
In the case of an advertisement inserted in a programme under arrangementsmade between a programme contractor and a person acting as advertising agent,the amount of any receipt by the programme contractor which represents apayment by the advertiser from which the advertising agent has deducted anyamount by way of commission shall, except in a case falling withinsub-paragraph (6), be the amount of the payment by the advertiser after thededuction of the commission.
6
If the amount deducted by way of commission as mentioned in sub-paragraph(5) exceeds 15 per cent. of the payment by the advertiser, the amount of thereceipt shall be the amount of that payment less 15 per cent.
7
Any contract shall provide that where for any insertion of anadvertisement a programme contractor receives or is entitled to an entireconsideration not solely referable to that insertion, the advertising revenueshall be calculated by reference to so much only of the consideration as isreferable to that insertion according to an apportionment made in such manneras the contract may provide.
Profits
2
1
The profits of a programme contractor for an accounting period shall becomputed in accordance with this paragraph.
2
The profits shall consist of the excess of relevant income over relevantexpenditure.
3
“Relevant income” means—
a
in relation to a programme contractor other than a DBS programmecontractor or a DBS teletext contractor, income which accrues to thecontractor in connection (directly or indirectly) with—
i
the provision by the contractor of programmes for broadcasting on ITV, theFourth Channel or a local sound broadcasting service, or
ii
the provision by the contractor, for broadcasting, distribution or showingin the United Kingdom, of programmes provided by him for broadcasting on ITV,the Fourth Channel or a local sound broadcasting service;
b
in relation to a DBS programme contractor or DBS teletext contractor,income which accrues to the contractor in connection (directly or indirectly)with—
i
the provision by the contractor to the Authority, in accordance with theterms of his contract as a DBS programme contractor or (as the case may be)DBS teletext contractor, of programmes for broadcasting in the Authority’s DBSservice to which his contract with the Authority relates, or
ii
the provision by the contractor, for broadcasting, distribution or showingin the United Kingdom, of programmes broadcast in the Authority’s DBS service.
4
Without prejudice to the generality of sub-paragraph (3), “relevant income” includes—
a
all revenue which is advertising revenue for the purposes of thisparagraph; and
b
such part of any income which—
i
accrues to any subsidiary of or company related to the programmecontractor or to the contractor’s holding company, and
ii
would be relevant income of that contractor if he and the subsidiary orrelated company or his holding company were a single programme contractor,
as, in the opinion of the Authority, should be attributed to thecontractor as reflecting his financial interest in the subsidiary or therespective financial interests of the holding company in the contractor andthe company related to the contractor or the financial interest of the holdingcompany in the contractor, as the case may be.
5
For the purposes of this paragraph advertising revenue includes—
a
in relation to a DBS programme contractor, payments received or to bereceived by him in respect of charges made for the reception of programmesprovided by him and broadcast in a DBS service;
b
in relation to a teletext contractor, payments received or to be receivedby him in respect of charges made for the reception of programmes provided byhim and broadcast in a DBS or additional teletext service.
6
“Relevant expenditure” means any expenditure of the programmecontractor which is properly chargeable to revenue account and which isincurred in connection with the provision by him of programmes of a kindmentioned in sub-paragraph (3).
7
Without prejudice to the generality of sub-paragraph (6), “relevant expenditure” includes—
a
expenditure in connection with the sale of rights to insert advertisementsin programmes; and
b
such part of any expenditure which—
i
is incurred by any subsidiary of or company related to the programmecontractor or by the contractor’s holding company, and
ii
would be relevant expenditure of that contractor if he and the subsidiaryor related company or his holding company were a single programme contractor,
as, in the opinion of the Authority, should be attributed to thecontractor as reflecting his financial interest in the subsidiary or therespective financial interests of the holding company in the contractor andthe company related to the contractor or the financial interest of the holdingcompany in the contractor, as the case may be;
c
in the case of a DBS programme contractor or a teletext contractor, anyexpenditure incurred in connection with the collection of charges for thereception of programmes provided by him and broadcast in a DBS service or ina DBS or additional teletext service, as the case may be; and
d
in the case of a DBS programme or DBS teletext contractor, any expenditureincurred in connection with the provision of the satellite transponder.
8
In ascertaining relevant income or relevant expenditure no account shallbe taken of interest on any loan.
9
Items of relevant income and items of relevant expenditure shall beattributed to accounting periods in accordance with the foregoing provisionsof this Schedule.
10
In this paragraph “programme” means—
a
in the application of this Schedule in relation to the additional paymentsmentioned in section 32(1)(b), a television programme; and
b
in the application of this Schedule in relation to the additional paymentsmentioned in section 32(2)(b), a local sound broadcast.
Carry forward of losses
3
1
Where, in any accounting period, the relevant expenditure of a programmecontractor exceeds his relevant income, the excess shall be carried forwardto the following accounting period and treated as relevant expenditure forthat period for the purpose of computing his profits for that period.
2
When a programme contractor’s contract with the Authority comes to an end,no losses incurred at any time during the currency of that contract may becarried forward under this paragraph and set against income attributable toany subsequent contract between him and the Authority.
Computation of profits of programme contractors
4
1
It shall be the duty of the Authority—
a
to draw up, and from time to time review, a statement setting out theprinciples to be followed in ascertaining, for any accounting period, aprogramme contractor’s—
i
advertising revenue, and
ii
relevant income and relevant expenditure for the purpose of computing hisprofits;
b
in computing the advertising revenue and the profits of a programmecontractor for any accounting period, to take account of that statement(including any revision thereof which has taken effect before the end of thatperiod).
2
A statement under this paragraph may set out different principles for TVprogramme contractors, DBS programme contractors, programme contractors forthe provision of local sound broadcasting and teletext contractors.
3
Before drawing up or revising a statement under this paragraph theAuthority shall consult the Secretary of State and the Treasury.
4
The Authority shall—
a
publish the statement drawn up under this paragraph and every revision ofthat statement; and
b
transmit a copy of the statement, and of every revision of it, to theSecretary of State;
and the Secretary of State shall lay copies of the statement and of everysuch revision before each House of Parliament.
5
The principles relating to advertising revenue and to profits may be setout in separate statements under this paragraph; and where this is done itsprovisions apply to each statement.
Disputes
5
1
For the purposes of the principal sections and this Schedule—
a
the amount of any advertising revenue, or
b
the amount of any profits, or
c
the amount of any additional payments, or of an instalment of additionalpayments,
shall, in the event of a disagreement between the Authority and theprogramme contractor, be the amount determined by the Authority.
2
No determination of the Authority under this paragraph shall be called inquestion in any court of law, or be the subject of any arbitration; butnothing in this sub-paragraph shall prevent the bringing of proceedings forjudicial review.
Accounting periods
6
1
Subject to the provisions of this Schedule, each period for which a bodycorporate which is a programme contractor makes up a profit and loss accountwhich is laid before the body corporate in general meeting shall be anaccounting period, whether that period is a year or not.
2
If part of the said period for which a profit and loss account is made upfalls before, and part after—
a
the commencement of a relevant order under section 32, or
b
the time when the programme contractor begins or ceases to provideprogrammes for broadcasting by the Authority,
the two parts shall be treated as separate accounting periods.
In paragraph (a) “relevant order” means, in theapplication of this Schedule in relation to the additional payments mentionedin subsection (1)(b) or (as the case may be) subsection (2)(b) of section 32,an order having effect in relation to those payments.
3
Where two parts of such a period as is mentioned in sub-paragraph (1) fallto be divided from each other under sub-paragraph (2)(a), section 32(4) shallhave effect as if the profits and advertising revenue for each part were theprofits and advertising revenue for the whole multiplied by—
$\frac{X}{X + Y}$
where X and Y are respectively the number of weeks in that part and thenumber of weeks in the other part, counting (in each case) an odd four daysor more as a week.
4
If sub-paragraph (2)(b) would produce an accounting period of three monthsor less, that period shall be added on to the accounting period (if any) whichprecedes or succeeds it (and which does not fall to be divided from it undersub-paragraph (2)(b)).
5
A contract which varies another contract may modify the precedingprovisions of this paragraph.
6
Nothing in this paragraph shall create an accounting period during whichthe programme contractor is not providing programmes for broadcasting by theAuthority.
7
If a programme contractor is not a body corporate the contractor’saccounting periods shall be such as the Authority may direct, or as may beprovided in the contract.
Information
8
1
Every contract shall impose on the contractor such requirements withrespect to the furnishing of information to the Authority as appear to theAuthority, after consultation with the Secretary of State, to berequisite—
a
for enabling the Authority to perform their functions under the provisionsof the principal sections and this Schedule, and
b
for enabling the Authority to furnish to the Secretary of State suchinformation as he may require for the purpose of determining whether, and inwhat manner, to exercise his powers of making orders under the saidprovisions.
2
Without prejudice to the generality of sub-paragraph (1), the duty imposedon the Authority by that sub-paragraph includes the duty to impose, so far asis reasonably practicable, such requirements as will enable the Authority todetermine the amounts (if any) which, in relation to any programme contractor,are to be treated as advertising revenue and relevant income and relevantexpenditure for the computation of profits by virtue, respectively, ofparagraphs 1 and 2.
3
It shall be the duty of the Authority to furnish to the Secretary of Statesuch information (whether obtained from contractors or otherwise) as is intheir possession and is required by the Secretary of State for the purpose ofdetermining whether, and in what manner, to exercise his powers of makingorders under the said provisions.
9
It shall be the duty of the Authority in framing any contract to includeterms ensuring that the Authority will have the right to inspect accounts andrecords—
a
of the programme contractor, and
b
of any subsidiary of the programme contractor,
for the purpose of discharging their functions under the principalsections and this Schedule.
Interpretation
10
1
In this Schedule, and in the principal sections, except where the contextotherwise requires—
“accounting period” shall be construed in accordance withparagraph 6;
“additional payments” and “contract”—
a
in the application of this Schedule and the principal sections in relationto the additional payments mentioned in section 32(1)(b), mean respectivelyadditional payments payable by virtue of that paragraph and a contract betweenthe Authority and a programme contractor under which television programmes areto be provided by the programme contractor, and
b
in their application in relation to the additional payments mentioned insection 32(2)(b), mean respectively additional payments payable by virtue ofthat paragraph and a contract between the Authority and a programme contractorunder which local sound broadcasts are to be provided by the programmecontractor;
“related”, in relation to a company and a programmecontractor, means that another person (whether alone or jointly with one ormore persons and whether directly or indirectly) holds, or is beneficiallyentitled to, 50 per cent or more of the equity share capital, or possesses 50per cent or more of the voting power, in the company and in the programmecontractor and “holding company” means that other person; and
“subsidiary”, in relation to any person, means a company inwhich that person (whether alone or jointly with one or more persons andwhether directly or indirectly) holds, or is beneficially entitled to, 10 percent or more of the equity share capital, or possesses 10 per cent or more ofthe voting power.
2
In this Schedule “payment” includes any valuableconsideration, and references to revenue and receipts and expenditure shallbe construed accordingly.

Part III Transitional Provisions

1

In this paragraph—

“new statutory provisions” means the provisions of the M95Broadcasting Act 1981 as amended by this Act; and
“existing statutory provisions” means the provisions of thatAct as they had effect immediately before the coming into force of section181.

2

Any contract between the Authority and a programme contractor which is inforce immediately before the day on which section 181 of this Act comes intoforce shall, until it is varied or superseded by a further contract betweenthem or expires or is otherwise terminated (whichever first occurs), be deemedto be modified by virtue of this Schedule so as—

a

to substitute provisions in conformity with the new statutory provisionsfor so much of the contract as is in accordance with the existing statutoryprovisions and is not in conformity with the new statutory provisions, and

b

to incorporate in the contract such additional provisions as a contractbetween the Authority and a programme contractor is required to include inaccordance with the new statutory provisions;

and (subject to paragraph 5 of Schedule 4 to the 1981 Act) any provisionsof the contract which provide for arbitration as to any matters contained inthe contract in accordance with the existing statutory provisions shall beconstrued as making the like provision for arbitration in relation to mattersdeemed to be included in the contract by virtue of this sub-paragraph.

3

Where it appears to the Authority that the new statutory provisions callfor the inclusion of additional terms in any such contract, but do not affordsufficient particulars of what those terms should be, the Authority may, afterconsulting the programme contractor, decide what those terms are to be.

4

This paragraph shall not be taken to have effect in relation to anycontract entered into by a programme contractor and any person other than theAuthority before the day on which section 181 of this Act comes into force.

2

Where any accounting period of a programme contractor begins before 1stJanuary 1990 and ends after 31st December 1989, the additional paymentspayable by the programme contractor in relation to that accounting periodunder section 32 of the M96Broadcasting Act 1981 shall be theaggregate of—

a

the amounts payable by him on the assumption that section 181 of this Actwas not in force at any time during the accounting period, multipliedby—

\frac{X}{X + Y,}

and

b

the amounts payable by him on the assumption that that section was inforce throughout the accounting period, multiplied by—

\frac{Y}{X + Y;}

where (taking any odd four days or more as a week)—

X is the number of weeks in the accounting period falling before 1stJanuary 1990, and
Y is the number of weeks in the accounting period falling after 31stDecember 1989.

3

Where, under the existing statutory provisions, any excess of firstcategory expenditure over first category income of a programme contractorwould have been carried forward and treated as relevant first categoryexpenditure of his for an accounting period ending after 31st December 1989if those provisions had applied in relation to that period then the excessshall be carried forward and treated, under the new statutory provisions, asrelevant expenditure of the contractor for any accounting period which endsafter that date.

4

In this Part of this Schedule, references to programme contractors shallbe read as including references to teletext contractors.

SCHEDULE 17 Repeals

Section 187.

Part I Customs and Excise

1979 c. 2.	The Customs and Excise Management Act 1979.	Section 17(5)(a).Section 147(1).
1979 c. 4.	The Alcoholic Liquor Duties Act 1979.	Section 73.
1988 c. 39.	The Finance Act 1988.	Section 11(2).

The repeals of section 147(1) of the Customs and Excise Management Act1979 and section 11(2) of the Finance Act 1988 have effect in relation tooffences committed on or after the day on which this Act is passed.

F245Part II

Annotations:

Amendments (Textual)

F245

Sch. 17 Pt. II repealed (20.7.1998) by S.I. 1998/1446, art. 30(2), Sch. 2 Pt. I

Part III Value Added Tax

1983 c. 55.	The Value Added Tax Act 1983.	In Schedule 5, Group 6 and, in Group 8A, Note (5).
1984 c. 43.	The Finance Act 1984.	In Schedule 6, Part II.
S.I. 1986/704.	The Value Added Tax (Land) Order 1986.	The whole Order.
S.I. 1986/716.	The Value Added Tax (Land) (No.2) Order 1986.	The whole Order.
S.I. 1987 /1072.	The Value Added Tax (Construction of Buildings) (No.2) Order 1987.	Article 2.

1

The repeal of Group 6 of Schedule 5 to the Value Added Tax Act 1983 haseffect in relation to supplies made on or after 1st April 1989.

2

The remaining repeals have effect in accordance with Schedule 3 to thisAct.

Part IV Income and Corporation Tax: General

1970 c. 9.	The Taxes Management Act 1970.	In section 15(11), paragraph (b) and the word “and” preceding it.
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 131(2), the words “for the same or another chargeableperiod”.In section 149(1), the words “for that period” and the words “for that or any other period”. Section 170.Section 175(3).In section 176(1), the words “(but not morethan six months)”.In section 178(2), paragraph (b) and the word “or”preceding it.Section 203(4).In section 231, in subsection (4) the words “andwhere” onwards, and subsection (5).Section 433.Section 434(4) and(5).Section 435.Section 436(3)(b).Section 507(2).In section 590(3)(d), thewords “(disregarding any excess of that remuneration over the permittedmaximum)”.Section 595(2) and (3).In section 596(3)(a), the word “either” and the words “or subsection (2)”.In section 600(1), thewords “or have been” and the words “or has at any time been”.Section635(4).In section 645, in subsection (3), the word “and” followingparagraph (a) and subsection (5).In section 655(5), the words “in caseswhere the applications are made before 1st February 1990”.Section 769(7)(b)and (c).In section 824(10), the definition of “United Kingdom estate”.InSchedule 8, in paragraph 7(1), the words “, or is an associate of a personwho has,”; in paragraph 13, in sub-paragraph (1) the word “fixed” andsub-paragraphs (2) and (3); and, in paragraph 14, sub-paragraph (2), insub-paragraph (5) the words “specified in, or” and sub-paragraph (7).InSchedule 9, in paragraph 10, paragraph (ii) of sub-paragraph (c) and the word “and” preceding it.In Schedule 23, paragraph 8.
1988 c. 39.	The Finance Act 1988.	In section 68(1), the words from “at the fixed price” to “tendered”.

1

The repeals in sections 131 and 149 and of section 170 of the Income andCorporation Taxes Act 1988 have effect in accordance with section 42 of thisAct.

2

The repeals in sections 231 and 824 of the Income and Corporation TaxesAct 1988 have effect in accordance with sections 110 and 111 of this Act.

3

The repeals in sections 433 to 435 of the Income and Corporation Taxes Act1988 have effect in accordance with section 84(5) of this Act and the repealof section 436(3)(b) of that Act has effect in accordance with section 87(5)of this Act.

4

The repeals in sections 590, 595, 596 and 600 of, and in Schedule 23 to,the Income and Corporation Taxes Act 1988 have effect in accordance withSchedule 6 to this Act.

5

The repeals in sections 635, 645 and 655 of the Income and CorporationTaxes Act 1988 have effect in accordance with Schedule 7 to this Act.

6

The repeal of section 769(7)(b) and (c) of the Income and CorporationTaxes Act 1988 has effect in accordance with section 100 of this Act.

7

The repeal in the Finance Act 1988 has effect in relation to offers madeon or after 11th October 1988.

C47Part V Close Companies

Annotations:

Modifications etc. (not altering text)

C47

Sch. 17 Pt. V restricted (retrospectively) by 1993 c. 34, s. 79(2)(a)

1970 c. 9.	The Taxes Management Act 1970.	Section 29(2).In section 31(3)(b), the words “426,”.In the Table insection 98, in the first column, the reference to paragraph 17 of Schedule 19to the principal Act.In Schedule 3, in rule 8, the words from “orrelating” to “Schedule 19 to the principal Act”.
1972 c. 41.	The Finance Act 1972.	In Schedule 24, paragraph 6.
1979 c. 14.	The Capital Gains Tax Act 1979.	In section 89(1), paragraph (b) and the word “or” preceding it.
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 127(3), paragraph (b) and the word “or” preceding it.Insection 230, the word “either”, the words from “or to” to “Schedule 19” and the words “in either case”.In section 239(7), thewords “subsections (5) to (7) of section 430 and”.In section 249(3), thewords “and paragraph 12(1) to (3) of Schedule 19”.In section 250(7), thewords “and paragraph 12 of Schedule 19”.Section 414(3).In section 416(1),the words from “except” to “Schedule 19”.Sections 423 to 430.Insection 539(1), the words “including tax under section 426”.In section681, in subsection (1), paragraph (b) and the word “and” preceding it andsubsections (2) and (3).Section 686(3) and (4).Section 687(3)(b) and (c).Insection 701(8), the words “426(3)”.Section 742(9)(d) and (10).In section825(1)(a), the words from “and any” to “430(7)(a)”.In Schedule 4,paragraph 10(3).In Schedule 8, in paragraph 7(3), the second “and”.Schedule 19.In Schedule 29, in the Table in paragraph 32, theentries relating to section 29(2) of the Taxes Management Act 1970 andsections 89(1)(b) and 136(10)(b) of the Capital Gains Tax Act 1979.
1988 c. 39.	The Finance Act 1988.	Section 102(2)(a).

6

The repeal in the Finance Act 1982 has effect in accordance with section156(4) of this Act.

7

The repeal of subsection (2) of section 165 of this Act has effect inrelation to failures beginning on or after the day appointed under thatsubsection.

Part IX Stamp Duty: Insurance

54 & 55 Vict. c. 39.	The Stamp Act 1891.	Section 91.Section 98(1).Section 100.Section 118.In Schedule 1, paragraph(3) of the heading beginning “Bond, Covenant, or Instrument of any kindwhatsoever”, the whole of the heading beginning “Insurance”, and thewhole of the heading beginning “Policy of Life Insurance”.
4 & 5 Eliz. 2 c. 54.	The Finance Act 1956.	Section 38.
4 & 5 Eliz. 2 c. 11 (N.I.).	The Finance Act (Northern Ireland) 1956.	Section 6.
7 & 8 Eliz. 2 c. 58.	The Finance Act 1959.	In section 30(4), the words preceding paragraph (a) and the words followingparagraph (c).
7 & 8 Eliz. 2 c. 9 (N.I.).	The Finance Act (Northern Ireland) 1959.	In section 5(4), the words preceding paragraph (a) and the words followingparagraph (c).
1966 c. 18.	The Finance Act 1966.	Section 47.
1966 c. 21 (N.I.).	The Finance Act (Northern Ireland) 1966.	Section 5.
1970 c. 24.	The Finance Act 1970.	In Schedule 7, paragraphs 7(4) and 17.
1970 c. 21 (N.I.).	The Finance Act (Northern Ireland) 1970.	In Schedule 2, paragraphs 7(4) and 17.
1982 c. 39.	The Finance Act 1982.	Section 130.
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In Schedule 14, in paragraph 3(4) the words from “and section 100” tothe end.

These repeals have effect in accordance with section 173 of this Act.

Part X Rates of Interest

1970 c. 9.	The Taxes Management Act 1970.	Section 89.
1970 c. 24.	The Finance Act 1970.	Section 30.
1970 c. 21 (N.I.).	The Finance Act (Northern Ireland) 1970.	Section 1(1) and (2).
1973 c. 51.	The Finance Act 1973.	In Schedule 16A, in paragraph 3(4), para-graph (a) and the word “and”following it and the words “they apply”.
1975 c. 22.	The Oil Taxation Act 1975.	In Schedule 2, in the Table in paragraph 1, the entry relating to section89 of the Taxes Management Act 1970.
1975 c. 45.	The Finance (No.2) Act 1975.	Section 47(2).
1980 c. 1.	The Petroleum Revenue Tax Act 1980.	Section 2(3).
1984 c. 51.	The Inheritance Tax Act 1984.	Section 233(2) and (4).
1986 c. 41.	The Finance Act 1986.	Section 92(4) and (5).In Schedule 19, paragraph 32.
1987 c. 51.	The Finance (No.2) Act 1987.	Section 89.
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 824, subsection (1A), in subsection (2) the words “and(1A)” and in subsection (6) the words “Without prejudice to subsection(1A) above”.In section 825, subsection (2A) and in subsection (5) the words “Without prejudice to subsection (2A) above”.In Schedule 19A, inparagraph 3(4), para-graph (a) and the word “and” following it and thewords “they apply”.
1988 c. 39.	The Finance Act 1988.	In Schedule 13, paragraphs 7(b) and (f) and 8.

These repeals have effect in accordance with section 178(7) of this Act.

Part XI Broadcasting

1981 c. 68.	The Broadcasting Act 1981.	Section 32(4A).In section 35(1)(b)(ii), the words “in the case of secondcategory profits,”.
1982 c. 39.	The Finance Act 1982.	In section 144, subsections (1), (2), (4) and (5).
1984 c. 46.	The Cable and Broadcasting Act 1984.	Section 40(2).In Schedule 5, in paragraph 40, sub-paragraphs (7), (8) and(9).
1986 c. 41.	The Finance Act 1986.	In Schedule 22, paragraph 1, and paragraphs 4 to 8.

These repeals have effect on 1st January 1990.

Part XII Government Stock: Redemption

11 and 12 Geo. 5 c. 32.	The Finance Act 1921.	Sections 50 and 51.Schedule 3.
5 and 6 Geo. 6 c. 21.	The Finance Act 1942.	In Schedule 11, in Part II, the amendments of the Finance Act 1921.
9 and 10 Geo. 6 c. 64.	The Finance Act 1946.	Section 66.
1969 c. 48.	The Post Office Act 1969.	Section 108(1)(c).
1982 c. 41.	The Stock Transfer Act 1982.	Section 4.

So far as relating to stock registered in the National Savings StockRegister these repeals have effect on the coming into force of the firstregulations made by virtue of section 3(1)(bb) of the National Debt Act 1972and so far as relating to other stock and bonds they have effect on the cominginto force of the first regulations made by virtue of section 47(1)(bb) of theFinance Act 1942.

Part XIII National Savings

1971 c. 29.	The National Savings Bank Act 1971.	Section 5(2), (5), (6) and (7).In section 26(2), paragraph (b) and the word “or” preceding it.
1982 c. 39.	The Finance Act 1982.	In Schedule 20, paragraph 4(2).

These repeals, apart from the repeal of section 5(2), (5) and (6) of theNational Savings Bank Act 1971, come into force on 1st October 1989.

Part XIV Tithe Redemption

26 Geo. 5 & 1 Edw. 8 c. 43.	The Tithe Act 1936.	Section 2(1).In section 4(2), in paragraph (a) the words “the amount”onwards.Section 7.Part II.Section 31(7).In section 47(1), the definition of “interest date”.In section 47(4), the words “of any stock, or”.InSchedule 7, paragraph 3(a) of Part I, Part II, and paragraph 2 of Part III.
5 & 6 Geo. 6 c. 21.	The Finance Act 1942.	In Schedule 11, in Part I the entry relating to Redemption Stock and inPart II the amendment of the Tithe Act 1936.
14 & 15 Geo. 6 c. 62.	The Tithe Act 1951.	In section 8(2), the words from “which” to “Act”, and the words “and appended” onwards.
6 & 7 Eliz. 2 c. 55.	The Local Government Act 1958.	In Schedule 8, paragraph 15.
1968 c. 13.	The National Loans Act 1968.	In section 16(7), the words “Part II of the Tithe Act 1936”.Section16(9)(a).In section 22(3), the words “Part II of the Tithe Act 1936”.InSchedule 1, the entries relating to section 26 of the Tithe Act 1936.
1972 c. 65.	The National Debt Act 1972.	In section 15(1), the words “section 24 of the Tithe Act 1936”.
1979 c. 14.	The Capital Gains Tax Act 1979.	In Schedule 2, in Part II, the entry relating to securities issued underPart II of the Tithe Act 1936.

These repeals have effect from the day appointed under section 187(2)of this Act.

For so much of the profits for the accounting period after deducting anyamount payable under Table A as does not exceed the free slice for profits.	Nil
For so much of the profits for the accounting period after deducting anyamount payable under Table A as exceeds the free slice for profits.	The relevant profits rate except where the rate is nil.