Finance Act 1993

Part IU.K. Customs and Excise and Value Added Tax

Chapter IU.K. General

Alcoholic liquor dutiesU.K.

1 Rates of duty.U.K.

(1)In section 36 of the M1Alcoholic Liquor Duties Act 1979 (beer), as that section has effect apart from section 7(1) of the M2Finance Act 1991, for “£1.108” there shall be substituted “ £1.163 ”.

(2)For the Table of rates of duty in Schedule 1 to that Act (wine and made-wine) there shall be substituted the Table in Schedule 1 to this Act.

(3)In section 62(1) of that Act (cider) for “£21.32” there shall be substituted “ £22.39 ”.

(4)This section shall be deemed to have come into force at 6 o’clock in the evening of 16th March 1993.

2 Beer duty: rate for new regime.U.K.

(1)In section 36(1) of the M3Alcoholic Liquor Duties Act 1979 (beer duty), as substituted by section 7(1) of the M4Finance Act 1991, for “£10.60” there shall be substituted “ £10.45 ”.

(2)This section shall be deemed to have come into force on 1st June 1993.

3 Low strength beer.U.K.

(1)In section 1 of the Alcoholic Liquor Duties Act 1979 (alcoholic liquors dutiable under that Act) in subsection (3) (beer) for “1.2 per cent.” there shall be substituted “ 0.5 per cent. ”.

(2)In section 36 of that Act (beer duty), as substituted by section 7(1) of the Finance Act 1991, after subsection (1) there shall be inserted the following subsection—

“(1A)No duty shall be chargeable under subsection (1) above on beer which is of a strength of 1.2 per cent. or less; but any such beer shall in all other respects be treated as if it were chargeable with a duty of excise.”

(3)This section shall apply in relation to liquor which is produced in or imported into the United Kingdom, or removed into the United Kingdom from the Isle of Man, on or after the day on which this Act is passed.

4 Beer duty: abolition of certain reliefs, etc.U.K.

(1)The Alcoholic Liquor Duties Act 1979 shall be amended as follows.

(2)In subsection (2) of section 42 (drawback on exportation etc. of beer)—

(a)paragraph (a) (drawback on removal to excise warehouse) shall be omitted,

(b)in paragraph (b) the words “or removal to the Isle of Man” shall be omitted,

(c)also in paragraph (b) for “any such beer” there shall be substituted “ any beer to which this section applies ”, and

(d)for “exported, removed or shipped” there shall be substituted “ exported or shipped ”.

(3)In subsections (3) and (4) of that section the word “remove,”, in each place where it occurs, shall be omitted.

(4)Section 43 (warehousing of beer for exportation, etc.) shall cease to have effect.

(5)In section 45(1) (repayment of duty on beer used in the production or manufacture of other beverages etc.)—

(a)at the end of paragraph (a) there shall be inserted “ or ”, and

(b)paragraph (b) shall be omitted.

(6)Section 51 (power to require production of books by brewers for sale) shall cease to have effect.

(7)Subsections (2)(a) and (c) and (4) to (6) above shall come into force on 1st September 1993.

(8)Subsections (2)(b) and (d) and (3) above shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

5 Blending of alcoholic liquors.U.K.

(1)In Part VI of the M5Alcoholic Liquor Duties Act 1979 the following section shall be inserted before section 67—

“66A Blending of alcoholic liquors.

(1)Subject to subsections (4) to (6) below, a person shall not blend two or more alcoholic liquors—

(a)each of which is of a kind mentioned in paragraphs (a) to (e) of section 1(1) above, but

(b)not all of which fall within the same one of those paragraphs,

except in an excise warehouse or on premises which, in relation to the liquors blended, are for the time being permitted premises.

(2)Subject to subsections (4) to (6) below, a person shall not blend two or more alcoholic liquors which—

(a)fall within the same paragraph of section 1(1) above, but

(b)are not all of the same alcoholic strength,

except in an excise warehouse or on premises which, in relation to the liquors blended, are for the time being permitted premises.

(3)In relation to the blending of particular alcoholic liquors—

(a)if the liquor which is the product of the blending is beer, permitted premises are premises which are registered under section 41A above and premises in respect of which a person is registered under section 47 above;

(b)if the liquor which is the product of the blending is wine, permitted premises are premises in respect of which a licence under section 54(2) above is held;

(c)if the liquor which is the product of the blending is made-wine, permitted premises are premises in respect of which a licence under section 55(2) above is held;

(d)if the liquor which is the product of the blending is cider, permitted premises are premises in respect of which a person is registered under section 62 above.

(4)Subsections (1) and (2) above do not apply unless the blending is done with a view to offering for sale the liquor which is the product of the blending.

(5)Subsections (1) and (2) above do not apply where the liquor which is the product of the blending is intended for consumption on the premises on which the blending takes place.

(6)The Commissioners may direct that subsections (1) and (2) above shall not apply to the blending of alcoholic liquors in such circumstances as are specified in the direction.

(7)Where a person contravenes subsection (1) or (2) above, the following shall be liable to forfeiture—

(a)the liquor which is the product of the blending;

(b)all such vessels, utensils and materials for the blending of alcoholic liquors as are found in his possession.

(8)In this section any reference to blending liquors includes a reference to otherwise mixing them.”

(2)In subsection (5) of section 55 of that Act (exemption for certain producers of made-wine from requirement to hold excise licence) before paragraph (a) there shall be inserted the following paragraph—

“(aa)he does not blend or otherwise mix two or more alcoholic liquors to which paragraphs (a) and (b) of section 66A(1) below or paragraphs (a) and (b) of section 66A(2) below apply;”.

(3)In that section—

(a)paragraph (e) of subsection (5) and the word “and” immediately preceding that paragraph shall be omitted, and

(b)subsection (5A) shall be omitted.

(4)This section shall apply in relation to the blending or other mixing of alcoholic liquors on or after the day on which this Act is passed.

6 Mixing of wine and spirits in excise warehouse.U.K.

(1)In subsection (1) of section 58 of the M6Alcoholic Liquor Duties Act 1979 (mixing of wine and spirits in excise warehouse)—

(a)for “6 litres” there shall be substituted “ 12 litres ”,

(b)for “except as provided by subsection (2) below” there shall be substituted “ by virtue of this section ”, and

(c)for “23 per cent.” there shall be substituted “ 22 per cent. ”.

(2)Subsection (2) of that section shall be omitted.

(3)This section shall apply in relation to mixing done on or after the day on which this Act is passed.

7 Sparkling wine or made-wine.U.K.

(1)In Schedule 1 to the Alcoholic Liquor Duties Act 1979 (rates of duty on wine and made-wine), for paragraphs 1 and 2 there shall be substituted the following paragraphs—

“1Paragraphs 2 and 3 below apply for the purposes of this Act.

2(1)Wine or made-wine which is for the time being in a closed container is sparkling if, due to the presence of carbon dioxide or any other gas, the pressure in the container, measured at a temperature of 20°C, is not less than 3 bars in excess of atmospheric pressure.

(2)Wine or made-wine which is for the time being in a closed container is sparkling regardless of the pressure in the container if the container has a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening.

(3)Wine or made-wine which is not for the time being in a closed container is sparkling if it has characteristics similar to those of wine or made-wine which has been removed from a closed container and which, before removal, fell within sub-paragraph (1) above.

3(1)Wine or made-wine shall be regarded as having been rendered sparkling if, as a result of aeration, fermentation or any other process, it either falls within paragraph 2(1) above or takes on such characteristics as are referred to in paragraph 2(3) above.

(2)Wine or made-wine which has not previously been rendered sparkling by virtue of sub-paragraph (1) above shall be regarded as having been rendered sparkling if it is transferred into a closed container which has a mushroom-shaped stopper (whether solid or hollow) held in place by a tie or fastening.

(3)Wine or made-wine which is in a closed container and has not previously been rendered sparkling by virtue of sub-paragraph (1) or (2) above shall be regarded as having been rendered sparkling if the stopper of its container is exchanged for a stopper of a kind mentioned in sub-paragraph (2) above.”

(2)This section shall apply in relation to wine and made-wine which is produced in or imported into the United Kingdom, or removed into the United Kingdom from the Isle of Man, on or after the day on which this Act is passed.

F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

Hydrocarbon oil dutiesU.K.

9 Rates of duty.U.K.

(1)In section 6(1) of the M7Hydrocarbon Oil Duties Act 1979 for “£0.2779” (duty on light oil) and “£0.2285” (duty on heavy oil) there shall be substituted “ £0.3058 ” and “ £0.2514 ” respectively.

(2)In section 11(1) of that Act (rebate on heavy oil) for “£0.0095” (fuel oil) and “£0.0135” (gas oil) there shall be substituted “ £0.0105 ” and “ £0.0149 ” respectively.

(3)In section 13A(1) of that Act (rebate on unleaded petrol) for “£0.0437” there shall be substituted “ £0.0482 ”.

(4)In section 14(1) of that Act (rebate on light oil for use as furnace fuel) for “£0.0095” there shall be substituted “ £0.0105 ”.

(5)This section shall be deemed to have come into force at 6 o’clock in the evening of 16th March 1993.

10 Mineral oil fuel substitutes.U.K.

(1)The Hydrocarbon Oil Duties Act 1979 (“the 1979 Act”) shall have effect in relation to such cases as may be specified in an order made by the Treasury as if references in that Act to hydrocarbon oil or to road fuel gas included references to any mineral oil which is designated by that order as a substance which is to be treated for the purposes of that Act as the equivalent of hydrocarbon oil or, as the case may be, of road fuel gas.

(2)The Treasury may by order provide, in relation to any substance which by virtue of this section is to be treated for the purposes of the 1979 Act as the equivalent of hydrocarbon oil, for that substance to be treated for the purposes of such of the provisions of that Act as may be specified in the order as if it fell within the description of such one or more of the following as may be so specified, that is to say—

(a)heavy oil or light oil, as defined in section 1 of that Act;

(b)aviation gasoline, as defined in section 6(4) of that Act;

(c)fuel oil or gas oil, as defined in section 11(2) of that Act; and

(d)unleaded petrol, as defined in section 13A(2) of that Act.

(3)In exercising their powers under this section, the Treasury shall so far as practicable secure that a mineral oil which is intended for, or capable of being put to, a particular use is treated for the purposes of the 1979 Act as if it were the substance falling within the descriptions specified in subsection (2) above to which, when put to that use, it is most closely equivalent.

(4)In this section “mineral oil” means any substance which—

(a)falls within the definition of mineral oil in Article 2.1 of the Directive of the Council of the European Communities dated 19th October 1992 No. 92/81/EEC (directive on the harmonisation of the structures of excise duties on mineral oils), as amended by the Directive of the Council dated 14th December 1992 No. 92/108/EEC; and

(b)is not, apart from this section, hydrocarbon oil or road fuel gas within the meaning of the 1979 Act.

(5)The power of the Treasury to make an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons; and any such order may make different provision for different cases and different substances.

(6)No duty of excise shall be charged by virtue of section 7 of the 1979 Act (duty on petrol substitutes and power methylated spirits) on any substance on which duty is charged under that Act by virtue of an order under this section.

11 Other fuel substitutes.U.K.

(1)After section 6 of the M8Hydrocarbon Oil Duties Act 1979 there shall be inserted the following section—

“6A Fuel substitutes.

(1)A duty of excise shall be charged on the setting aside for a chargeable use by any person, or (where it has not already been charged under this section) on the chargeable use by any person, of any liquid which is not hydrocarbon oil.

(2)In this section “chargeable use” in relation to any substance means the use of that substance—

(a)as fuel for any engine, motor or other machinery; or

(b)as an additive or extender in—

(i)any substance on which duty is charged by virtue of paragraph (a) above; or

(ii)any hydrocarbon oil which is or is to be used as mentioned in that paragraph.

(3)The rate of the duty under this section shall be prescribed by order made by the Treasury.

(4)In the following provisions of this Act references to hydrocarbon oil shall be construed as including references to any substance on which duty is charged under this section; and, accordingly, references to duty on hydrocarbon oil shall be construed, where a substance is to be treated as such oil, as including references to duty under this section.

(5)The Treasury may by order provide for any substance on which duty is charged under this section to be treated for the purposes of such of the following provisions of this Act as may be specified in the order as if it fell within the description of such one or more of the following as may be so specified, that is to say—

(a)heavy oil or light oil;

(b)aviation gasoline;

(c)fuel oil or gas oil, as defined in section 11(2) below; and

(d)unleaded petrol, as defined in section 13A(2) below.

(6)In exercising their powers under this section, the Treasury shall so far as practicable secure—

(a)that a substance set aside for use or used as mentioned in subsection (2)(a) above is—

(i)charged with duty at the same rate as, and

(ii)otherwise treated for the purposes of the following provisions of this Act as if it were,

the substance falling within the descriptions specified in subsection (5) above to which, when put to that use, it is most closely equivalent; and

(b)that a substance set aside for use or used as an additive or extender in any substance is—

(i)charged with duty at the same rate as, and

(ii)otherwise treated for the purposes of the following provisions of this Act as if it were,

the substance in which it is an additive or extender.

(7)For the purposes of this section “liquid” does not include any substance which is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars.

(8)The power of the Treasury to make an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

(9)An order under this section—

(a)may make different provision for different cases and for different substances;

(b)may prescribe the rate of duty under this section in respect of any substance by reference to the rate of duty under this Act in respect of any other substance; and

(c)in making different provision for different substances, may define a substance by reference to the use for which it is set aside or the use to which it is put.”

(2)Sections 4, 7 and 16 of that Act (petrol substitutes and power methylated spirits) shall cease to have effect.

(3)In section 22(1) of that Act (offence of using petrol substitutes on which duty has not been paid), for the words from the beginning to the word “shall”, in the first place where it occurs, there shall be substituted— “A person who—

(a)puts to a chargeable use (within the meaning of section 6A above) any liquid which is not hydrocarbon oil; and

(b)knows or has reasonable cause to believe that there is duty charged under section 6A above on that liquid which has not been paid and is not lawfully deferred,

shall ”.

(4)In section 1(1)(b) of the M9Excise Duties (Surcharges or Rebates) Act 1979 (surcharges or rebates in respect of excise duties on hydrocarbon oil etc.), for paragraph (b) there shall be substituted the following paragraph—

“(b)those chargeable by virtue of the Hydrocarbon Oil Duties Act 1979;”.

(5)This section shall come into force on such day as the Treasury may by order made by statutory instrument appoint, and different days may be appointed under this subsection for different provisions and for different purposes.

12 Measurement of volume.U.K.

(1)In ascertaining for the purposes of the M10Hydrocarbon Oil Duties Act 1979—

(a)the amount of any duty of excise chargeable on any liquid by virtue of that Act; or

(b)the amount of any rebate allowable on any such liquid by virtue of that Act,

the volume of that liquid shall be taken (if it would not otherwise be so taken) to be what would be its volume, calculated in accordance with regulations under subsection (2) below, at a temperature of 15°C.

(2)The Commissioners of Customs and Excise may by regulations make such provision as they think fit as to the method by which, in ascertaining any amount mentioned in subsection (1) above—

(a)the volume of any liquid is to be measured; or

(b)the volume as at a temperature of 15°C of any amount of a liquid is to be determined;

and that provision may include provision made by reference to any internationally recognised conversion tables.

(3)Any reference in sections 15 and 17 to 19A of that Act (drawback and relief) to the amount of any duty of excise which has been paid in respect of any substance, or to the amount of any rebate that has been allowed in respect of any substance, shall be construed as a reference—

(a)to such amount as is shown to the satisfaction of the Commissioners of Customs and Excise to have been paid or, as the case may be, allowed in respect of that substance; or

(b)where regulations made by those Commissioners so provide, to such amount as is calculated on such assumptions as to the volume of the substance in question as may be determined in accordance with any such regulations.

(4)The power of the Commissioners of Customs and Excise to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; and any such regulations—

(a)may make different provision for different cases and for different substances; and

(b)may contain such transitional, supplemental and incidental provision as those Commissioners think fit.

(5)Provision made under this section by any regulations may provide for any determination or measurement under the regulations to be made, or any description of a case or substance to be framed, by reference to such circumstances or other factors, or to the opinion of such persons, as the Commissioners think fit.

(6)For the purposes of this section “liquid” does not include any substance which is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars.

(7)In consequence of this section—

(a)section 2(5) of that Act (measurement of heavy oil having a temperature exceeding 15°C) shall cease to have effect; and

(b)the words “shown to the satisfaction of the Commissioners to have been” in section 15(1) of that Act (drawback) shall be omitted.

(8)This section shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint, and different days may be appointed under this subsection for different provisions and for different purposes.

Tobacco products dutyU.K.

13 Rates of duty.U.K.

(1)For the Table in Schedule 1 to the M11Tobacco Products Duty Act 1979 there shall be substituted—

(2)This section shall be deemed to have come into force at 6 o’clock in the evening of 16th March 1993.

14 Hand-rolling tobacco.U.K.

(1)In the Tobacco Products Duty Act 1979, section 1 (definition of tobacco products) shall be amended as follows.

(2)In subsection (2) (definition of hand-rolling tobacco) after paragraph (a) there shall be inserted—

“(aa)which is of a kind used for making into cigarettes; or”.

(3)In paragraph (b) of subsection (2) (more than 25 per cent. by weight of the tobacco particles have a width of less than 0.6 mm) for “0.6” there shall be substituted “ 1 ”.

(4)The following subsection shall be inserted after subsection (2)—

“(2A)For the purposes of subsection (2)(aa) above the use for making into cigarettes must amount to more than occasional use but need not amount to common use.”

(5)In subsection (3) (power to amend definitions) after “(2)” there shall be inserted “ or (2A) ”.

Gaming machine licence dutyU.K.

F215. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

16 Small-prize machines.U.K.

(1)The Betting and Gaming Duties Act 1981 shall be amended as follows.

(2)In section 21 (gaming machine licences) in subsection (1) (licence required for machine other than a two-penny machine) for “a two-penny machine” there shall be substituted “ an excepted machine ”.

(3)In that section the following subsection shall be inserted after subsection (3)—

“(3A)For the purposes of this section an excepted machine is—

(a)a two-penny machine, or

(b)a five-penny machine which is a small-prize machine.”

(4)In section 22 (charge to duty)—

(a)in subsection (1) for the words from “by reference” to the end of the subsection there shall be substituted “ in accordance with section 23 below ”;

F3(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)For subsection (4) of section 25 (meaning of “gaming machine”) there shall be substituted the following subsections—

“(4)Subject to subsection (5) below, for the purposes of determining whether a machine is a gaming machine it is immaterial whether it is capable of being played by only one person at a time, or is capable of being played by more than one person.

(5)For the purposes of sections 21 to 24 above a machine (the actual machine) which two or more persons can play simultaneously (whether or not participating with one another in the same game) shall, instead of being treated as one machine, be treated as if it were a number of machines (accountable machines) equal to the number of persons who can play the actual machine simultaneously.

(6)Subsection (5) above does not apply to a machine which is a two-penny machine, or is both a small-prize machine and a five-penny machine.

(7)If the actual machine is a small-prize machine but not a five-penny machine, the accountable machines shall be taken to be small-prize machines which are not five-penny machines.

(8)If the actual machine is not a small-prize machine, the accountable machines shall be taken not to be small-prize machines, and in such a case—

(a)if the actual machine is a five-penny machine, the accountable machines shall be taken to be five-penny machines;

(b)if the actual machine is not a five-penny machine, the accountable machines shall be taken not to be five-penny machines.

(9)For the purposes of subsection (5) above the number of persons who can play a particular machine simultaneously shall be determined by reference to the number of individual playing positions provided on the machine.”

(7)In section 26(2) (interpretation) the following definition shall be inserted after the definition of “two-penny machine”—

““five-penny machine” means a gaming machine which can only be played by the insertion into the machine of a coin or coins of a denomination, or aggregate denomination, not exceeding 5p;”.

F4(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)This section shall apply in relation to licences for any period beginning on or after 1st November 1993.

Vehicles excise dutyU.K.

17 Rates of duty: general.U.K.

F5(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(3)In Schedule 2 (annual rate of duty on hackney carriages) in the Table set out in Part II—

F6(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In Schedule 5 (annual rate of duty on vehicles not falling within Schedules 1 to 4) in the Table set out in Part II—

F9(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F1219. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

20 Old bicycles.U.K.

F13(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F13(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F13(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1521. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

MiscellaneousU.K.

22 Mutual recovery and disclosure of information.U.K.

(1)In subsection (1) of section 17 of the M12Finance Act 1980 (extension of mutual recovery provisions to VAT), at the end there shall be inserted “ and to excise duties by the Directive of the Council of the European Communities dated 14th December 1992 No. 92/108/EEC. ”

(2)In subsection (2)(a) of that section (extension of mutual disclosure provisions to VAT), after “No. 79/1070/EEC” there shall be inserted “ and to excise duties by the Directive of the Council of the European Communities dated 25th February 1992 No. 92/12/EEC. ”

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

“(2A)The references in subsections (1) and (2) above to excise duties are references to any duty on mineral oils, on alcohol and alcoholic beverages or on manufactured tobacco.”

(4)Subsection (1) above shall have effect as respects a request for the recovery of a sum only if it is a sum becoming due on or after the day on which this Act is passed.

F1623. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

Chapter IIU.K. Lottery Duty

The dutyU.K.

24 Lottery duty.U.K.

(1)Subject to subsections (3) and (4) below, a duty of excise called “lottery duty” is chargeable—

(a)on the taking in the United Kingdom of a ticket or chance in a lottery, and

(b)in such cases as may be determined by regulations, on the taking outside the United Kingdom of a ticket or chance in a lottery promoted in the United Kingdom.

(2)Regulations may make provision for determining when and where the taking of a ticket or chance in a lottery is to be treated as occurring for the purposes of this Chapter.

(3)Lottery duty is not chargeable in respect of a lottery that constitutes a game of bingo (or any version of bingo, by whatever name called).

(4)Lottery duty is not chargeable in respect—

(a)of a lottery promoted as an incident of an exempt entertainment within the meaning of the M13Lotteries and Amusements Act 1976 or the M14Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985;

(b)of a private lottery within the meaning of that Act or Order;

(c)of a society’s lottery within the meaning of that Act or Order in respect of which the conditions set out in section 5(3) of that Act or Article 135(1) of that Order are satisfied;

(d)of a local lottery within the meaning of that Act in respect of which the conditions set out in section 6(2) of that Act are satisfied;

(e)of a lottery promoted in accordance with the M15Art Unions Act 1846.

(5)The Treasury may by order amend subsection (4) above so as to add to the descriptions of lottery for the time being mentioned in that subsection, so as to omit any of them or so as to substitute a different description of lottery for any of them.

25 Amount of duty.U.K.

(1)The amount of the lottery duty chargeable on the taking of a ticket or chance in a lottery is equal to 12 per cent. of the value of the consideration given for the ticket or chance.

(2)Subject to subsection (3) below, the aggregate of everything paid or given by (or debited to the account of) the person taking the ticket or chance for, on account of, or in connection with, the ticket or chance shall be taken to be the consideration given for it.

(3)If a price is shown on a lottery ticket or any other document providing evidence of the taking of a ticket or chance in a lottery and—

(a)the consideration given for the ticket or chance is of lesser value than the price shown (or is of no value), or

(b)no consideration is given for the ticket or chance,

consideration to the value of the price shown shall be taken to be given for the ticket or chance.

26 Time for payment.U.K.

(1)The lottery duty chargeable on the taking of a ticket or chance in a lottery becomes due and (subject to any regulations under subsection (2) below) payable at the time the ticket or chance is taken.

(2)Regulations may provide for the payment of any lottery duty due in respect of a lottery of a description specified in the regulations to be deferred, subject to any conditions or requirements that may be imposed by or under the regulations.

(3)Regulations may require payments (of amounts determined by or under the regulations) to be made on account of any lottery duty that may become due in respect of a lottery of a description specified in the regulations that is being or is to be promoted.

27 Persons liable for duty.U.K.

(1)Any lottery duty or payment on account of lottery duty that under section 26 above or regulations under that section is payable in respect of a lottery shall be paid (subject to any regulations under subsection (2) below) by the promoter of the lottery.

(2)Regulations may require any lottery duty or payment on account of lottery duty that is payable in respect of a lottery of a description specified in the regulations to be paid by a person specified in the regulations (being a person who occupies or has occupied a position of responsibility in relation to the lottery) instead of by the promoter.

(3)Any lottery duty that is payable in respect of a lottery may be recovered jointly and severally from—

(a)the promoter of the lottery,

(b)any other person who occupies or has occupied a position of responsibility in relation to the lottery or who has or has had any degree of control over any of its proceeds, and

(c)where the promoter or a person within paragraph (b) above is a body corporate, any director of that body corporate.

(4)[F17Where a person]does not make a payment that he is required to make by subsection (1) above or regulations under subsection (2) above at the time the payment becomes payable [F18his failure so to make the payment shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) which shall be calculated by reference to the amount which has not been paid and shall also attract daily penalties.].

Administration and enforcementU.K.

28 General.U.K.

(1)Lottery duty shall be under the care and management of the Commissioners.

(2)Regulations may provide for any matter for which provision appears to the Commissioners to be necessary or expedient for the administration or enforcement of lottery duty or for the protection of the revenue derived from lottery duty.

(3)[F19Where a person] contravenes or does not comply with any regulations under subsection (2) above [F20his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).].

29 Registration of promoters etc.U.K.

(1)A lottery in respect of which lottery duty is chargeable (or, on the taking of a ticket or chance, will be chargeable) shall not be promoted in the United Kingdom unless the chargeable person is registered with the Commissioners under this section.

(2)In this section “the chargeable person”, in relation to a lottery, means—

(a)subject to paragraph (b) below, the promoter of the lottery;

(b)in the case of a lottery of a description specified in regulations under section 27(2) above, the other person referred to in that subsection.

(3)Regulations may make provision—

(a)as to the time at which an application for registration is to be made, as to the form and manner of such an application and as to the information to be contained in or provided with it,

(b)as to the requirements that must be satisfied as a condition of a person’s registration or continued registration, and

(c)as to other requirements that must be observed by a person while he remains registered.

(4)The requirements imposed by virtue of subsection (3)(b) above may include requirements as to the giving of security or further security (by means of a deposit or otherwise) for any lottery duty that may become due.

(5)Subject to regulations under subsection (3)(a) and (b) above, the Commissioners—

(a)shall register any person applying to them for registration who satisfies them that he will be the chargeable person in relation to a lottery that is to be promoted, and

(b)shall not remove any person from the register unless it appears to them that no lottery is being or is to be promoted in relation to which he is or will be the chargeable person.

(6)Where—

(a)the Commissioners determine that a person should be removed from the register because any requirement imposed by regulations under subsection (3)(b) above is not (or is no longer) satisfied in relation to him, and

(b)a lottery in relation to which he is the chargeable person is being promoted at the time they make that determination,

they shall not remove him from the register until the promotion of that lottery has come to an end.

(7)If subsection (1) above is contravened in relation to a lottery at any time during its promotion, the chargeable person is guilty of an offence and liable—

(a)on summary conviction, to a penalty of the statutory maximum 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 two years, or to both.

(8)[F21Where a person] contravenes or fails to comply with any requirements imposed by regulations under subsection (3)(c) above [F22his contravention or failure to comply shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).].

30 Application of revenue trade provisions of CEMA 1979.U.K.

(1)Section 1(1) of the M16Customs and Excise Management Act 1979 (interpretation) shall be amended in accordance with subsections (2) and (3) below.

(2)In the definition of “the revenue trade provisions of the customs and excise Acts”—

(a)the word “and” at the end of paragraph (b) shall be omitted, and

(b)at the end there shall be added “; and

(d)the provisions of Chapter II of Part I of the Finance Act 1993;”.

(3)In paragraph (a) of the definition of “revenue trader”—

(a)the word “or” at the end of sub-paragraph (i) shall be omitted,

(b)after sub-paragraph (i) there shall be inserted—

“(i)the buying, selling, importation, exportation, dealing in or handling of tickets or chances on the taking of which lottery duty is or will be chargeable; or”, and

(c)in sub-paragraph (ii) after “activities” there shall be inserted “ as are mentioned in sub-paragraph (i) or (ia) above ”.

(4)In section 117 of the M17Customs and Excise Management Act 1979 (execution and distress against revenue traders) after subsection (1) there shall be inserted—

“(1A)In subsection (1) above as it applies in relation to a sum owing by a revenue trader in respect of lottery duty or of a relevant penalty—

(a)references to goods liable to any excise duty include lottery tickets on the taking of which lottery duty will be chargeable, and

(b)“the trade in respect of which the duty is imposed” includes any trade or business carried on by the revenue trader that consists of or includes the buying, selling, importation, exportation, dealing in or handling of tickets or chances on the taking of which lottery duty is or will be chargeable.”

31 General offences.U.K.

(1)A person who is knowingly concerned—

(a)in the fraudulent evasion (by him or another person) of lottery duty, or

(b)in taking steps with a view to such fraudulent evasion,

is guilty of an offence.

(2)A person guilty of an offence under subsection (1) above is liable—

(a)on summary conviction, to a penalty of the statutory maximum or, if greater, treble the amount of the duty evaded or sought to be evaded 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.

(3)A person who in connection with lottery duty—

(a)makes a statement that he knows to be false in a material particular or recklessly makes a statement that is false in a material particular, or

(b)with intent to deceive, produces or makes use of a book, account, return or other document that is false in a material particular,

is guilty of an offence.

(4)A person guilty of an offence under subsection (3) above is liable—

(a)on summary conviction, to a penalty of the statutory maximum 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 two years, or to both.

32 Offences by bodies corporate.U.K.

Where an offence under this Chapter is committed by a body corporate, every person who at the date of the commission of the offence is a director, manager, secretary or other similar officer of the body corporate (or is purporting to act in such a capacity) is also guilty of the offence unless—

(a)the offence is committed without his consent or connivance, and

(b)he has exercised all such diligence to prevent its commission as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.

33 Forfeiture.U.K.

(1)Where a person has committed an offence under section 31(1) or (3) above, any goods used in the promotion of, or in any other way related to, a relevant lottery are liable to forfeiture.

(2)In subsection (1) above “relevant lottery”—

(a)in relation to an offence under section 31(1) above, means a lottery in respect of which lottery duty was fraudulently evaded or (as the case may be) in respect of which the fraudulent evasion of lottery duty was sought, and

(b)in relation to an offence under section 31(3) above, means a lottery to which the false statement or (as the case may be) false document related.

34 Protection of officers etc.U.K.

Where a person takes an action in pursuance of instructions of the Commissioners given in connection with the enforcement of this Chapter or of regulations under it and, apart from this section, the person would in taking that action be committing an offence under any enactment relating to lotteries, he shall not be guilty of that offence.

35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36 Duty a preferential debt in insolvency.U.K.

(1)In section 386(1) of the M19Insolvency Act 1986 (preferential debts) after “beer duty” there shall be inserted “ , lottery duty ”.

(2)In Schedule 6 to that Act (categories of preferential debts) in Category 2 (debts due to Customs and Excise) after paragraph 5A there shall be inserted—

“5BAny amount which is due by way of lottery duty from the debtor at the relevant date and which became due within the period of 12 months next before that date.”

(3)In Schedule 3 to the M20Bankruptcy (Scotland) Act 1985 (list of preferred debts) at the end of paragraph 2 (debts due to Customs and Excise) there shall be added—

“(5)Any amount which is due by way of lottery duty from the debtor at the relevant date and which became due within the period of 12 months next before that date.”

(4)In Article 346(1) of the M21Insolvency (Northern Ireland) Order 1989 (preferential debts) after “beer duty” there shall be inserted “ , lottery duty ”.

(5)In Schedule 4 to that Order (categories of preferential debts) in Category 2 (debts due to Customs and Excise) after paragraph 5A there shall be inserted—

“5BAny amount which is due by way of lottery duty from the debtor at the relevant date and which became due within the period of 12 months next before that date.”

37 Disclosure of information.U.K.

(1)Notwithstanding any obligation not to disclose information that would otherwise apply, the Commissioners may disclose information—

(a)to the Secretary of State,

(b)to the Gaming Board for Great Britain, or

(c)to an authorised officer of the Secretary of State or Gaming Board,

for the purpose of assisting the Secretary of State or Gaming Board (as the case may be) in the performance of duties imposed by or under any enactment in relation to lotteries.

(2)Notwithstanding any such obligation as is mentioned in subsection (1) above—

(a)the Secretary of State,

(b)the Gaming Board for Great Britain, or

(c)an authorised officer of the Secretary of State or Gaming Board,

may disclose information to the Commissioners or to an authorised officer of the Commissioners for the purpose of assisting the Commissioners in the performance of duties in relation to lottery duty.

(3)Information that has been disclosed to a person by virtue of this section shall not be disclosed by him except—

(a)to another person to whom (instead of him) disclosure could by virtue of this section have been made, or

(b)for the purpose of any proceedings connected with the operation of any enactment in relation to lotteries or lottery duty.

(4)References above in this section to the Secretary of State include any person who has been designated by the Secretary of State as a person to and by whom information may be disclosed under this section.

(5)The Secretary of State shall notify the Commissioners in writing if he designates a person under subsection (4) above.

SupplementaryU.K.

38 Regulations and orders.U.K.

(1)Any regulations under this Chapter may make—

(a)different provision for different cases or circumstances, and

(b)incidental, supplemental or consequential provision.

(2)Any power to make regulations or orders under this Chapter is exercisable by statutory instrument.

(3)Subject to subsection (4) below, a statutory instrument containing such regulations or an order under section 24(5) above is subject to annulment in pursuance of a resolution of the House of Commons.

(4)An order under section 24(5) above that will result in lottery duty becoming chargeable in respect of any description of lottery shall not be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, the House of Commons.

39 Disapplication of pool betting duty.U.K.

In section 6 of the M22Betting and Gaming Duties Act 1981 (pool betting duty)—

(a)for subsection (3)(b) there shall be substituted—

“(b)“bet” does not include the taking of a ticket or chance in a lottery.”, and

(b)subsection (4) shall cease to have effect.

40 Interpretation etc.U.K.

(1)In this Chapter—

• “the Commissioners” means the Commissioners of Customs and Excise,

• “document” includes a document of any kind whatsoever and, in particular, a record kept by means of a computer,

• “promotion”, in relation to a lottery, includes the conduct of the lottery (and “promoted” is to be read accordingly), and

• “regulations” means regulations made by the Commissioners.

(2)This Chapter applies in relation to lotteries promoted on behalf of the Crown in pursuance of any enactment as it applies in relation to lotteries not so promoted.

(3)The imposition by this Chapter of lottery duty does not make lawful anything that is unlawful apart from this Chapter.

41 Commencement.U.K.

This Chapter shall come into force on such day as the Commissioners may by order appoint, and different days may be appointed for different provisions or for different purposes.

Chapter IIIU.K. Value Added Tax

F2342. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F2443. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F2544. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F2645. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F2746. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F2847. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F2948. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F3049. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F3150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

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

Chapter IU.K. General

Income tax: charge, rates and allowancesU.K.

51 Charge and rates of income tax for 1993-94.U.K.

(1)Income tax shall be charged for the year 1993-94, and for that year—

(a)the lower rate shall be 20 per cent.,

(b)the basic rate shall be 25 per cent., and

(c)the higher rate shall be 40 per cent.

(2)For the year 1993-94 section 1(2) of the Taxes Act 1988 shall apply as if—

(a)the amount specified in paragraph (aa) were £2,500 (the lower rate limit), and

(b)the amount specified in paragraph (b) were £23,700 (the basic rate limit);

and accordingly section 1(4) of that Act (indexation) shall not apply for the year 1993-94.

52 Personal and married couple’s allowances.U.K.

Sections 257 and 257A of the Taxes Act 1988 (personal and married couple’s allowances) shall apply for the year 1993-94 as if the amounts specified in them were the same as the amounts specified in them as they apply for the year 1992-93, and accordingly section 257C(1) of that Act (indexation) shall not apply for the year 1993-94.

Corporation tax charge and rateU.K.

53 Charge and rate of corporation tax for 1993.U.K.

Corporation tax shall be charged for the financial year 1993 at the rate of 33 per cent.

54 Small companies.U.K.

For the financial year 1993—

(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 fiftieth.

Interest: generalU.K.

55 Relief for interest.U.K.

For the year 1993-94 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.

F3256. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

57 Temporary relief for interest payments.U.K.

F33(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F33(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In section 365 of that Act (relief on interest on loans to buy a life annuity), after subsection (1) there shall be inserted the following subsections—

“(1A)Where, in the case of any loan—

(a)the condition specified in subsection (1)(d) above would not (apart from this subsection) be fulfilled with respect to any land by reason of its having ceased at any time to be used by a particular person as his only or main residence; and

(b)the intention at that time of the person to whom the loan was made, or of each of the annuitants owning an estate or interest in that land, was to take steps, before the end of the period of 12 months after the day on which it ceased to be so used, with a view to the disposal of his estate or interest,

that condition shall be treated in relation to interest on that loan as continuing to be fulfilled with respect to the land from that time until the end of that period or (if sooner) the abandonment by that person or any of those annuitants of his intention to dispose of his estate or interest.

(1B)If it appears to the Board reasonable to do so, having regard to all the circumstances of a particular case, they may direct that in relation to that case subsection (1A) above shall have effect as if for the reference to 12 months there were substituted a reference to such longer period as meets the circumstances of that case.”

F33(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)This section shall have effect in relation to payments of interest made on or after 16th March 1993 (whenever falling due).

F33(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58 Overclaims in respect of deductions of mortgage interest.U.K.

(1)After subsection (6) of section 369 of the Taxes Act 1988 (recovery of amount treated as paid by recipient of interest paid subject to a deduction under that section) there shall be inserted the following subsection—

“(7)The following provisions of the Management Act, namely—

(a)section 29(3)(c) (excessive relief),

(b)section 30 (tax repaid in error etc.),

(c)section 88 (interest), and

(d)section 95 (incorrect return or accounts),

shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) 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 a relief which was not due.”

(2)This section shall not apply in relation to any payment if the payment, or the claim on which it is made, was made before the day on which this Act is passed.

59 Interest payments to persons not ordinarily resident in UK.U.K.

In section 349 of the Taxes Act 1988 (annual interest etc.) in subsection (3) (exceptions from requirement to deduct tax from interest payments) at the end of paragraph (g) there shall be inserted “ or ” and after that paragraph there shall be inserted the following paragraph—

“(h)to any payment in respect of which a liability to deduct income tax would, but for section 481(5)(k), be imposed by section 480A(1).”

60 Certain interest not allowed as a deduction.U.K.

(1)This section applies where—

(a)a qualifying company becomes subject to a qualifying debt, and

(b)the interest payable exceeds a commercial return on the capital repayable, expressing that capital in the settlement currency of the debt.

(2)In computing the corporation tax chargeable for an accounting period of the company, so much of the excess interest as is paid in the accounting period shall not be allowed as a deduction against the total profits for the period (if it would be allowed apart from this section).

(3)In this section—

• “qualifying company” has the meaning given by section 152 below;

• “qualifying debt” has the meaning given by section 153(10) below;

• “settlement currency”, in relation to a debt, shall be construed in accordance with section 161 below.

(4)This section applies where the company becomes subject to the debt (whether as the original debtor or otherwise) on or after the day which is its commencement day for the purposes of section 165 below.

Interest etc. on debts between associated companiesU.K.

F3561. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F3662. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F3762A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F3863. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F3964. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F4065. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F4166. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

Charitable donationsU.K.

67 Donations from companies and individuals.U.K.

(1)In section 339 of the Taxes Act 1988 (charges on income: donations to charity) in subsection (3A) (payment by close company not a qualifying donation if less than £400 after deducting income tax) for “£400” there shall be substituted “ £250 ”.

(2)In section 25 of the M23Finance Act 1990 (donations to charity by individuals) in subsection (2)(g) (gift must be not less than £400 to be a qualifying donation) for “£400” there shall be substituted “ £250 ”.

(3)Subsection (1) above shall apply in relation to payments made on or after 16th March 1993.

(4)Subsection (2) above shall apply in relation to gifts made on or after 16th March 1993.

68 Payroll deduction schemes.U.K.

(1)In section 202(7) of the Taxes Act 1988 (which limits to £600 the deductions attracting relief) for “£600” there shall be substituted “ £900 ”.

(2)This section shall have effect for the year 1993-94 and subsequent years of assessment.

69 Contributions to agent’s expenses.U.K.

The following section shall be inserted after section 86 of the Taxes Act 1988—

“86A Charitable donations: contributions to agent’s expenses.

(1)This section applies where—

(a)a person (the employer) is liable to make to any individual payments from which income tax falls to be deducted by virtue of section 203 and regulations under that section, and

(b)the employer withholds sums from those payments in accordance with a scheme falling within subsection (3) of section 202 and pays the sums to an agent (within the meaning of subsection (4)(a) of that section).

(2)Any relevant expenditure incurred by the employer on or after 16th March 1993—

(a)shall be deducted in computing for the purposes of Schedule D the profits or gains of a trade, profession or vocation carried on by the employer, or

(b)if the employer is an investment company or a company in the case of which section 75 applies by virtue of section 76, shall be treated as expenses of management.

(3)Relevant expenditure is expenditure incurred in making to the agent any payment in respect of expenses which have been or are to be incurred by the agent in connection with his functions under the scheme.”

Benefits in kindU.K.

70 Car benefits: 1993-94.U.K.

(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 IU.K. Tables of Flat Rate Cash Equivalents

(2)This section shall have effect for the year 1993-94.

71 Car fuel: 1993-94.U.K.

(1)In section 158 of the Taxes Act 1988 (car fuel) for the Tables in subsection (2) (tables of cash equivalents) there shall be substituted—

(2)In subsection (5) of that section (reductions in cash equivalents) the words “or 3” shall be omitted.

(3)This section shall have effect for the year 1993-94.

72 Car and car fuel benefits: 1994-95 onwards.U.K.

Schedule 3 to this Act (which contains provisions, having effect for the year 1994-95 and subsequent years of assessment, about cars available for private use and car fuel) shall have effect.

73 Vans.U.K.

Schedule 4 to this Act (which contains provisions about vans available for private use) shall have effect.

74 Heavier commercial vehicles.U.K.

(1)In the Taxes Act 1988, after section 159AB (inserted by Schedule 4 to this Act) there shall be inserted the following section—

“159AC Heavier commercial vehicles available for private use.

(1)This section applies where in any year—

(a)a heavier commercial vehicle is made available to an employee in circumstances such that, had that vehicle been a van, the benefit so provided would have been chargeable to tax under section 159AA, and

(b)the employee’s use of the vehicle is not wholly or mainly private use.

(2)Section 154 shall not apply to—

(a)the benefit so provided, or

(b)any benefit in connection with the vehicle other than a benefit in connection with the provision of a driver for the vehicle.

(3)The employee shall not be taxable—

(a)under Schedule E in respect of the discharge of any liability of his in connection with the vehicle;

(b)under section 141 or 142 in respect of any non-cash voucher or credit-token to the extent that it is used by him—

(i)for obtaining money which is spent on goods or services in connection with the vehicle, or

(ii)for obtaining such goods or services;

(c)under section 153 in respect of any payment made to him in respect of expenses incurred by him in connection with the vehicle.

(4)In this section “heavier commercial vehicle” means a mechanically propelled road vehicle which is—

(a)of a construction primarily suited for the conveyance of goods or burden of any description, and

(b)of a design weight exceeding 3,500 kilograms;

and “design weight” here means the weight which the vehicle is designed or adapted not to exceed when in normal use and travelling on a road laden.

(5)In this section—

(a) “private use”, in relation to a vehicle made available to an employee, means any use other than for his business travel, and

(b) “business travel” means travelling which the employee is necessarily obliged to do in the performance of the duties of his employment.”

F42(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)This section shall have effect for the year 1993-94 and subsequent years of assessment.

75 Sporting and recreational facilities.U.K.

(1)After section 197F of the Taxes Act 1988 there shall be inserted the following section—

“ Sporting and recreational facilitiesU.K.

197G Sporting and recreational facilities.

(1)No charge to tax under Schedule E shall arise in respect of the provision to any person in employment with any employer, or to any member of the family or household of such a person, of—

(a)any benefit to which this section applies; or

(b)any non-cash voucher which is capable of being exchanged only for a benefit to which this section applies.

(2)This section applies, subject to subsections (3) to (5) below, to any benefit consisting in, or in a right or opportunity to make use of, any sporting or other recreational facilities provided so as to be available generally to, or for use by, the employees of the employer in question.

(3)Except in such cases as may be prescribed, this section does not apply to any benefit consisting in—

(a)an interest in, or the use of, any mechanically propelled vehicle;

(b)an interest in, or the use of, any holiday or other overnight accommodation or any facilities which include, or are provided in association with, a right or opportunity to make use of any such accommodation;

(c)a facility provided on domestic premises;

(d)a facility provided so as to be available to, or for use by, members of the public generally;

(e)a facility which is used neither wholly nor mainly by persons whose right or opportunity to use it derives from employment (whether with the same employer or with different employers); or

(f)a right or opportunity to make use of any facility falling within any of the preceding paragraphs.

(4)For the purposes of subsection (3)(e) above a person’s right or opportunity to use any facility shall be taken to derive from employment if, and only if—

(a)it derives from his being or having been an employee of a particular employer or a member of the family or household of a person who is or has been such an employee; and

(b)the facility is one which is provided so as to be available generally to the employees of that employer.

(5)The Treasury may by regulations provide—

(a)that such benefits as may be prescribed shall not be benefits to which this section applies; and

(b)that such other benefits as may be prescribed shall be benefits to which this section applies only where such conditions as may be prescribed are satisfied in relation to the terms on which, and the persons to whom, they are provided.

(6)In this section—

• “domestic premises” means any premises used wholly or mainly as a private dwelling or any land or other premises belonging to, or enjoyed with, any premises so used;

• “non-cash voucher” has the same meaning as in section 141;

• “prescribed” means prescribed by regulations made by the Treasury;

• “vehicle” includes any ship, boat or other vessel, any aircraft and any hovercraft;

and section 168(2) and (4) shall apply for the purposes of this section as it applies for the purposes of Chapter II of this Part.”

(2)This section shall apply for the year 1993-94 and subsequent years of assessment.

76 Removal expenses and benefits.U.K.

Schedule 5 to this Act (which relates to the payment of expenses, and the provision of benefits, in respect of removals) shall have effect.

Taxation of distributions etc.U.K.

77 Application of lower rate.U.K.

F43(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F43(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In section 249 of that Act (issues of share capital treated as income)—

(a)in subsection (4)—

(i)for the words “basic rate”, in each place where they occur, there shall be substituted “ lower rate ”; and

(ii)in paragraph (c), for “which is not chargeable at the lower rate and” there shall be substituted “ to which (without prejudice to paragraph (a) above) section 207A shall be taken to apply as it applies to income chargeable under Schedule F, but shall be treated ”;

and

(b)in subsection (6)(b), for “basic rate” there shall be substituted “ lower rate ”.

(4)In section 421(1) of that Act (taxation of borrower where loan under section 419 released)—

(a)in paragraph (a), after “tax” there shall be inserted “ at the lower rate ”;

(b)in paragraph (b), for “basic rate” there shall be substituted “ lower rate ”; and

(c)in paragraph (c), for the words from “which is not” to “that paragraph” there shall be substituted “ to which (without prejudice to paragraph (b) above) section 207A shall be taken to apply as it applies to income chargeable under Schedule F, but, notwithstanding the preceding provisions of this subsection ”.

(5)This section shall apply in relation to the year 1993-94 and subsequent years of assessment.

F4478. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

79 Provisions supplemental to sections 77 and 78.U.K.

(1)Schedule 6 to this Act (which makes further provision for the purposes of and in connection with the provisions of sections 77 and 78 above) shall have effect.

(2)Subject to that Schedule, subsection (3) of section 687 of the Taxes Act 1988 (definition of pool for the purposes of payments under discretionary trusts) shall have effect, and be deemed always to have had effect, as if—

(a)the repeal of paragraph (b) which was made by Part V of Schedule 17 to the M24Finance Act 1989 in relation to accounting periods beginning after 31st March 1989 had been confined to the following words in that paragraph, that is to say, “under section 462(2) as applied by section 686(4) or”; and

(b)that subsection included the following paragraph—

“(j)the amount of any tax on an amount which is treated as income of the trustees by virtue of paragraph 12 of Schedule 10 to the M25Finance Act 1990 and is charged to tax at a rate equal to the sum of the basic rate and the additional rate by virtue of paragraph 19 of that Schedule;”.

F45(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80 Transitional relief for charities etc.U.K.

(1)In any case where—

(a)a qualifying distribution is made on or after 6th April 1993 and before 6th April 1997 by a company resident in the United Kingdom;

(b)the recipient of the distribution is a section 505 body; and

(c)the section 505 body is entitled to the payment of a tax credit in respect of the distribution,

the section 505 body, on a claim made under this section to the Board, shall (in addition to its entitlement to payment of the tax credit) be entitled to be paid by the Board out of money provided by Parliament an amount determined in accordance with subsection (2) below.

(2)The amount referred to in subsection (1) above is an amount equal to—

(a)one-fifteenth of the amount or value of the distribution if the distribution is made on or after 6th April 1993 and before 6th April 1994;

(b)one-twentieth of that amount or value if the distribution is made on or after 6th April 1994 and before 6th April 1995;

(c)one-thirtieth of that amount or value if the distribution is made on or after 6th April 1995 and before 6th April 1996;

(d)one-sixtieth of that amount or value if the distribution is made on or after 6th April 1996 and before 6th April 1997.

(3)For the purposes of this section each of the following is a section 505 body—

(a)any charity (as defined in section 506(1) of the Taxes Act 1988);

(b)each of the bodies mentioned in section 507 of that Act (heritage bodies);

(c)any Association of a description specified in section 508 of that Act (scientific research organisations).

(4)Any entitlement of a section 505 body to a payment under the preceding provisions of this section shall be subject to a power of the Board to determine (whether before or after any payment is made) that, having regard to the operation in relation to the qualifying distribution in question of section 235, 237 or 703 of the Taxes Act 1988 (distributions of exempt funds, bonus issues and tax avoidance provisions), that body is to be treated as if it had had no entitlement to that payment or to so much of it as they may determine.

(5)No claim may be made under this section later than two years after the end of the chargeable period of the section 505 body in which the distribution is made.

(6)An appeal may be brought against any decision of the Board under this section by giving written notice to the Board within thirty days of receipt of written notice of the decision.

(7)An appeal under this section shall lie to the Special Commissioners, and the provisions of the M26Taxes Management Act 1970 relating to appeals under the Tax Acts shall apply to an appeal under this section as they apply to those appeals.

(8)Any payment of an amount under this section shall be treated for the purposes of section 252 of the Taxes Act 1988 (rectification of excessive set-off etc. of ACT or tax credit) as a payment of tax credit.

F4681. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

Chargeable gainsU.K.

82 Annual exempt amount for 1993-94.U.K.

For the year 1993-94 section 3 of the M27Taxation of Chargeable Gains Act 1992 (annual exempt amount) shall have effect as if the amount specified in subsection (2) were £5,800, and accordingly subsection (3) of that section (indexation) shall not apply for that year.

83 Annual exempt amount: indexation for 1994-95 onwards.U.K.

(1)In section 3(3) of the M28Taxation of Chargeable Gains Act 1992 (indexation of annual exempt amount) for “December” (in each place) there shall be substituted “ September ”.

(2)This section shall have effect for the year 1994-95 and subsequent years of assessment.

84 Re-organisations etc. involving debentures.U.K.

(1)In section 117 of the Taxation of Chargeable Gains Act 1992 (meaning of qualifying corporate bond), after subsection (6) there shall be inserted the following subsection—

“(6A)For the purposes of this section “corporate bond” also includes, except in relation to a person who acquires it on or after a disposal in relation to which section 115 has or has had effect in accordance with section 116(10)(c), any debenture issued on or after 16th March 1993 which is not a security (as defined in section 132) but—

(a)is issued in circumstances such that it would fall by virtue of section 251(6) to be treated for the purposes of section 251 as such a security; and

(b)would be a corporate bond if it were a security as so defined.”

(2)In section 251 of that Act (general provisions in relation to debts), after subsection (5) there shall be inserted the following subsection—

“(6)For the purposes of this section a debenture issued by any company on or after 16th March 1993 shall be deemed to be a security (as defined in section 132) if—

(a)it is issued on a reorganisation (as defined in section 126(1)) or in pursuance of its allotment on any such reorganisation;

(b)it is issued in exchange for shares in or debentures of another company and in a case unaffected by section 137 where one or more of the conditions mentioned in paragraphs (a) to (c) of section 135(1) is satisfied in relation to the exchange;

(c)it is issued under any such arrangements as are mentioned in subsection (1)(a) of section 136 and in a case unaffected by section 137 where section 136 requires shares or debentures in another company to be treated as exchanged for, or for anything that includes, that debenture; or

(d)it is issued in pursuance of rights attached to any debenture issued on or after 16th March 1993 and falling within paragraph (a), (b) or (c) above.”

(3)This section shall have effect in relation to any chargeable period ending on or after 16th March 1993 but, in relation to any accounting period of a company which began before 6th April 1992, this section shall have effect as if the references in this section, and in the amendments made by this section, to provisions of the Taxation of Chargeable Gains Act 1992 were references to such of the provisions of the M29Capital Gains Tax Act 1979 and the M30Finance Act 1984 as correspond to those provisions and have effect in relation to that accounting period.

85 Personal equity plans.U.K.

After subsection (3) of section 151 of the Taxation of Chargeable Gains Act 1992 (personal equity plans) there shall be inserted the following subsection—

“(4)Regulations under this section may include provision which, for cases where a person subscribes to a plan by transferring or renouncing shares or rights to shares—

(a)modifies the effect of this Act in relation to their acquisition and their transfer or renunciation; and

(b)makes consequential modifications of the effect of this Act in relation to anything which (apart from the regulations) would have been regarded on or after their acquisition as an indistinguishable part of the same asset.”

86 Roll-over relief.U.K.

(1)In section 155 of the M31Taxation of Chargeable Gains Act 1992 (classes of assets for the purposes of roll-over relief), after Class 5 there shall be inserted—

“CLASS 6U.K.

Ewe and suckler cow premium quotas (that is, rights in respect of any ewes or suckler cows to receive payments by way of any subsidy entitlement to which is determined by reference to limits contained in a Community instrument).”

(2)The Treasury may by order made by statutory instrument amend that section so as to add one or more further classes of assets to the classes specified in that section.

(3)A statutory instrument containing an order under subsection (2) above shall be subject to annulment in pursuance of a resolution of the House of Commons.

(4)Subsection (1) above shall apply where the disposal of the old assets (or an interest in them) or the acquisition of the new assets (or an interest in them) is on or after 1st January 1993; but, in relation to any accounting period of a company which began before 6th April 1992, subsection (1) above shall have effect as if the inserted class were numbered 5 and were inserted after Class 4 in section 118 of the M32Capital Gains Tax Act 1979.

87 Relief on retirement or re-investment.U.K.

(1)Schedule 7 to this Act (which amends the provisions of the Taxation of Chargeable Gains Act 1992 with respect to retirement relief and makes new provision in relation to relief on the re-investment of certain gains) shall have effect.

(2)This section and that Schedule shall have effect in relation to any disposal made on or after 16th March 1993.

88 Restriction on set-off of pre-entry losses.U.K.

(1)After section 177 of the Taxation of Chargeable Gains Act 1992 there shall be inserted the following section—

“177A Restriction on set-off of pre-entry losses.

Schedule 7A to this Act (which makes provision in relation to losses accruing to a company before the time when it becomes a member of a group of companies and losses accruing on assets held by any company at such a time) shall have effect.”

(2)The Schedule set out in Schedule 8 to this Act shall be inserted after Schedule 7 to that Act.

(3)This section and that Schedule—

(a)shall apply for the calculation of the amount to be included in respect of chargeable gains in a company’s total profits for any accounting period ending on or after 16th March 1993; but

(b)shall so apply only in relation to the deduction from chargeable gains accruing on or after 16th March 1993 of amounts in respect of, or of amounts carried forward in respect of—

(i)pre-entry losses accruing before it became a member of the relevant group to a company whose membership of that group began or begins at a time on or after 1st April 1987; and

(ii)losses accruing on the disposal of any assets so far as it is by reference to such a company that the assets fall to be treated as being or having been pre-entry assets or assets incorporating a part referable to pre-entry assets.

(4)In relation to accounting periods beginning before 6th April 1992 this section and that Schedule shall have effect as if—

(a)the section and Schedule inserted by subsections (1) and (2) above were inserted in the M33Capital Gains Tax Act 1979; and

(b)references in the Schedule so inserted to provisions of the M34Taxation of Chargeable Gains Act 1992 were references to such of the provisions of that Act of 1979 or of any other enactment as correspond to the provisions referred to and have effect in relation to that accounting period.

89 De-grouping charges.U.K.

(1)In section 179(4) of the Taxation of Chargeable Gains Act 1992 (time at which de-grouping charges accrue), for the words from “as follows” onwards there shall be substituted “at whichever is the later of the following, that is to say—

(a)the time immediately after the beginning of the accounting period of that company in which or, as the case may be, at the end of which the company ceases to be a member of the group; and

(b)the time when under subsection (3) above it is treated as having reacquired the asset;

and subsection (2) of section 409 of the Taxes Act (group relief) shall require any apportionment under that subsection to be made accordingly but shall not require any reference in this subsection to an accounting period to have effect for any of the purposes specified in subsection (3) of that section as a reference to any accounting period other than a true accounting period. ”

(2)This section shall have effect in relation to accounting periods ending after the day appointed for the purposes of section 180(1)(b) of that Act.

F4790. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

91 Deemed disposals of unit trusts by insurance companies.U.K.

(1)Section 212 of the Taxation of Chargeable Gains Act 1992 (annual deemed disposal by insurance companies of unit trusts) shall have effect in relation to accounting periods beginning on or after 1st January 1993; and neither that section nor section 46 of the M35Finance Act 1990 (which is consolidated in that section) shall have effect in relation to any earlier accounting period in relation to which either of them would have applied apart from this subsection.

(2)In relation to any accounting period beginning on or after 1st January 1993—

(a)section 432A of the Taxes Act 1988 shall have effect with the omission of subsection (10) (which disapplies the apportionment rules in that section in the case of a deemed disposal under section 212 of that Act of 1992); and

(b)that section 212 shall have effect with the omission, in subsection (2), of the words from “and in relation to” onwards and of subsections (3), (4) and (6) (which provide for a different apportionment rule in the case of the deemed disposal).

(3)In subsection (7) of that section 212, in the words after paragraph (b) (application of definitions in the Taxes Act 1988), for “and 214” there shall be substituted “ to 214A ”.

(4)After section 213(1) of that Act of 1992 (spreading of gains and losses), there shall be inserted the following subsection—

“(1A)Subsection (1) above shall not apply to chargeable gains or allowable losses except so far as they are gains or losses which—

(a)are referable to basic life assurance and general annuity business; or

(b)would (apart from that subsection) be taken into account in computing the profits of any business treated as a separate business under section 458 of the Taxes Act;

and that subsection shall apply separately in relation to the gains and losses falling within paragraph (a) above and those falling within paragraph (b) above for the purpose of determining what chargeable gains or allowable losses so referable are to be treated as accruing under that subsection and what chargeable gains or allowable losses to be so taken into account are to be treated as so accruing.”

(5)Section 214 of that Act of 1992 shall have effect with the omission of subsections (3) to (5) (run-off relief), and after that section there shall be inserted the following section—

“214A Further transitional provisions.

(1)This section applies where within two years after the end of an accounting period beginning on or after 1st January 1993 ( “the relevant period”)—

(a)an insurance company makes a claim for the purposes of this section in relation to that period; and

(b)that period is one of the company’s first eight accounting periods after the end of 1992.

(2)Where this section applies, section 213 shall have effect as if—

(a)the amount of the chargeable gains which—

(i)apart from that section and this section, would be treated as accruing on disposals deemed by virtue of section 212 to have been made at the end of the relevant period, and

(ii)satisfy the condition specified in paragraph (a) of section 213(1A),

were reduced by the protected proportion of that amount; and

(b)an amount equal to the appropriate part of that reduction were (subject to section 213) a chargeable gain satisfying that condition and accruing at the end of each of the accounting periods in which the reduction is to be taken into account.

(3)For the purposes of subsection (2) above the protected proportion, in relation to the relevant period, of the amount mentioned in paragraph (a) of that subsection shall be an amount equal to the amount calculated in accordance with the following formula—

(4)In subsection (3) above—

• A is so much of the amount mentioned in subsection (2)(a) above as represents chargeable gains on section 212 assets which at the end of the relevant period were linked solely to the basic life assurance and general annuity business of the company in question;

• B is so much of the amount so mentioned as represents chargeable gains on linked section 212 assets which at the end of that period were partially linked to that business;

• C is the amount of such of the closing liabilities at the end of that period of the company’s basic life assurance and general annuity business as were liabilities in respect of benefits to be determined by reference to the value of linked section 212 assets which were then partially linked to that business;

• D is the amount of all the closing liabilities of the company at the end of that period which were long term business liabilities in respect of benefits to be so determined;

• E is the amount of such of the closing liabilities of the company on the relevant date as were relevant linked liabilities in respect of benefits determined by reference to linked section 212 assets;

• F is the amount of all the closing liabilities on the relevant date of the company’s basic life assurance and general annuity business which were liabilities in respect of such benefits; and

• G is the number of accounting periods in the first nine accounting periods of the company after the end of 1992 which remain after the end of the relevant period or, as the case may be, which would so remain apart from any cessation of the carrying on of any business of the company;

and for the purposes of this subsection the relevant date is, subject to subsection (7) below, the time of the first disposal which is deemed to have been made by the company in question under section 212.

(5)For the purposes of this section and subject to subsection (6) below—

(a)a reduction made under subsection (2) above in relation to the accounting period of any company shall be taken into account in every succeeding accounting period of that company which is included in the first nine accounting periods of that company after the end of 1992; and

(b)in relation to any accounting period in which a reduction is to be taken into account, the appropriate part of the reduction is—

(i)if that is the only accounting period in which it falls to be taken into account, the whole of the reduction; and

(ii)in any other case, the amount of the reduction divided by the number of the accounting periods after the period in which the reduction is made in which the reduction falls to be taken into account or, as the case may be, would so fall apart from any cessation of the carrying on of any business of the company.

(6)Subject to subsection (7) below, where a company ceases to carry on long term business before the end of the first nine accounting periods after the end of 1992, the appropriate part of any reduction in relation to the accounting period ending with the cessation shall be such as to secure that the whole of the reduction has been taken into account under subsection (2)(b) above.

(7)Where at any time on or after 1st January 1993 there is a transfer of the whole or part of the long term business of an insurance company ( “the transferor”) to another company ( “the transferee”) in accordance with a scheme sanctioned by a court under section 49 of the M36Insurance Companies Act 1982, this section shall have effect so that—

(a)the relevant date for the purposes of subsection (4) above shall be determined in relation to any disposal deemed to have been made after the transfer—

(i)by the transferee, or

(ii)in a case where the transfer is of part of the transferor’s long term business, by the transferee or the transferor,

as if there had been no deemed disposals under section 212 before the transfer; and

(b)any reduction which (on the assumption that the transferor had continued to carry on the transferred business) would have fallen to be taken into account under subsection (2)(b) above shall be taken into account instead in relation to the transferee.

(8)Where the transfer is of part only of the transferor’s long term business, subsection (7)(b) above shall apply only to such part of any reduction to which it would otherwise apply as is appropriate.

(9)Any question arising as to the operation of subsection (8) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and transferee shall be entitled to appear and be heard or to make representations in writing.

(10)This section shall have effect in relation to any cases in which there is such a transfer as is mentioned in subsection (7) above as if the accounting periods to be taken into account in any calculation for the purposes of this section of the number of accounting periods of the transferee after the end of 1992, and the only accounting periods in relation to which any reduction is to be taken into account under paragraph (b) of that subsection, were—

(a)the accounting periods of the transferor which began on or after 1st January 1993 and ended on or before the day of the transfer (including any which, by reference to a transfer in relation to which the transferor is a transferee, are taken into account in accordance with this subsection as accounting periods of the transferor); and

(b)the accounting periods of the transferee ending after the day of the transfer,

and this section shall have effect in relation to such a reduction as if the first accounting period of the transferee to end after the day of the transfer began with the day after the transfer.

(11)For the purposes of this section assets shall be taken to be partially linked to a company’s basic life assurance and general annuity business if they are not linked solely to that business and are neither—

(a)linked solely to any pension business or long term business of that company other than life assurance business; nor

(b)assets of the company’s overseas life assurance fund;

and subsection (1) of section 214 shall apply for the purposes of this section as it applies for the purposes of that section.

(12)Subject to subsection (10) above, the references in this section, in relation to any company, to the first eight accounting periods of a company after the end of 1992 are references to the first accounting period of that company to begin on or after 1st January 1993 and to the succeeding seven accounting periods of that company, and references to the first nine accounting periods of a company after the end of 1992 shall be construed accordingly.”

(6)In section 214(6)(a) of that Act of 1992 (replacement relief), after “1989” there shall be inserted “ and before the time when it is first deemed under section 212 to have made a disposal of any assets ”.

Corporation tax: currencyU.K.

[F4892 The basic rule: sterling to be used.U.K.

(1)Where a company carries on a business, the profits or losses of the business for an accounting period shall for the purposes of corporation tax be computed and expressed in sterling; but this is subject to section 93 below.

(2)In this section—

• “losses” includes management expenses and any allowances falling to be made under [F49section 19 or 253 of the Capital Allowances Act]] ;

• “profits” includes gains, income and any charges falling to be made under [F49section 19 or 253 of that Act].

[F5093 Use of currency other than sterling.U.K.

(1)This section applies where in an accounting period a company carries on a business and either the first condition or the second condition is fulfilled.

(2)The first condition is that—

(a)the accounts of the company as a whole are prepared in a currency other than sterling in accordance with normal accounting practice; and

(b)in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in such a currency in accordance with such practice.

(3)The second condition is that—

(a)the accounts of the company as a whole are prepared in sterling but, so far as relating to the business, they are prepared, using the closing rate/net investment method, from financial statements prepared in a currency other than sterling; or

(b)in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in sterling but, so far as relating to the business, it is prepared, using that method, from financial statements prepared in such a currency.

(4)The profits or losses of the business for an accounting period shall for the purposes of corporation tax be found by—

(a)taking the amount of all the profits and losses of the business for the period computed and expressed in the relevant foreign currency;

(b)taking account of any of the following which are so computed and expressed—

(i)any management expenses brought forward under section 75(3) of the Taxes Act 1988 from an earlier accounting period;

(ii)any losses of the business brought forward under section 392B or 393 of that Act from such a period; and

(iii)any non-trading deficits on loan relationships brought forward under section 83 of the M37Finance Act 1996 from the previous accounting period; and

(c)taking the sterling equivalent of the amount found by applying paragraphs (a) and (b) above.

(5)In the application of [F51section 578A(2) or (3) of the Taxes Act 1988 or section 43(3), 74(2), 75(1), 76(2), (3) or (4), 99(1), (2) or (3) or 208(1) of the Capital Allowances Act]] for the purposes of subsection (4)(a) or (b) above, it shall be assumed that any sterling amount mentioned in any of those sections is its equivalent expressed in the relevant foreign currency.

(6)Where in an accounting period—

(a)a company carries on different parts of a business through different branches (whether within or outside the United Kingdom); and

(b)this section would apply differently in relation to different parts if they were separate businesses,

those parts shall be treated for the purposes of this section as if they were separate businesses for that period.

(7)In this section, unless the context otherwise requires—

• “accounts”, in relation to a company, means—

  (a)

  the annual accounts of the company prepared in accordance with Part VII of the M38Companies Act 1985 or Part VIII of the M39Companies (Northern Ireland) Order 1986; or

  (b)

  if the company is not required to prepare such accounts, the accounts which it is required to keep under the law of its home State; or

  (c)

  if the company is not so required to keep accounts, such of its accounts as most closely correspond to accounts which it would have been required to prepare if the provisions of that Part applied to it;

• “branch” includes any collection of assets and liabilities;

• “the closing rate/net investment method” means the method so called as described under the title “Foreign currency translation” in the Statement of Standard Accounting Practice issued in April 1983 by the Institute of Chartered Accountants in England and Wales;

• “home State”, in relation to a company, means the country or territory under whose laws the company is incorporated;

• “losses” has the same meaning as in section 92 above except that it does not include allowable losses within the meaning of the M40Taxation of Chargeable Gains Act 1992;

• “profits” has the same meaning as in section 92 above except that it does not include chargeable gains within the meaning of that Act;

• “the relevant foreign currency” means the currency other than sterling or, where the first condition is fulfilled and two different such currencies are involved, the currency in which the return of accounts is prepared;

• “return of accounts”, in relation to a branch in the United Kingdom, means a return of such accounts of the branch as may be required by the Inland Revenue under paragraph 3 of Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters).

[F5594 Rules for ascertaining currency equivalents.U.K.

(1)Any receipt or expense which is to be taken into account in making a computation under subsection (1) of section 92 above for an accounting period, and is denominated in a currency other than sterling, shall be translated into its sterling equivalent—

(a)if either of the conditions mentioned in subsection (2) below is fulfilled, by reference to the rate used in the preparation of the accounts of the company as a whole for that period;

(b)if neither of those conditions is fulfilled, by reference to the London closing exchange rate for the relevant day.

(2)The conditions are—

(a)that the rate is an arm’s length exchange rate for the relevant day;

(b)that the rate is an average arm’s length exchange rate for a period ending with that day, or for a period not exceeding three months which includes that day, and the arm’s length exchange rate for any day in that period (except the first) is not significantly different from that for the preceding day.

(3)Subject to subsections (5) and (7) below, any amount found by applying paragraphs (a) and (b) of subsection (4) of section 93 above shall be translated into its sterling equivalent by reference to the London closing exchange rate for the relevant day.

(4)The following—

(a)any receipt or expense which is to be taken into account in making a calculation for the purposes of subsection (4)(a) or (b) of section 93 above, and is denominated in a currency other than the relevant foreign currency; and

(b)any such sterling amount as is referred to in subsection (5) of that section,

shall be translated into its equivalent expressed in the relevant foreign currency by reference to the London closing exchange rate for the relevant day.

(5)Where section 93 above applies by virtue of the first condition mentioned in that section, then, as regards the business or part of the business, the company—

(a)may elect, by a notice given to an officer of the Board, that as from the first day of the accounting period in which the notice is given, an average arm’s length exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned; and

(b)may withdraw such an election, by a notice so given, as from the first day of the first accounting period beginning on or after the date of the notice.

(6)Where an election under subsection (5) above is withdrawn, no further election may be made under that subsection so as to take effect before the third anniversary of the day on which the withdrawal takes effect.

(7)Where—

(a)section 93 above applies by virtue of the second condition mentioned in that section; and

(b)the accounts of the company, so far as relating to the business or part of the business, are prepared by reference to an average arm’s length exchange rate,

that exchange rate shall be used for the purposes of subsection (3) above instead of the rate there mentioned.

(8)In this section—

• “accounts” has the same meaning as in section 93 above;

• “arm’s length exchange rate” means such exchange rate as might reasonably be expected to be agreed between persons dealing at arm’s length;

• “average arm’s length exchange rate”, in relation to a period, means the rate which represents an appropriate average of arm’s length exchange rates for the period;

• “the relevant day” means—

  (a)

  for the purposes of subsections (1), (2) and (4)(a) above, the day on which the company becomes entitled to the receipt or incurs (or is treated as incurring) the expense;

  (b)

  for the purposes of subsection (3) above, the last day of the accounting period in question;

  (c)

  for the purposes of subsection (4)(b) above, the day on which the company incurs the capital expenditure.

(9)Nothing in this section affects the operation of Chapter IV of Part VII of the Taxes Act 1988 (controlled foreign companies) or Chapter II of this Part.

(10)Nothing in paragraph 88 of Schedule 18 to the M41Finance Act 1998 (company tax returns, assessments and related matters) shall be taken to prevent any amount which is taken to be conclusively determined for the purposes of the Corporation Tax Acts from being translated under this section by reference to an exchange rate which was not used to determine the amount which can no longer be altered.]

[F56F5794A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F6196 Foreign companies: trading currency.U.K.

(1)In Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies) the following paragraph shall be inserted after paragraph 4—

“4A(1)Sub-paragraph (2) below applies where—

(a)the company carries on a trade, and

(b)the currency used in the accounts of the company for an accounting period is a currency other than sterling.

(2)It shall be assumed that by virtue of regulations under section 93 of the Finance Act 1993 (corporation tax: currency to be used) the basic profits or losses of the trade for the accounting period are to be computed and expressed for the purposes of corporation tax in the currency used in the accounts of the company for the period.

(3)References in this paragraph to the accounts of a company—

(a)are to the accounts which the company is required by the law of its home State to keep, or

(b)if the company is not required by the law of its home State to keep accounts, are to the accounts of the company which most closely correspond to the individual accounts which companies formed and registered under the M42Companies Act 1985 are required by that Act to keep;

and for the purposes of this paragraph the home State of a company is the country or territory under whose law the company is incorporated.

(4)The reference in sub-paragraph (2) above to the basic profits or losses of the trade for the accounting period shall be construed in accordance with section 93 of the Finance Act 1993.”

(2)This section applies in relation to any accounting period beginning on or after the day appointed under section 165(7)(b) below.]

Overseas life insurance companiesU.K.

97 Modification of Taxes Act 1988.U.K.

(1)The following shall be inserted after section 444A of the Taxes Act 1988—

“ Provisions applying in relation to overseas life insurance companiesU.K.

444B Modification of Act in relation to overseas life insurance companies.

Schedule 19AC (which makes modifications of this Act in relation to overseas life insurance companies) shall have effect.”

(2)Schedule 9 to this Act (which inserts Schedule 19AC into that Act and makes further provision) shall have effect.

98 Modification of section 440 of Taxes Act 1988.U.K.

(1)The following section shall be inserted after section 444B of the Taxes Act 1988—

“444C Modification of section 440.

(1)Where the company mentioned in section 440(1) is an overseas life insurance company, section 440 shall have effect with the modifications in subsections (2) and (3) below.

(2)Subsection (4) shall be treated as if—

(a)paragraph (c) were omitted;

(b)in paragraphs (a), (b), (d) and (e), the words “UK assets” were substituted for the word “assets”; and

(c)at the end there were inserted the following paragraphs—

(f)section 11C assets;

(g)non-UK assets.”

(3)The following subsection shall be treated as inserted at the end of the section—

(6)For the purposes of this section—

(a)UK assets are—

(i)section 11(2)(b) assets;

(ii)section 11(2)(c) assets; or

(iii)assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;

(b)section 11C assets are assets—

(i)(in a case where section 11C (other than subsection (9)) applies) of the relevant fund, other than UK assets; or

(ii)(in a case where that section including that subsection applies) of the relevant funds, other than UK assets;

(c)non-UK assets are assets which are not UK assets or section 11C assets;

and any expression used in this subsection to which a meaning is given by section 11A has that meaning.”

(4)Where one or each of the companies mentioned in section 440(2) is an overseas life insurance company, section 440(2)(b) and (4) shall have effect as if for “categories”, in each place where the word occurs, there were substituted “paragraphs”.

(5)Where the transferor company mentioned in section 440(2) is an overseas life insurance company, section 440 shall have effect, as regards the time immediately before the acquisition, with the modifications in subsections (2) and (3) above.

(6)Where the acquiring company mentioned in section 440(2) is an overseas life insurance company, section 440 shall have effect, as regards the time immediately after the acquisition, with the modifications in subsections (2) and (3) above.”

(2)This section shall apply—

(a)so far as section 440(1) is concerned, as regards events falling on or after the first day of the relevant accounting period of the company concerned;

(b)so far as section 440(2) is concerned, as regards events falling on or after the first day of the relevant accounting period of the transferor company or on or after the first day of the relevant accounting period of the acquiring company (whichever of those days falls later).

(3)For the purposes of subsection (2) above a company’s relevant accounting period is its first accounting period to begin after 31st December 1992.

F6299. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

100 Income from investments attributable to BLAGAB, etc.U.K.

F63(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)In section 475 of that Act (tax-free Treasury securities: exclusion of interest on borrowed money), in subsection (6)—

F63(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)for the words “of the life assurance fund”, in each place where they occur, there shall be substituted the words “ attributable to basic life assurance and general annuity business ”.

(3)This section shall apply in relation to accounting periods beginning after 31st December 1992.

101 Modification of Finance Act 1989.U.K.

(1)The following section shall be inserted after section 89 of the M43Finance Act 1989—

“89A Modification of sections 83 and 89 in relation to overseas life insurance companies.

Schedule 8A to this Act (which makes modifications of sections 83 and 89 in relation to overseas life insurance companies) shall have effect.”

(2)Schedule 10 to this Act (which inserts Schedule 8A into that Act) shall have effect.

102 Modification of Taxation of Chargeable Gains Act 1992.U.K.

(1)The following section shall be inserted after section 214A of the M44Taxation of Chargeable Gains Act 1992—

“214B Modification of Act in relation to overseas life insurance companies.

Schedule 7B (which makes modifications of this Act in relation to overseas life insurance companies) shall have effect.”

(2)Schedule 11 to this Act (which inserts Schedule 7B into that Act) shall have effect.

103 Amendment of definition and repeals.U.K.

(1)In section 431(2) of the Taxes Act 1988 (definitions), in the definition of “overseas life insurance company” for the words “having its head office outside” there shall be substituted the words “ not resident in ”.

(2)The following provisions of that Act shall cease to have effect—

(a)section 445 (charge to tax on investment income of overseas life insurance company);

(b)section 446(1) (qualifying distributions part of profits of pension business of overseas life insurance company);

(c)section 447(1), (2) and (4) (set-off of income tax and tax credits against corporation tax assessed under section 445);

(d)section 448 (qualifying distributions and tax credits);

(e)section 449 (double taxation agreements);

(f)section 724(5) to (8) (special provisions of accrued income scheme for overseas life insurance companies);

(g)section 811(2)(c) (provision about deduction of foreign tax not to affect overseas life insurance company charged under section 445);

(h)paragraph 1(9) of Schedule 19AB (payments on account of tax credits in case of pension business: special provision for overseas life insurance companies).

(3)Subject to subsection (4) below, this section shall apply in relation to accounting periods beginning after 31st December 1992.

F64(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Approved share option schemesU.K.

104 Calculation of consideration.U.K.

After section 149 of the M45Taxation of Chargeable Gains Act 1992 there shall be inserted the following section—

“149A Approved share option schemes.

(1)This section applies where—

(a)an option is granted on or after 16th March 1993,

(b)the option consists of a right to acquire shares in a body corporate and is obtained as mentioned in section 185(1) of the Taxes Act (approved share option schemes), and

(c)section 17(1) would (apart from this section) apply for the purposes of calculating the consideration for the grant of the option.

(2)The grantor of the option shall be treated for the purposes of this Act as if section 17(1) did not apply for the purposes of calculating the consideration and, accordingly, as if the amount or value of the consideration was its actual amount or value.

(3)Where the option is granted wholly or partly in recognition of services or past services in any office or employment, the value of those services shall not be taken into account in calculating the actual amount or value of the consideration.

(4)The preceding provisions of this section shall not affect the treatment for the purposes of this Act of the person to whom the option is granted.”

105 Expenditure on shares.U.K.

(1)In section 120(6) of the Taxation of Chargeable Gains Act 1992 (increase in expenditure by reference to tax charged in relation to shares)—

(a)for the words “section 185(6)” there shall be substituted the words “ the applicable provision ”, and

(b)at the end there shall be inserted “; and in this subsection “the applicable provision” means—

(a)subsection (6) of section 185 of the Taxes Act (as that subsection had effect before the coming into force of section 39(5) of the M46Finance Act 1991), or

(b)subsection (6A) of that section.”

(2)The amendments made by subsection (1) above shall be deemed always to have had effect.

(3)In section 32A(5) of the M47Capital Gains Tax Act 1979 (expenditure: amounts to be included as consideration)—

(a)for the words “section 185(6)” there shall be substituted the words “ the applicable provision ”, and

(b)at the end there shall be inserted “; and in this subsection “the applicable provision” means—

(a)subsection (6) of section 185 of the Taxes Act (as that subsection had effect before the coming into force of section 39(5) of the M48Finance Act 1991), or

(b)subsection (6A) of that section.”

(4)The M49amendments made by subsection (3) above shall be deemed to have come into force on 1st January 1992 (but shall have effect subject to the repeals made by the Taxation of Chargeable Gains Act 1992).

Indexation: miscellaneousU.K.

106 Earnings cap etc: no indexation in 1993-94.U.K.

The figure £75,000 shall be deemed to be the figure found for the year 1993-94, for the purposes of section 590C of the Taxes Act 1988, by virtue of section 590C(4) and (5) (indexation of earnings cap for retirement benefits schemes and certain other figures).

107 Indexation of allowances etc. for 1994-95 onwards.U.K.

(1)The Taxes Act 1988 shall be amended as mentioned in subsections (2) to (6) below.

(2)In section 1—

(a)in subsection (4) (indexation of income tax bands) for “December” (in each place) there shall be substituted “ September ”;

(b)subsection (5) (no change required for PAYE before 18th May) shall be omitted.

(3)In section 257C—

(a)in subsection (1) (indexation of personal allowance and married couple’s allowance) for “December” (in each place) there shall be substituted “ September ”;

(b)subsection (2) (no change required for PAYE before 18th May) shall be omitted.

(4)In section 590C (earnings cap for retirement benefits schemes) in subsection (5) (indexation) for “December” (in each place) there shall be substituted “ September ”.

(5)In section 590C the following subsection shall be inserted after subsection (5)—

“(5A)If the retail prices index for the month of September preceding a year of assessment falling within subsection (4) above is not higher than it was for the previous September, the figure for that year shall be the same as the figure for the previous year of assessment.”; and accordingly, in subsection (4) of that section for “subsection (5)” there shall be substituted “ subsections (5) and (5A) ”.

(6)In each of the provisions to which this subsection applies (provisions which refer to section 590C(4) and (5)) for “and (5)” there shall be substituted “ to (5A) ”; and this subsection applies to sections 590B(11), 592(8E), 594(7), 599(12) and 640A(4).

(7)In Schedule 6 to the M50Finance Act 1989 (retirement benefits schemes) in paragraphs 20(6) and 22(5) (which refer to section 590C(4) and (5) of the Taxes Act 1988) for “and (5)” there shall be substituted “ to (5A) ”.

(8)This section shall have effect for the year 1994-95 and subsequent years of assessment.

Miscellaneous provisions about reliefsU.K.

108 Counselling services for employees.U.K.

In Chapter VI of Part XIII of the Taxes Act 1988, after section 589 there shall be inserted the following sections—

“589A Counselling services for employees.

(1)This section applies where—

(a)qualifying counselling services are provided to a person (the employee) in connection with the termination of the holding by him of any office or employment, and

(b)the termination takes place on or after 16th March 1993.

(2)This section also applies where—

(a)subsection (1)(a) above applies, and

(b)the termination takes place before 16th March 1993 but relevant expenditure is incurred on or after that date.

(3)Relevant expenditure is expenditure incurred in—

(a)providing the qualifying counselling services to the employee,

(b)paying or reimbursing fees for the provision to the employee of the qualifying counselling services, or

(c)paying or reimbursing any allowable travelling expenses incurred in connection with the provision of the qualifying counselling services to the employee.

(4)No charge to tax under Schedule E shall arise in respect of—

(a)the provision of the qualifying counselling services to the employee,

(b)the payment or reimbursement of fees for the provision to the employee of the qualifying counselling services, or

(c)the payment or reimbursement of any allowable travelling expenses incurred in connection with the provision of the qualifying counselling services to the employee.

(5)Where this section applies by virtue of subsection (2) above, subsection (4) above shall apply only to the extent that the expenditure incurred in providing the services or paying or reimbursing the fees or expenses is incurred on or after 16th March 1993.

(6)Subsection (4) above shall apply whether or not the person who provides the services or pays or reimburses the fees or expenses is the person under whom the employee holds or held the office or employment mentioned in subsection (1) above.

(7)Subsections (8) to (10) below apply where any relevant expenditure is incurred by the person under whom the employee holds or held the office or employment mentioned in subsection (1) above (the employer).

(8)If and so far as the expenditure would not, apart from this subsection, be so deductible, it shall be deductible in computing for the purposes of Schedule D the profits or gains of the trade, profession or vocation of the employer for the purposes of which the employee is or was employed.

(9)If the employer carries on a business and the expenses of management of the business are eligible for relief under section 75, subsection (8) above shall have effect as if for the words from “in computing” onwards there were substituted “as expenses of management for the purposes of section 75”.

(10)Where this section applies by virtue of subsection (2) above, subsections (8) and (9) above shall apply only to the extent that the expenditure is incurred on or after 16th March 1993.

589B Qualifying counselling services etc.

(1)Subsections (2) to (4) below apply for the purposes of section 589A.

(2)Subject to subsection (3) below, services are qualifying counselling services if—

(a)the purpose, or main purpose, of their provision is to enable the employee to adjust to the termination of his holding of the office or employment mentioned in section 589A(1) or is to enable him to find other gainful employment (including self-employment) or is to enable him to do both,

(b)the services consist wholly of any or all of the following, namely, giving advice and guidance, imparting or improving skills, and providing or making available the use of office equipment or similar facilities,

(c)the employee has been employed by the employer full-time throughout the period of two years ending at the time when the services begin to be provided to him or, if it is earlier, at the time he ceases to be employed by the employer,

(d)the opportunity to receive the services, on similar terms as to payment or reimbursement of any expenses incurred in connection with their provision, is available either generally to holders or past holders of offices or employment under the employer or to a particular class or classes of such holders or past holders, and

(e)the services are provided in the United Kingdom.

(3)Where paragraphs (a) to (d) of subsection (2) above are satisfied in relation to particular services but the services are provided partly in and partly outside the United Kingdom, the extent to which the services are qualifying counselling services shall be determined on a just and reasonable basis.

(4)In relation to services, allowable travelling expenses are those which would be deductible under section 198—

(a)on the assumption that receipt of the services is one of the duties of the employee’s office or employment, and

(b)if the employee has in fact ceased to be employed by the employer, on the assumption that he continues to be employed by him.

(5)Any reference in this section or section 589A to an employee being employed by an employer is a reference to the employee holding office or employment under the employer.”

109 Pre-trading expenditure.U.K.

(1)In subsection (1) of section 401 of the Taxes Act 1988 (which gives relief for expenditure incurred within the five years before the beginning of any trade, profession or vocation), for “five” there shall be substituted “ seven ”.

(2)After subsection (1) of that section there shall be inserted the following subsection—

“(1A)Where—

(a)a company pays any charge on income at a time before it begins to carry on any trade, and

(b)the payment is made wholly and exclusively for the purposes of that trade,

that payment, to the extent that it is not deducted otherwise than by virtue of this section from any profits, shall be treated for the purposes of corporation tax as paid on the day on which the trade is first carried on by the company.”

(3)In section 338(5)(b) of that Act (payments not to be treated as charges on income), after “trade” there shall be inserted “ which is or is to be ”.

(4)Subsections (1) and (2) above shall have effect where the time when the person begins to carry on the trade, profession or vocation falls after 31st March 1993, and subsection (3) above shall have effect in relation to payments made after that date.

110 Waste disposal expenditure.U.K.

(1)In section 91A(6) of the Taxes Act 1988 (relevant licence for the purposes of restoration payments), after paragraph (b) there shall be inserted “or

(c)any authorisation under the M51Radioactive Substances Act 1960 or the M52Radioactive Substances Act 1993 for the disposal of radioactive waste or any nuclear site licence under the M53Nuclear Installations Act 1965.”

(2)In section 91B of that Act (preparation expenditure for waste disposal), after subsection (10) there shall be inserted the following subsection—

“(10A)For the purposes of this section any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated as if it had been incurred by that person on the first day on which he does carry it on and in the course of doing so.”

(3)This section shall have effect in relation to any case where the trade in question is begun after 31st March 1993.

111 Business expansion scheme: loan linked investments.U.K.

(1)After section 299 of the Taxes Act 1988 there shall be inserted the following section—

“299A Loan linked investments.

(1)An individual shall not be entitled to relief in respect of any shares in a company issued on or after 16th March 1993 if—

(a)there is a loan made by any person, at any time in the relevant period, to that individual or any associate of his; and

(b)the loan is one which would not have been made, or would not have been made on the same terms, if that individual had not subscribed for those shares or had not been proposing to do so.

(2)References in this section to the making by any person of a loan to any individual or an associate of his include references—

(a)to the giving by that person of any credit to that individual or any associate of his; and

(b)to the assignment or assignation to that person of any debt due from that individual or any associate of his;

and the references in section 307(6)(ca) to the making of a loan shall be construed accordingly.”

(2)In sections 289(12)(a) and 310(1) and (10)(a) of that Act (definition of “the relevant period” and information provisions), after “299,”, in each case, there shall be inserted “ 299A, ”.

(3)In section 307(6) of that Act (reckonable date for the purposes of interest on relief that is withdrawn), after paragraph (c) there shall be inserted the following paragraph—

“(ca)in the case of relief withdrawn by virtue of section 299A in consequence of the making of any loan after the grant of the relief, the date of the making of the loan;”.

(4)This section shall apply in relation to any case in which the claim for relief is made on or after 16th March 1993.

112 Employers’ pension contributions.U.K.

(1)In section 592(4) of the Taxes Act 1988 (employers’ contributions to exempt approved schemes), at the end there shall be inserted “ but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any contributions under the scheme. ”

(2)Subsection (1) above shall have effect in the case of any employer in relation to, as the case may be—

(a)any accounting period of that employer ending with a day after 5th April 1993; or

(b)any year of assessment the employer’s basis period for which ends with a day after that date.

(3)Where—

(a)there is after 5th April 1993 an actual payment by an employer of a contribution under an exempt approved scheme,

(b)that payment would, apart from this subsection, be allowed to be deducted as an expense, or expense of management, of the employer in relation to any chargeable period in relation to which subsection (1) above has effect, and

(c)the total of previously allowed deductions exceeds the relevant maximum,

the amount allowed to be so deducted in respect of the payment mentioned in paragraph (a) above and of any other actual payments of contributions under the scheme which, having been made after 5th April 1993, fall within paragraph (b) above in relation to the same chargeable period shall be reduced by whichever is the smaller of the excess and the amount which reduces the deduction to nil.

(4)In relation to any such actual payment by an employer of a contribution under an exempt approved scheme as would be allowed to be deducted as mentioned in subsection (3) above in relation to any chargeable period-

(a)the reference in that subsection to the total of previously allowed deductions is a reference to the aggregate of every amount in respect of the making, or any provision for the making, of that or any other contributions under the scheme, which has been allowed to be deducted as an expense, or expense of management, of that person in relation to a previous chargeable period; and

(b)the reference to the relevant maximum is a reference to the amount which would have been that aggregate if the restriction on deductions imposed by virtue of subsection (1) above had been applied in relation to every previous chargeable period;

and for the purposes of this subsection an amount the deduction of the whole or any part of which falls to be taken into account as allowed in relation to more than one chargeable period shall be treated as if the amount allowed were a different amount in the case of each of those periods.

(5)For the purposes of this section any payment which is treated under subsection (6) of section 592 of the Taxes Act 1988 as spread over a period of years shall be treated as actually paid at the time when it is treated as paid in accordance with that subsection.

(6)After subsection (6) of section 592 of the Taxes Act 1988 there shall be inserted the following subsection—

“(6A)Where any sum is paid to the trustees of the scheme in or towards the discharge of any liability of an employer under section 58B of the M54Social Security Pensions Act 1975 or section 144 of the Pension Schemes Act 1993 (deficiencies in the assets of a scheme) or under Article 68B of the M55Social Security Pensions (Northern Ireland) Order 1975 or section 140 of the Pension Schemes (Northern Ireland) Act 1993 (which contain corresponding provision for Northern Ireland), the payment of that sum—

(a)shall be treated for the purposes of this section as an employer’s contribution under the scheme; and

(b)notwithstanding (where it is the case) that the employer’s trade, profession, vocation or business is permanently discontinued before the making of the payment, shall be allowed, in accordance with subsection (4) above, to be deducted as such a contribution to the same extent as it would have been allowed but for the discontinuance and as if it had been made on the last day on which the trade, profession, vocation or business was carried on.”; and this subsection shall have effect in relation to any payment made on or after the day on which this Act is passed.

(7)In this section—

• “basis period”, in relation to any person, means a period on the profits or gains of which income tax for any year of assessment falls to be finally computed under Case I or II of Schedule D in respect of the trade, profession or vocation of that person (being the later period in any case where the profits and gains of an earlier period are taken to be the profits and gains of a later period); and

• “exempt approved scheme” has the meaning given by section 592(1) of the Taxes Act 1988.

Capital allowancesU.K.

F65113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F66114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F67115. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F68116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F69117 Transactions between connected persons etc.U.K.

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

MiscellaneousU.K.

118 Scottish trusts.U.K.

(1)Where—

(a)any of the income of a trust having effect under the law of Scotland is income to which a beneficiary of the trust would have an equitable right in possession if that trust had effect under the law of England and Wales, and

(b)the trustees of that trust are resident in the United Kingdom,

the rights of that beneficiary shall be deemed for the purposes of the Income Tax Acts to include such a right to that income notwithstanding that no such right is conferred according to the law of Scotland.

(2)This section shall have effect in relation to the income of any trust for the year 1993–94 or any subsequent year of assessment.

119 Controlled foreign companies.U.K.

(1)In section 750(1) of the Taxes Act 1988 (meaning of lower level of taxation for purposes of provisions relating to controlled foreign companies) for “one-half” there shall be substituted “ three-quarters ”.

(2)Subsection (1) above shall apply in relation to accounting periods beginning on or after 16th March 1993.

(3)Where a company is by virtue of section 749(1) or (2) of the Taxes Act 1988 regarded as resident in a territory outside the United Kingdom and (apart from this section)—

(a)an accounting period of the company would begin before 16th March 1993 and end on or after that date, and

(b)the company would not be considered to be subject, by virtue of section 750(1) of that Act, to a lower level of taxation in that accounting period in the territory in which it is regarded as resident,

for the purposes of Chapter IV of Part XVII of that Act that accounting period shall be treated as ending on 15th March 1993.

120 Pay and file: miscellaneous amendments.U.K.

Schedule 14 to this Act (which makes various amendments of the M56Taxes Management Act 1970, the Taxes Act 1988 and the M57Finance Act 1989 with a view to, or in connection with, the introduction of “pay and file”) shall have effect.

F70121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

122 Application of Income Tax Acts etc. to public departments.U.K.

(1)In subsection (2) of section 829 of the Taxes Act 1988 (restriction on application of Income Tax Acts to public departments), at the end there shall be inserted “ unless it is tax which would not have been so borne but for a failure by a public office or department of the Crown to make a deduction required by virtue of subsection (1) above. ”

(2)The provisions of Parts IX and X of the Taxes Management Act 1970 (interest and penalties) shall apply in relation to public offices and departments of the Crown for the purposes, so far as they so apply, of the other provisions of that Act and of the provisions of the Income Tax Acts mentioned in section 829(1) of the Taxes Act 1988.

(3)This section shall have effect in relation to the year 1993-94 and subsequent years of assessment.

123 Expenditure involving crime.U.K.

(1)The following section shall be inserted after section 577 of the Taxes Act 1988—

“577A Expenditure involving crime.

(1)In computing profits or gains chargeable to tax under Schedule A or Schedule D, no deduction shall be made for any expenditure incurred in making a payment the making of which constitutes the commission of a criminal offence.

(2)Such expenditure shall not be included in computing any expenses of management in respect of which relief may be given under the Tax Acts.”

(2)This section shall apply in relation to expenditure incurred on or after 11th June 1993.

124 Expenses of Members of Parliament.U.K.

(1)Section 200 of the Taxes Act 1988 (expenses of Members of Parliament) shall become subsection (1) of that section and the following subsection shall be inserted after that subsection—

“(2)A sum which is paid to a Member of the House of Commons in accordance with any resolution of that House providing for Members of that House to be reimbursed in respect of the cost of, and any additional expenses incurred in, travelling between the United Kingdom and any European Community institution in Brussels, Luxembourg or Strasbourg shall not be regarded as income for any purpose of the Income Tax Acts.”

(2)This section shall apply in relation to sums paid on or after 1st January 1992.

(3)Any such adjustment (whether by way of discharge or repayment of tax, the making of an assessment or otherwise) as is appropriate in consequence of this section may be made.

Chapter IIU.K. Exchange Gains and Losses

Accrual of gains and lossesU.K.

125 Accrual on qualifying assets and liabilities.U.K.

(1)Subsection (2) below applies where a qualifying company holds a qualifying asset and there is a difference between—

(a)the local currency equivalent, at the translation time with which an accrual period as regards the asset begins, of the basic valuation of the asset, and

(b)the local currency equivalent, at the translation time with which the accrual period ends, of the basic valuation of the asset.

(2)There is as regards the asset an exchange difference for the accrual period, and—

(a)if the difference represents an increase over the period, an initial exchange gain of an amount equal to the difference accrues to the company as regards the asset for the period;

(b)if the difference represents a decrease over the period, an initial exchange loss of an amount equal to the difference accrues to the company as regards the asset for the period.

(3)Subsection (4) below applies where a qualifying company owes a qualifying liability and there is a difference between—

(a)the local currency equivalent, at the translation time with which an accrual period as regards the liability begins, of the basic valuation of the liability, and

(b)the local currency equivalent, at the translation time with which the accrual period ends, of the basic valuation of the liability.

(4)There is as regards the liability an exchange difference for the accrual period, and—

(a)if the difference represents a decrease over the period, an initial exchange gain of an amount equal to the difference accrues to the company as regards the liability for the period;

(b)if the difference represents an increase over the period, an initial exchange loss of an amount equal to the difference accrues to the company as regards the liability for the period.

126 Accrual on currency contracts.U.K.

(1)This section applies where a qualifying company enters into a contract (a currency contract) under which—

(a)it becomes entitled to a right and subject to a duty to receive payment at a specified time of a specified amount of one currency (the first currency), and

(b)it becomes entitled to a right and subject to a duty to pay in exchange and at the same time a specified amount of another currency (the second currency).

[F71(1A)In deciding whether a contract falls within subsection (1) above it is immaterial that the rights and duties there mentioned may be exercised and discharged by a payment made to or, as the case may require, by the qualifying company of an amount (in whatever currency) designed to represent any difference in value at the specified time between the two payments referred to in that subsection.]

(2)Subsection (3) below applies if there is a difference between—

(a)the local currency equivalent, at the translation time with which an accrual period as regards the contract begins, of the amount of the first currency, and

(b)the local currency equivalent, at the translation time with which the accrual period ends, of the amount of the first currency.

(3)There is as regards the contract an exchange difference for the accrual period, and—

(a)if the difference represents an increase over the period, an initial exchange gain of an amount equal to the difference accrues to the company as regards the contract for the period;

(b)if the difference represents a decrease over the period, an initial exchange loss of an amount equal to the difference accrues to the company as regards the contract for the period.

(4)Subsection (5) below applies if there is a difference between—

(a)the local currency equivalent, at the translation time with which an accrual period as regards the contract begins, of the amount of the second currency, and

(b)the local currency equivalent, at the translation time with which the accrual period ends, of the amount of the second currency.

(5)There is as regards the contract an exchange difference for the accrual period, and—

(a)if the difference represents a decrease over the period, an initial exchange gain of an amount equal to the difference accrues to the company as regards the contract for the period;

(b)if the difference represents an increase over the period, an initial exchange loss of an amount equal to the difference accrues to the company as regards the contract for the period.

[F72(6)Subsection (7) below applies where—

(a)under a contract a qualifying company becomes entitled to a right and subject to a duty to receive or make a payment at a specified time, and

(b)the amount of the payment (in whatever currency) is computed in such a way as to be equal to the amount of the payment referred to in subsection (1A) above which would have fallen to be computed if—

(i)the qualifying company had been entitled and subject as mentioned in subsection (1) above, and

(ii)a payment such as is referred to in subsection (1A) above were to be made to or by the qualifying company.

(7)For the purposes of this Chapter—

(a)the qualifying company shall be deemed to have become entitled and subject as mentioned in subsection (1) above under the contract referred to in subsection (6) above;

(b)the payment made under the contract shall be treated as if it were a payment falling within subsection (1A) above in the exercise and discharge of the rights and duties to which the qualifying company is deemed to have become entitled and subject by virtue of paragraph (a) above.]

127 Accrual on debts whose amounts vary.U.K.

(1)In a case where—

(a)a qualifying company holds an asset consisting of a right to settlement under a qualifying debt or owes a liability consisting of a duty to settle under such a debt, and

(b)the nominal amount of the debt outstanding varies during an accrual period (whether because of an increase or a decrease or both),

the following provisions of this section shall apply for the period and section 125 above shall not.

[F73(1A)For the purposes of this section if, in the case of any debt—

(a)an amount in respect of any discount or premium relating to that debt is treated, on an accruals basis of accounting, as accruing at any time for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships), or

(b)any such amount would be treated as so accruing if the authorised method of accounting used for those purposes as respects the loan relationship relating to that debt were an accruals basis of accounting, instead of a mark to market basis,

then, for the purposes of this section, there shall be deemed to be such a variation at that time of the nominal amount of the debt outstanding as is specified in subsection (1B) below.

(1B)That variation is—

(a)if the amount mentioned in paragraph (a) or (b) of subsection (1A) above relates to a discount, a variation that increases the nominal amount of the debt outstanding by the amount so mentioned; and

(b)if the amount so mentioned relates to a premium, a variation that decreases the nominal amount of the debt outstanding by the amount so mentioned.]

(2)In such a case—

(a)take the local currency equivalent, at the translation time with which the accrual period begins, of the nominal amount of the debt then outstanding;

(b)take the local currency equivalent, at each time (if any) immediately after the nominal amount of the debt outstanding increases in the accrual period, of the amount by which it then increases;

(c)take the local currency equivalent, at each time (if any) immediately after the nominal amount of the debt outstanding decreases in the accrual period, of the amount by which it then decreases;

(d)take the figure found under paragraph (a) above, add each figure found under paragraph (b) above, subtract each figure found under paragraph (c) above, and call the resulting figure the first amount;

(e)take the local currency equivalent, at the translation time with which the accrual period ends, of the nominal amount of the debt then outstanding, and call the figure so found the second amount.

(3)Where the qualifying company has a right to settlement under the debt the following provisions apply in relation to the asset consisting of the right—

(a)if the second amount exceeds the first an initial exchange gain of an amount equal to the difference between them accrues to the company as regards the asset for the accrual period;

(b)if the second amount is less than the first an initial exchange loss of an amount equal to the difference between them accrues to the company as regards the asset for the accrual period.

(4)Where the qualifying company has a duty to settle under the debt the following provisions apply in relation to the liability consisting of the duty—

(a)if the second amount is less than the first an initial exchange gain of an amount equal to the difference between them accrues to the company as regards the liability for the accrual period;

(b)if the second amount exceeds the first an initial exchange loss of an amount equal to the difference between them accrues to the company as regards the liability for the accrual period.

(5)If the first amount has a negative value, for the purposes of this section the second amount (however small its value) shall be taken to exceed the first amount (however large its value).

(6)Subsection (7) below modifies the preceding provisions of this section in their application to an asset or liability where there is a difference between—

(a)the basic valuation of the asset or liability, and

(b)the nominal amount of the debt outstanding at the translation time with which the accrual period begins.

(7)In such a case—

(a)the reference in subsection (2)(a) above to the nominal amount of the debt outstanding shall be taken to be a reference to the basic valuation of the asset or liability;

(b)the reference in subsection (2)(c) above to the amount by which the nominal amount of the debt outstanding decreases shall be taken to be a reference to the amount found under subsection (8) below;

(c)the reference in subsection (2)(e) above to the nominal amount of the debt outstanding shall be taken to be a reference to the amount found under subsection (10) below.

(8)The amount referred to in subsection (7)(b) above is the amount given by the formula—

(9)For the purposes of subsection (8) above—

• A is the basic valuation of the asset or liability;

• B is the amount by which, at the time of the decrease mentioned in subsection (2)(c) above, the nominal amount of the debt outstanding then decreases;

• C is the nominal amount of the debt outstanding at the translation time with which the accrual period begins.

(10)The amount referred to in subsection (7)(c) above is the amount given by the formula—

(11)For the purposes of subsection (10) above—

• D is the basic valuation of the asset or liability;

• E is the amount (if any) by which the nominal amount of the debt outstanding has at any time increased in the accrual period or, if it has increased more than once, the aggregate of such amounts;

• F is the amount (if any) found under subsection (8) above or, if the nominal amount of the debt outstanding has decreased more than once in the accrual period, the aggregate of the amounts so found.

Trading gains and lossesU.K.

128 Trading gains and losses.U.K.

(1)Subsections (2) to (4) below apply where—

(a)as regards an asset, liability or contract an initial exchange gain accrues to a qualifying company for an accrual period, and

(b)at any time in the period the asset or contract was held, or the liability was owed, by the company for the purposes of a trade or part of a trade carried on by it.

(2)If throughout the accrual period the asset or contract was held, or the liability was owed, by the company solely for the purposes of the trade or part the whole of the gain is an exchange gain of the trade or part for the period.

(3)In any other case the gain shall be apportioned on a just and reasonable basis and so much as is attributable to the trade or part is an exchange gain of the trade or part for the period.

(4)The company shall be treated for the purposes of the Tax Acts as—

(a)receiving in respect of the trade or part an amount equal to the exchange gain of the trade or part for the accrual period, and

(b)receiving the amount in respect of the accounting period which constitutes the accrual period or in which the accrual period falls.

(5)Subsections (6) to (8) below apply where—

(a)as regards an asset, liability or contract an initial exchange loss accrues to a qualifying company for an accrual period, and

(b)at any time in the period the asset or contract was held, or the liability was owed, by the company for the purposes of a trade or part of a trade carried on by it.

(6)If throughout the accrual period the asset or contract was held, or the liability was owed, by the company solely for the purposes of the trade or part the whole of the loss is an exchange loss of the trade or part for the period.

(7)In any other case the loss shall be apportioned on a just and reasonable basis and so much as is attributable to the trade or part is an exchange loss of the trade or part for the period.

(8)The company shall be treated for the purposes of the Tax Acts as—

(a)incurring in the trade or part a loss of an amount equal to the exchange loss of the trade or part for the accrual period, and

(b)incurring the loss in respect of the accounting period which constitutes the accrual period or in which the accrual period falls.

[F74(9)For the purposes of this section a part of a trade is any part of a trade which is treated for the purposes of section 93 above as if it were a separate business for the relevant accounting period; and the relevant accounting period is the accounting period which constitutes the accrual period concerned or in which that accrual period falls.]

(10)The preceding provisions of this section apply—

(a)whether the asset or contract is at any time held, or the liability is at any time owed, on revenue account or capital account, and

(b)notwithstanding anything in section 74 of the Taxes Act 1988 (general rules as to deductions not allowable).

[F75(10A)In a case where—

(a)an exchange gain of a trade or part of a trade or an exchange loss of a trade or part of a trade would (apart from this subsection) accrue to a company as regards a liability consisting of a duty to settle under a qualifying debt, and

(b)a charge is allowed to the company in respect of the debt under section 338 of the Taxes Act 1988 (allowance of charges on income and capital),

the exchange gain or loss shall be treated as not accruing.

(10B)A charge shall be treated as allowed as mentioned in subsection (10A) above if—

(a)it would be so allowed if the company’s total profits were sufficient,

(b)it would be so allowed if the duty mentioned in that subsection were settled, and if in settling it payment were made out of the company’s profits brought into charge to corporation tax, or

(c)it would be so allowed if the facts were as mentioned in both paragraph (a) and paragraph (b) above.]

(11)In a case where—

(a)an accounting period of a qualifying company begins on or after its commencement day, and

(b)but for this subsection, a gain or loss falling within subsection (12) below would be taken into account in calculating for the purposes of corporation tax the profits or losses for the period of a trade carried on by the company,

the gain or loss shall be left out of account in calculating the profits or losses.

(12)A gain or loss falls within this subsection if it—

(a)accrues to the company, otherwise than by virtue of this Chapter, as regards a qualifying asset or liability or a currency contract, and

(b)is attributable to fluctuations in currency exchange rates;

and it is immaterial whether the gain or loss is realised.

Non-trading gains and lossesU.K.

129 Non-trading gains and losses: general.U.K.

(1)In a case where—

(a)as regards an asset, liability or contract an initial exchange gain accrues to a qualifying company for an accrual period, and

(b)the whole or part of the gain is not an exchange gain of a trade or part of a trade for the period,

the whole or part (as the case may be) is a non-trading exchange gain for the period.

(2)The company shall be treated as—

(a)receiving in respect of the asset, liability or contract an amount equal to the non-trading exchange gain for the accrual period, and

(b)receiving the amount in the accounting period which constitutes the accrual period or in which the accrual period falls;

[F76and the rule in section 130(1) below shall apply].

(3)In a case where—

(a)as regards an asset, liability or contract an initial exchange loss accrues to a qualifying company for an accrual period, and

(b)the whole or part of the loss is not an exchange loss of a trade or part of a trade for the period,

the whole or part (as the case may be) is a non-trading exchange loss for the period.

(4)The company shall be treated as—